Continued strategy shifts at Jive; 14% cut in headcount

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Last week, social collaboration vendor Jive Software announced its financial results for the first quarter of 2016, posting an 8% increase in revenues year-over-year, at $50.7 million. However, the more significant aspects of the announcement focused on two separate (though related) issues – first, that the company is cutting 14% of its headcount globally, and second, that it has decided to stop pursuing the small and medium-sized business (SMB) market opportunity, reverting to its more comfortable territory in the enterprise space.

A measured, more conservative approach

Over the last eight years or so, Jive has been growing steadily – from 170 employees in 2008 to 720 as at the end of 2015. However, despite the injection of investment that came from the company’s IPO in 2011, Jive has so far failed to convert that growth into profit, much to the frustration of investors. After several years of insisting that the best approach was to invest in the product strategy as a long-term path to profitability, it seems that the time has now come to be pragmatic and realistic. While Jive has been gradually reducing its losses over time – its losses for Q1 2016 were down 10% year-on-year at $7.4 million – this quarter it has bitten the bullet and cut headcount to speed up the process. As a result, it is promising to achieve profitability this quarter, which will no doubt be well-received by investors.

My question was around how those job cuts would take shape, and apparently they are spread across the business, with marketing, customer services and engineering all taking some of the hit. Interestingly it’s not just in North America either – there are some reductions in EMEA as well, at fairly senior levels too.

The second announcement I mentioned was Jive’s decision to step back from the SMB opportunity, which it has been pursuing for the last year or so through its new suite of “Workstyle apps”. It seems that this strategy has been proving more of a distraction than a real opportunity, with the company struggling to build a loyal base in this tempting area of the market. So instead, Jive is refocusing on medium and large enterprises – by which it tends to mean organisations with more than a thousand employees – where it has more sales experience, and where the platform tends to be more sticky. The Workstyle apps are not going away, incidentally, but they have been increasingly shifting to become part of the bigger enterprise story.

Regrouping to prepare for the next challenge

Once the shining star of optimism in the enterprise collaboration space, Jive continues to battle its demons as a public company. Like many others before it the company is struggling in that difficult position of being too big and established (and publicly traded) to be given the freedom of a start-up any longer, but unable to make that leap to a large, stable software vendor. Over the last couple of years, we’ve seen various changes at exec level, new sales and market strategies, and even new product development approaches designed to bridge to the next level, and yet here we are again – another quarter, another strategy u-turn.

As a tech analyst, I think Jive has some great technology, and I know from the many case studies I’ve written on its customers how good its people are at not just selling the technology, but making it deliver value too. This latest approach is perhaps less ambitious than its previous strategies – it’s more about slimming down and focusing on what they know and do well, than trying to create that new opportunity. But hopefully it will steady the ship until the next big opportunity comes along.

For existing customers, there’s certainly no need to panic – this move should make Jive more secure as a company – but it’s important to continue to push Jive to outline its long-term plans for growth and stability. This is a competitive space, and innovation is critical to success. Jive has always done well here, but there are newer, more fashionable kids on the collaboration software block these days. If it’s going to remain an independent company, Jive needs to stay ahead of the competition, and more of the same is not going to cut it for long.

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Angela Ashenden

I lead the Collaboration programme at MWD Advisors, a UK-based technology and industry research and advisory firm, where I specialise in Social Collaboration technologies and practices. As well as tracking market trends, my research focuses particularly on the practicalities of achieving success with social collaboration deployments, and I have built up a great portfolio of case study research to support my advice to clients around strategy and best practice. I regularly present at conferences and seminars on Collaboration technology and market trends and adoption best practice, as well as writing for various media and trade publications. I've been quoted and/or had articles published in AIIM, CIO UK, Computer Weekly, CMSWire, ebizQ, Huffington Post, Information Age, Information Week, InsideOut, IT-Director.com, Our Social Times, PCPro, simply-communicate and The Times Raconteur. At the moment I'm helping MWD put together a fantastic event focused on the practicalities of delivering business value from social collaboration: Making Social Collaboration Work (October 15th in London, UK): see http://www.socialcollaborationevent.com

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