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Thierry Breton hates e-mail. The French tech boss hasn't used it since taking the helm at Europe's largest IT firm, Atos, three years ago. And he's instructed his 75,000 employees to follow suit. "The deluge of information will be one of the most important problems a company will have to face," Breton said upon announcing a "zero e-mail" policy last February that favors services more like Facebook and Twitter instead.
Breton isn't the only executive shunning e-mail. As company e-mail volume explodes, more businesses are grappling with the data surge. Corporate e-mail storage is growing 20% to 25% a year thanks in part to heavier file sharing, according to data consultancy Osterman Research. The data dump sucks $997 billion in productivity out of U.S. workers annually, according to research firm Basex. "E-mail is an inherently poor tool for accessing information," says Forrester Research analyst T.J. Keitt. Much of the drag is due to bad habits: an estimated 30% of e-mail is "occupational spam" caused by overuse of CC, BCC and REPLY ALL.
David Sacks wants to turn those problems into profits with Yammer, a social-networking start-up for the office. The thinking goes like this: unlike e-mail, which allows anyone to flood your inbox, social-media tools hand the reins to the recipient, allowing filtering and prioritizing. Sacks, a Silicon Valley comer and former COO of PayPal, thinks social networking also boosts workplace collaboration. "You find people with expertise you didn't know about," he says. His disciples agree. "Yammer helps drive innovation and community at Deloitte," Peter Williams, CEO of Deloitte Digital, has said. At Deloitte Australia, Yammer has spread to more than 5,000 employees.
But does Yammer add to data fatigue? Some 20% of companies have tried social networking, but most don't use it well. "Often the services get thrown up across a company without any real strategy," says Charlene Li of Altimeter Group, a social-media consultancy. "People stop using them if they feel overloaded." Research has found that high-tech workplace communications strip away trust-building cues like eye contact and tone of voice.
Sacks thinks otherwise. Unlike its competitors, which sell their software directly to companies, Yammer is free for individual workers. Companies are charged for going all-in, making the service "more intuitive and responsive," says Sacks. Being Web-based is also more efficient and cost effective than relying on company servers as its competitors do, says Yammer investor Randy Glein of DFJ Growth.
Companies like Ford, Pitney Bowes and Suncorp are piling in. Yammer's sales, employees and paying customers all tripled last year, and its total number of customers could double to 8 million this year. In February, Yammer raised $85 million to reach $142 million in funding. Jive, a competitor whose customers include Nike and Starbucks, raised $161 million in an IPO in December. Chatter, owned by software giant Salesforce, rides on Salesforce's 3 million users. Forrester estimates such applications will grow 61% per year to become a $6.4 billion market by 2016.
All the better for Millennials, born from 1977 to 1997, who will make up half the global workforce by 2014. "Young people are more comfortable with this form of communication. Every younger generation absorbs more information and does more multitasking," says Li. No wonder Sacks, 39, is in a hurry to ramp up. By the time Yammer hooks its target audience, the next new new thing may have come along.