Salesforce.com’s acquisition of Rypple highlights growing interest in enterprise gamification

OVUM VIEW

Summary

In our report 2012 Trends to Watch: Consumer IT and the Connected Employee, Ovum predicted that enterprise gamification techniques (whereby businesses aim to increase employee engagement and productivity by using “gaming” techniques and tools such as badges, leaderboards, rewards, and virtual currencies) would move further into employee-facing processes in 2012. The latest major sign of this move came in mid-December 2011, when Salesforce.com announced the acquisition of social management performance company Rypple.

Salesforce.com is planning to re-launch Rypple as “Successforce,” and make it part of a new Human Capital Management (HCM) division to accompany its existing CRM and enterprise collaboration platforms. The acquisition and pending launch is a sign of strengthening supply-side sentiment towards the opportunity presented by gamification, and by pushing gamification as a service through its customer channel, Salesforce.com is helping to spread the word.

However, gamification is still seen by many as a gimmick – or, at best, just a re-packaging of best-practice HR – and mainstream adoption in the enterprise is by no means a certainty. The success or failure of this acquisition will be a bellwether of mainstream market acceptance of the gamification of employee performance management.

Salesforce.com sees potential in Rypple’s gamification techniques to improve employee performance

Gamification techniques have taken off in the consumer-focused marketing sphere, as product designers and marketers aim to improve brand engagement and incentivize consumer behavior without necessarily resorting to financial incentives. Primarily targeted at the social networking and gaming generation, techniques normally associated with gaming such as point acquisition, leveling up, goals, reward badges, and competitions with leaderboards are used to increase traffic, engagement, and ultimately revenues. Businesses are beginning to realize the potential for these same techniques to be used to improve engagement and productivity among employees. Rypple, founded in 2008, is one of a number of specialist start-ups (others include Badgeville, RedCritter, and Adobe Ventures-backed Bunchball) that have so far been the only vendors catering to this growing market.

Salesforce.com’s entry through the acquisition of Rypple is a signal that the big-name vendors are taking the market seriously and want a stake if it develops. Gamification services also present a natural convergence point between CRM and HR management systems markets. The primary potential of gamification in the enterprise is to act as a tool for HR, and Salesforce.com is planning to re-launch Rypple as a new HCM division that sits alongside both its core CRM platform and Chatter, its enterprise collaboration platform. Rypple’s value proposition has been to replace “traditional” employee performance reviews with realtime feedback, coaching, and recognition of both success and under-performance. Combining these social and gaming tools and techniques with enterprise applications such as CRM can help to quickly gauge individual productivity, rewarding those who are over-performing and helping those who are struggling to meet targets to improve. It also meets demand from employees to use the kind of tools at work with which they are familiar in their personal lives, providing social functionality, ease of use, and tangible realtime results.

The real value of gamification in the enterprise is yet to be wholly proven

Given the hype surrounding gamification and Salesforce.com’s excitement at its entrance into the space, there is a note of caution to be sounded. Essentially, there is nothing particularly new in the practices behind gamification: successful businesses have long been recognizing and rewarding employee status and achievement, and providing incentivized work processes – especially in the sales department. Questions will remain over whether gamification is just re-hashing old ideas and, if so, if there is real business value in extending the incentivized schemes already in place.

There is also no hard data yet that demonstrates real improvements in productivity through usage of gamification techniques and, although this could simply be a symptom of a very immature market, until there is decent evidence to back up the theory, most organizations will be wary of adopting gamification applications. While there is hype and excitement around gamification, there are also still a sizable number of critics. The long-term prospects for the technique are by no means assured and widespread adoption is not a certainty.

The success or otherwise of the acquisition will be a bellwether of market sentiment

So, with doubt still hanging over the long-term viability of gamification techniques, and truly widespread adoption yet to be seen, Ovum will be watching Salesforce.com’s entry into the space keenly. The success or failure of this acquisition will act as a bellwether of market sentiment, as the rate of adoption of Successforce among Salesforce.com’s huge and varied customer base will be an interesting gauge of how organizations across verticals and geographies view gamification. Will they see it simply as a cool gimmick that has been plucked from the consumer marketing world, just a re-hashing of existing ideas and practices, or will they believe that it could genuinely improve HR and wider business practices through better employee engagement? For Saleforce.com, the question will be whether gamification gives it a foothold in the more mature HR performance management tools market, recently entered by SAP in its buy out of SuccessFactors for a ticket price of $3.4bn.

Ovum believes that enterprise gamification adopts consumer-focused techniques to make use of and improve existing incentivized business practices, bringing them into realtime, everyday use – meaning that it should lead to improved employee engagement and productivity, especially among the new social networking generation of employees who are happy using such tools. As a standalone application, gamification is a little abstract. As a set of behavioral logic and user experience tools integrated into existing enterprise applications, the potential value is more immediately obvious, with clear synergies with the Salesforce.com platform. We think that Salesforce.com’s acquisition of Rypple will begin to provide market evidence of this theory as growing numbers of enterprises adopt the application, and we will be closely monitoring the situation to see if the market does indeed begin to take off in 2012.

APPENDIX

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