What Enterprise Applications Vendors (And All Of Us) Can Learn From Facebook

Facebook is a phenomenon. Founded in 2004, it now has 600m+ active users (as of September 2010) c. 10% of the WORLD’s population. It will add around 300m users during 2010. That’s about how many people live in the whole of the US. Not that Facebook is a US phenomenon; 70% of Facebook users live outside of the US.

Number of users is one thing, actual usage is another. This is where Facebook gets really scary. Fifty per cent of Facebook users log onto Facebook everyday for 30+ minutes. People spend over 700 billion minutes per month on Facebook. So it’s sticky, which advertisers love.

The mobile revolution is fuelling Facebook’s growth. Facebook has 200m+ mobile device users. Having more ubiquitous access, they are twice as active as non-mobile users. All this for a relatively tiny software company of 1,700 employees that is dwarfed by the size and resources of the likes of Microsoft or Oracle.

So what makes Facebook so successful? Well firstly, Facebook believes that human interaction and sociability is a natural and normal human condition. This means they start their software development from the premise of ‘how does this product help people to communicate and collaborate?’

For example, Facebook’s first products to market offered relatively low functionality. Pictures weren’t shown in high definition and you couldn’t even move them around. It didn’t matter though because the product was easy to use and the pictures were easy to share with others. ‘Social’ is the startpoint for software development rather than functions, and is deeply embedded in all Facebook’s products.

CEO Mark Zuckerberg parallels this consumer-oriented mindset with that of enterprise software vendors. He believes that enterprise software vendors are more concerned with “a features checklist rather than what is really good to use”. Few analysts would disagree. It is rare indeed to find users raving about a piece of enterprise software like Facebook users do. However, that being said, Tableau, QlikTech and others have been making moves in this direction.

Zuckerberg goes further: “if you build a product that people love you can make lots of mistakes”. He means that users will forgive you if you build a product around the needs of people, and which is engaging, enjoyable and fun to use.

Facebook spends a lot of time trying to keep the user interface simple and intuitive, as Apple does. Unlike Apple, Facebook (which develops on Open Source platforms such as MySQL) also tries to be ‘open’ so that users can access and connect to a wide variety of services (including Facebook’s catalogue of 550,000 applications). This is true from a technical perspective, but also for user adoption. There are no user sign-up qualifications—apart from having to use your own real name rather than hiding behind an alias.

Facebook understands that it is at the forefront of a massive shift in tech marketplace dynamics—and wants to keep it that way. Every day their executives have intellectual debates about such issues as privacy, searching to better understand and shape trends, rather than to react to them. Facebook’s two most important corporate values are “move fast and be bold”.

Facebook may be run by a group of people who look like they just got out of High School (Zuckerberg is still aged only 26), but it should not be underestimated. Facebook has tapped into (and to some degree created) a rich vein of IT-enabled social interaction that few legacy software vendors have been able to exploit. The combination of intellectual zeal, ambition and teamwork; backed by top industry veterans (such as Netscape’s founder Marc Andreessen) has created a corporate culture that will be difficult for rivals to replicate.

Most importantly, Facebook has demonstrated a fanatical desire to understand and make sense of the fast-changing market environment around us—and convert that understanding into new products that are truly customer-centric, easy, social and fun to use. No wonder its dazzling speed to market and excellent execution is striking fear into rivals. With good reason.

Gerry Brown is an analyst (BI and CRM/Digital Marketing) at Bloor Research. Gerry has 25 years of experience in the software and services industry, and has worked in senior marketing and sales management positions for Xerox, Fujitsu Services, Hyperion and MicroStrategy. He was Marketing Director at Hyperion Solutions and Head of Marketing at MicroStrategy. Gerry is also a visiting lecturer for the London School of Marketing and lectures at top academic institutions such as Imperial College and Birkbeck College. He lectures in Strategic Marketing, Analysis and Evaluation, Managing Marketing Performance, and Strategic Marketing in Practice on the Professional Postgraduate Diploma in Marketing course. Gerry is a Fellow of the Chartered Institute of Marketing (FCIM), has a DipM (the equivalent of an MA) in Marketing, and received his BA (Hons) Business Studies degree from Sheffield City University. Gerry regularly presents on behalf of Bloor Research at international business conferences, roundtable discussions, user group meetings, vendor seminars, and Webinars and Podcasts.