Tech Giant Off to an Impressive Start in Enterprise Space
Last week, the CCS Insight team met with senior product executives from Workplace by Facebook. The session kicked off the official analyst communication programme for the tech giant’s enterprise arm. Here is our take on Workplace’s progress to date and its strategy in the competitive enterprise collaboration market.
It’s now almost two years since Facebook formally launched its enterprise collaboration offering, Workplace, bringing the market-defining public social network into a private, secure business context. Since then, the service has attracted more than 30,000 organisations, as at October 2017, and has more than 1 million groups created by business users. It continues to forge ahead at pace.
Hitting the Ground Running
Although it’s relatively new to the enterprise collaboration space, Workplace benefits from its relationship with the consumer Facebook platform in many ways, and its functional capabilities are at the heart of this. One of the major advantages for Workplace is that it looks and works almost exactly like the consumer product that many business users are already familiar with, cutting the time needed to get started with it. And because the Workplace team borrows the core of its technology from Facebook, it’s able to keep costs relatively low, allowing it to charge just $3 per active user per month for its Premium offering — compared with Slack’s $5.25 per active user per month.
But despite sharing much of its user experience with its consumer-focused older sibling, Workplace is fundamentally separate. It’s hosted on its own infrastructure, business profiles are completely apart from users’ personal Facebook profiles, and — importantly — there are no ads. There’s a separation between the Facebook development plan and that of Workplace, whose leadership team chooses the new features they want to roll out. This is where the two services fork, with Workplace adding capabilities that are necessary for the business market, particularly to support productivity and collaboration, such as rich document previews and multicompany groups. Security is, of course, also a major priority for Workplace, which earned compliance certification for standards such as ISO27001, SOC 2 and SOC 3 within its first year.
The other major area of investment for Workplace is integration, aiming to connect with other business applications and technologies to enable the platform to fit into existing business processes rather than operating adjacently to them. Facebook has made a lot of progress here already, announcing 50 new integrations earlier in 2018 with major business tools including SharePoint, Marketo, Zoom and Cisco WebEx. However, there’s still plenty of room for improvement, as many of these integrations merely scratch the surface of what’s possible — and needed.
The Race Is Now on
Workplace is currently just a drop in the ocean in Facebook’s revenues, 99 percent of which come from advertising on the consumer platform. Nonetheless, it’s viewed by the company as an important opportunity to diversify its revenue streams. As Christine Overby, Workplace by Facebook’s global head of product marketing, pointed out during our conversation, the tool is now officially part of Facebook’s 10-year road map, which identifies the leading areas of investment and growth for the company. Workplace is still in its infancy, but it’s growing fast, with customer numbers rising 100 percent in the six months to October 2017. Most of its users are paying customers; although it has a greater number of organisations on the free, standard version, there are many more users on paid, premium subscriptions.
Right now, most of Workplace’s customers use the product for top-down corporate communication, sharing information with an organisation in a similar way to an Intranet. However, it’s seeing traction pick up in environments with “deskless” workers, and has attracted several major customers in the airline industry including Air Asia, Virgin Atlantic and Delta Airlines. This scenario is also playing out well in other sectors, including retail, transportation, financial services, retail banking and non-profit organisations. Much of this is being enabled by its Workplace mobile apps, which will again be very familiar for people who use Facebook outside of work.
Momentum within the Workplace business is impressive, and it seems like this is just the start of a bigger push. In two years, Facebook has not only signed up more than 50 implementation partners for its enterprise collaboration platform, but also technology integration and bot customisation partners. In October 2018, the company is hosting its first leadership summit, called Flow, for existing and potential customers, and it’s clearly only just beginning its marketing efforts. I expect the event will offer an update on customer numbers, and it will also be interesting to see if Workplace has grown as fast in 2018 as it did in its first year. Either way, Facebook is poised to fully ignite its challenge to the likes of Slack and Microsoft in the collaboration space.
Trust Is a Big Hurdle to Be Addressed
It’s been a difficult year for Facebook in the public arena, with the fallout from the Cambridge Analytica scandal putting pressure on the public’s trust in the Facebook brand. Trust is increasingly playing an even greater role in suppliers’ success in the enterprise software space, and our soon-to-be-published survey research indicates that Facebook’s perceived trustworthiness has taken a significant hit among employees over the past year. The Workplace team will need to address this as a top priority in the coming months, placing greater emphasis on their security credentials and governance messaging if it wishes to maintain the early momentum that it has built.
It’s also vital that Facebook takes a more holistic approach to its support for enterprises. While Workplace is explicitly targeting the business market, Facebook already enjoys a strong presence within organisations’ workplace technology strategies thanks to the widespread use of its WhatsApp platform for business communication among employees. IT organisations are now grappling with how to manage this example of “shadow IT” from a security and compliance standpoint, and to date, Facebook has failed to take ownership or help in this process. This is something it can’t afford to turn a blind eye to if it hopes to become a business-critical partner for enterprises in the long term.
There are still plenty of hurdles for Facebook to clear on the road to success in the business software market. But the Workplace by Facebook team is determined to make its mark, both in the enterprise collaboration space and in the context of Facebook’s wider business model. And it’s made a phenomenal start.
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