The market for social networking software nearly tripled last year, and an IDC analyst says when implemented properly, these tools can improve internal communication.
IDC released a study this week, which found it underestimated the popularity of social networking. Last year, the firm predicted the market in the US would increase by 120 percent in 2007, but the actual revenue growth was 191 percent, said Rachel Happe, IDC's research manager for digital business economy.
The study, dubbed US social networking applications 2008-2012 Forecast: Enterprise Social Networking takes Hold, used revenue figures from American vendors. The study, which predicts the market could reach $2 billion by 2012, includes any software often deployed as a service paid for by enterprises to enable communities, either internal or external, such as KickApps, Passenger and hi5.
The technology is popular because companies discovering the use of applications spawned by the popularity of Facebook and Myspace have business benefits, Happe said.
"These communities are extremely good at prioritising information," Happe said. "It's like flash mob. If a community sees an idea and thinks it's really exciting and everybody starts participating in it, the company can recognise that this is something that maybe they should spend a few resources investigating."
A case in point, she said, is Dell's Idea Storm site. Last year, customers surveyed by Dell said they wanted Linux as an option for their PCs, so the PC manufacturer decided to offer hardware with the open source operating system.
Happe said social networking lets workers exchange information without bombarding each other with email.
"As a participant who may see an interesting conversation, I don't necessarily have to get that flowing in email and constantly get pinged," she said. "I can kind of drop into the social network when I have time, see what conversations are happening and engage when I have the time to, rather than having things directed at me."
Human resource departments in particular are taking advantage of social networking, especially in companies that have gone through several mergers and have different employees who are accustomed to different processes. "I'm seeing it all over the place," she said. "Engineering teams are a good example. With so much outsourcing and distributed teams where you have 24 by 7 development going on around the globe, it's really good to keep track of conversations and updates that are happening."
Businesses planning to implement social networking need to bear in mind the major implementation issues are not technical issues, Happe warned.
"It's community development effort, making sure people know about it, bringing them in and getting them used to the social construct of this," she said, adding: "You can't force people to communicate so if you don't have an impassioned group of people it's going to fall flat."
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