There is usually a common theme that drives M&A in the technology sector and this season the theme is the "cloud." For example, in the last couple of months Oracle bought RightNow (cloud-based customer service) and IBM acquired DemandTec (cloud-based retail analytics). The trend seems to be spreading to the social software space as well.
Telligent Systems, a vendor of social software to enterprises, announced that it has acquired San Francisco based Leverage Software. Leverage also is focused on selling social networking software for enterprises but follows a software-as-a-service (SaaS) model.
Different enteprises have different preferences for running their software applications -- behind the firewall, on-demand, or some combination of both. Employee-facing functionality would seem to favor on-premise, but not always. On-demand versions of software typically boast more frequent updates. While on-premise versions might get a major overhaul only once a year (or every three years...), hosted versions tend get updated much more frequently. This can be useful in rapidly evolving sectors such as the social software field.
Not surprisingly, then, social software vendors follow a variety of approaches. For example, Broadvision offers only a SaaS version, OpenText Social Communities is available only as an on-premise solution, while Jive and Microsoft offer both SaaS and on-premise versions. And so on.
With this small acquisition of Leverage, Telligent can tell investors and the market that it now offers an on-demand solution. Telligent says that Leverage has an iPhone app for social functionality as well, so the mobile box gets checked. Finally, both Telligent and Leverage products are built off the Microsoft tech stack, which might bode well for future integration. Analysts have taken note and are gushing over all the buzzwords.
For you the customer, the reality will not likely be so rosy. New features from acquired vendors appear in marketing brochures long before they appear on your screen. Telligent has acquired a revenue stream, but now must add a new product line to an already somewhat unweildy set of incumbent offerings. Also, it's not easy to operate SaaS and traditional delivery models in tandem. I'm not worried about the vendor here; I'm concerned about you the customer. Don't trust the initial "roadmaps" that get marched out.
The enterprise social software suites marketplace is relatively young and we can expect to see more M&A activity in the coming years as larger and mid-sized vendors try to cherry-pick oppotunities. We'll keep looking out for your interests...