Can social apps kill enterprise software?

    Big, expensive, custom software from blue-chip software and consulting companies has been a rule of thumb for giant corporations for decades now. Is it possible a new breed of cloud-oriented startups can change all that?

    Anyone who's had to sort through a clunky "reply all" email chain at work or tried to post a document to the intranet knows that there's got to be a better way. In fact, they probably already know what that better way is: People are increasingly communicating and sharing information in real time on free services like Facebook and Twitter. Those companies are focused on the general public, but others deploying similar services are now trying to usurp the enterprise software that has long dominated the server farms of most major companies.

    We're at a weird place in time in terms of enterprise applications -- those big, expensive, often heavily customized software packages companies like IBM (IBM), Cisco (CSCO) and HP (HPQ) sell to equally big companies, along with hefty service contracts. As much as they are having their moment in the sun -- Microsoft (MSFT) for example boasted record sales of Enterprise apps last week -- people are getting increasingly and undeniably comfortable with social sharing, and several start-ups are trying to capitalize on that.

    "To deny enterprise workers the benefit of social networking is equivalent to, ten years ago, forcing them to communicate with colleagues by telegraph," says Matthew Cowan, co-founder of Bridgescale Partners, a tech investment firm that which works with several social media for business startups. He predicts that in two years, social media for business will be the norm.

    But providing social networking to business is not as simple as building an encrypted version of the software and naming it after a cute synonym for "talk." Twitter and Facebook work because they are free, people can use them to say pretty much anything they want, they enable the viral spread of information, and the usage of the applications spreads virally too. In contrast, social applications for enterprise will need to make money faster and will have to limit the information people can share both outside and inside a company. Also, these new apps will have to be contained in some way to stay secure, limiting the potential user base and adoption rate. So how do these startups balance sparking an enterprise tool to spread virally, while keeping it in check and secure?

    Different companies are looking at getting into the social media for business game at all angles. Take Jive, for example. It's the oldest player in the space, having launched in 2001 and has the most traditional approach-- spend money to reel in clients. Jive offers apps that target big corporations, and its business model depends on access to capital for sales and marketing. This summer, Jive received $30 million from two VC giants -- Sequoia Capital and Kleiner Perkins Caufield & Byers.

    Another strategy is the Trojan Horse (without the typical negative software connotation) of letting the social app sneak in on the back of other software. That's what Salesforce.com is doing, leveraging its track record with tech companies to help launch it social media service, Chatter. Free for Salesforce.com customers, it's $15 per user for everyone else, so it's using it's existing paid user-base to grow, by providing the social media utility as a value-add. The company's typical points of contact in an organization are executives in IT, sales and marketing, says Sean Whitely, the Vice President of Product Marketing for Salesforce.com, so they're promoting Chatter through those channels.