Private Label Facebooks to Proliferate in 2008

In 2007, countless corporations talked about building their own Facebook (see Wachovia, for one), while Facebook itself declined the invitation. Microsoft, as usual, careened into the ring from the sidelines with its lackluster Sharepoint offering, which produces less corporate entropy than pureplay Web 2.0 vendors but characteristically is short on features and has a slow development cycle.

Based on the interest I am getting from corporations to help them with strategy for social networks and Web 2.0 and my coverage of Forrester and Digital Hollywood, I predict that enterprise social network vendors will have a good year, but enthusiasts should beware of a couple of traps…

It’s creating significant buzz in The Valley, and here is one of the most authoritative lists of vendors that “white label” social networks for the enterprise. As always, enterprises will need guidance to diligence vendors before making investments. Good fun.

However, the whole concept of white labeling is a questionable proposition. The value of having a “Facebook” that’s restricted to the enterprise walls is compromised precisely because it does not cross boundaries. True, the functionality can reduce transaction costs internally, say, via a linear function, and this can be interesting in a large environment. To get into quadratic territory, however, companies need to let employees cross boundaries, increasing spontaneity and opening up the enterprise. Can an enterprise Facebook add much value beyond the latest version of Lotus Notes or Microsoft collaboration solutions? Sure, but don’t expect to reach breakaway.

The biggest risk for executives is to fool themselves into thinking that they are participating in the social network transformation when they aren’t. Enterprise vendors bearing bolt-ons are ready accomplices in this mirage.

I’m not saying that you shouldn’t look at a white label solution. Just realize that, unless you open the enterprise, you will not have the results of competitors that do. This must be approached with care. It means creating and enforcing certain standards for handling intellectual property, not a small matter. Social networks are driving the transformation of relationships, and you will get more value faster if you build your adoption strategy around that. Don’t get distracted by the technology.