Mark Skilton of Warwick Business School provides answers to Nextbigfuture on the Microsoft purchase of Linkedin

Mark Skilton, of Warwick Business School, is a Professor of Practice in the Information Systems and Management Group and researches technology ecosystems around defining value and monetization. He is the author of Building digital ecosystem architectures and Building the digital enterprise. Mark provides expert commentary on the Microsoft purchase of Linkedin.

Professor Mark Skilton said: “The acquisition makes sense in respect of Microsoft’s link with enterprise in its cloud platform and portfolio of enterprise business services, it will help Microsoft build out its enterprise services capabilities.

“The long running rumours of LinkedIn not being able to develop any new growth strategies, with its net income falling year on year from 2011, have finally come home to roost with the Microsoft acquisition of $26bn in cash.

“LinkedIn has grown a user base of 106 million active users, but compared to 310 million active Twitter users and the mighty 1.65 billion Facebook monthly users, LinkedIn has never managed to grow its commercial services in what could have been a strong enterprise market.

“LinkedIn makes two thirds of its income from talent solutions in recruiting and job market services that define it and the remainder in selling marketing solutions and premium subscriptions. It has remained the website to go to for professional networking.”

Nextbigfuture exchanged some email question and answer.

How will microsoft leverage the Linkedin Acquisition ?

It will be interesting to see it Microsoft will integrate this into their Office products or to extend its earlier smaller business social network Yammer platform acquisition and over the internet video and voice calls of skype. A more significant strategy is to bring LinkedIn into the Microsoft Dynamics CRM to provide a strong enterprise selling and social integration with its customer management. This is a logical response to competitors such as and workaday in human resource management who have realized the importance and rise of social network collaboration in modern connected enterprises.

In a longer strategic view it is more likely it the growing use of social media and digital tools that are increasingly defining the “digital workforce” that will be defined by always-connected employees and subcontractors with company and on-the-go services on the mobile apps. The role of “talent management” is becoming increasingly critical to enterprises as employees and perspectives new staff productivity will be through human resources platforms that can bridge the commercial world of work activities and the knowledge sharing and collaboration that defines modern digital economy.

Will Microsoft be able to restore Linkedin growth ?

Yes probably, the investments in marketing solutions may be absorbed into the Microsoft existing portfolio of services with its Bing and advertising systems. The social business platform links to talent and recruiting will likely be preserved as it’s the main revenue generated representing over two thirds of sales. This will retain the existing activity accounts but it must start to turn this round to growing the user base leverage the Microsoft Cloud clients and infrastructure management to consider increasing its scale to become the enterprise social platform it failed to achieve in its current pre acquisition efforts. The issue of sales leads and development is different to career and talent management but the network of social connections are largely the same to the trick will be if Microsoft and the merged LinkedIN team can figure out how this is integrated into a new digital work platform strategy and product offering.

How will this impact other internet players ?

The strategies of Enterprise Social that, workaday to specialist players such as Hootsuite may have to consider how social networks may be integrated with a Microsoft parent that may provide a one stop shop experience for CRM, social and workforce talent.

Will this trigger other acquisitions ?

Yes its possible, there are several smaller social media sites but none as large as LinkedIN in truth. Part of the problem that LinkedIN faced was a highly fragmented enterprise services market from human resources, training and knowledge collaboration to social web sites as large at Facebook who could perform some of their functions. This is the largest purchase we will see in a while but many smaller players will be targets as larger platforms in CRM and ERP seek to provide innovative enterprise social integration.

It was inevitable in some degree due to the problems of growing customer numbers. An issue is if this will also be the fate of Twitter who has 300 million users but has had a similar rocky ride in the analyst seeking a better performance. As Yahoo has shown, size in not a indicator of performance and in business will become a target with lack of returns.

Any other insight ?

A broader theme here is the rise of enterprise social platforms that represent a kind of post Enterprise Resource planning ERP and CRM world that recognized the increasing amount of social media time and mobile device time workers are taking in completing social interactions. The integration of the “digital workforce” beyond a simple knowledge management and sociology view held by traditional human resources is disappearing.
People and enterprise are seeking a 24×7 experience that is fully integrated with not just their social networks but extending their influence and reach across services and products. Once again the large cloud players like Microsoft have been able this time to make the right call in this acquisition. Lets hope they convert this into its full potential.

SOURCE – email interview with Mark Skilton, of Warwick Business School by Nextbigfuture