As a journalist, I always found it quicker to reach out to somebody on Facebook or a DM on Twitter for a quick quote. Messages on LinkedIn either required me to go premium before I could send an InMail to somebody, or got delayed replies, often weeks after my deadline. People aren’t there on LinkedIn day in and day out as they are on Facebook or on Whatsapp and to some extent on Twitter. So, why is it a big deal for Microsoft to buy the “professional” network, for a hefty amount of $26.2 billion?
Remember, prior to his role as CEO of Microsoft, Satya Nadella was Executive Vice President of Microsoft’s Cloud and Enterprise group. While Nadella was there, the group’s revenue are said to have increased by 22 percent, and its profits by 33 percent. So Nadella knows very well where his heart is.
To start with, let’s look at what Satya Nadella, CEO, Microsoft said in a conference call. “LinkedIn essentially becomes a social fabric across all of Microsoft, including Outlook, Excel, Skype, PowerPoint and Excel,” said Nadella, adding, “You’ll have the ability, whenever looking up a contact, to not only see what’s in Active Directory but to get the full richness of information about their professional network and about all the others who are in their professional network.”
Let’s look at some excerpts from his letter to employees about the acquisition on Monday:
“Along with the new growth in our Office 365 commercial and Dynamics businesses this deal is key to our bold ambition to reinvent productivity and business processes. Think about it: How people find jobs, build skills, sell, market and get work done and ultimately find success requires a connected professional world. It requires a vibrant network that brings together a professional’s information in LinkedIn’s public network with the information in Office 365 and Dynamics.”
At another instance, he says:
“The opportunity for Office 365 and Dynamics is just as profound. Over the past decade we have moved Office from a set of productivity tools to a cloud service across any platform and device. This deal is the next step forward for Office 365 and Dynamics as they connect to the world’s largest and most valuable professional network.”
Similarly, let’s look at what, Jeff Weiner, who’ll still be at the helm of affairs at LinkedIn has to say in an internal mail to his staff. Talking about the synergies between the two companies, he says:
“When Satya first proposed the idea of acquiring LinkedIn, he said it was absolutely essential that we had alignment on two things: Purpose and structure. On the former, it didn’t take long before the two of us realized we had virtually identical mission statements. For LinkedIn, it was to connect the world’s professionals to make them more productive and successful, and for Microsoft it was to empower every individual and organization in the world to achieve more. Essentially, we’re both trying to do the same thing but coming at it from two different places: For LinkedIn, it’s the professional network, and for Microsoft, the professional cloud.
Both of us recognized that combining these assets would be unique and had the potential to unlock some enormous opportunities.
For example:
- Massively scaling the reach and engagement of LinkedIn by using the network to power the social and identity layers of Microsoft’s ecosystem of over one billion customers. Think about things like LinkedIn’s graph interwoven throughout Outlook, Calendar, Active Directory, Office, Windows, Skype, Dynamics, Cortana, Bing and more.
- Accelerating our objective to transform learning and development by deeply integrating the Lynda.com/LinkedIn Learning solution in Office alongside some of the most popular productivity apps on the planet (note: 6 of the top 25 most popular Lynda.com courses are related to Microsoft products).
- Realizing LinkedIn’s full potential to truly change the way the world works by partnering with Microsoft to innovate on solutions within the enterprise that are ripest for disruption, e.g., the corporate directory, company news dissemination, collaboration, productivity tools, distribution of business intelligence and employee voice, etc.
- Expanding beyond recruiting and learning & development to create value for any part of an organization involved with hiring, managing, motivating or leading employees. This human capital area is a massive business opportunity and an entirely new one for Microsoft.
- Giving Sponsored Content customers the ability to reach Microsoft users anywhere across the Microsoft ecosystem, unlocking significant untapped inventory.
- Redefining social selling through the combination of Sales Navigator and Dynamics.
- Leveraging our subscription capabilities to provide opportunities to the massive number of freelancers and independent service providers that use Microsoft’s apps to run their business on a daily basis.
And these are just some of the ideas that have been discussed since our first meeting.”
Talent Management: The Dynamics portfolio gets bigger
Let’s quote Nadella once again. “In essence, we can reinvent ways to make professionals more productive while at the same time reinventing selling, marketing and talent management business processes,” he said.
CRM and ERP are at the top in the Dynamics portfolio; and the target audience being the Services industry, Retail, Manufacturing, Distribution, Financial Services, and Public Sector. It does have solutions for SMBs too. What is missing in this portfolio is ‘talent management’ or in other words, an HRM tool. LinkedIn fulfills that gap. Expect an HRM product from Dynamics soon, with LinkedIn sitting pretty under the hood — the target audience of course being the recruiting agencies or large corporate offices who have a busy HR Manager. For anyone who doesn’t need a full-blown HRM, can do with an API integrated into the ERP (read Dynamics).
Does all this leave room for Skype to be integrated into the HRM for conducting online interviews? Oh! Yes! Bring it on.
Anything else? Corporate Learning. Remember what Weiner said about accelerating the company’s objective to transform learning and development by deeply integrating the Lynda.com/LinkedIn Learning solution in Office. He makes it a point to highlight that six of the top 25 most popular Lynda.com courses are related to Microsoft products. LinkedIn acquired Lynda.com in April last year.
LinkedIn’s revenue streams have been Premium Subscriptions, Marketing Solutions and Talent Solutions. The last brings the maximum revenues — about 55 percent. Doesn’t it make sense for Dynamics to have an HRM product in its portfolio?
The CRM: Faster lead generation
Premium Subscriptions bring about 20 percent of the revenues; and Marketing Solutions account for 25 percent of the revenues. The last sits pretty well into the CRM’s scheme of things
Granted that LinkedIn gets contacts right within Outlook and Skype, but what if one had all that data right within the CRM? There are of course, hundreds of plugins that allow one to add existing and potential customers into Salesforce.com, SAP and Dynamics. With LinkedIn integrated right into Dynamics, puts quality customers right on top and “lead generation” becomes easier.
Besides, LinkedIn just integrates the Sales and Marketing departments better. With the right audience just at a reach, it can target ads with greater accuracy and granularity to its enterprise customer.
For Weiner, as according to Marketing Week, this is also an opportunity to boost ad sales and offer brands more marketing solutions. “We are in a position now where we can unlock additional inventory from within the Microsoft ecosystem. Sponsored content is our fastest growing business at scale, there is also additional opportunity there,” the online publication quoted Weiner as saying during an analyst call.
433 million users: Let the rich data come in
Now, LinkedIn officially a Microsoft company, the deal probably should, I assume, put its data off bound from Salesforce and other competition. That’s though, unlikely to happen. LinkedIn’s APIs are public and so is any other user profile data. But what could be off-bound from competition, is analytics. LinkedIn comes with a large volume of rich data of its about 433 million registered users, of which 2 million are paid subscribers. Add to that 1.2 billion Microsoft office users.
Over the years, LinkedIn has evolved from just being a professional network to a publishing platform as well. The acquisition of Pulse in 2013 paved the way. In 2015, it announced Analytics for Publishing. What can Analytics do?
- See the audience one is reaching by industry, location and even job title, and see if it aligns with the target audience
- See where traffic is being driven from and see where one can try to stimulate more traffic
- See patterns of visit behavior, and act to share further when traffic starts to tail off
- Engage with and thank the people who have read, liked, commented on or shared my work easily
Microsoft does have its own Analytics Platform System, which, pretty well speaks for itself and can sit pretty well on its cloud service, Azure. While it opens up vistas for building more data products, Microsoft does have Cortana Intelligence Suite, what it calls as “A fully managed big data and advanced analytics suite to transform your data into intelligent action.”
Then LinkedIn has what it calls the Economic Graph, which in short, is “a digital mapping of the global economy.” In detail:
“It will include a profile for every one of the 3 billion members of the global workforce, enabling them to represent their professional identity and subsequently find and realize their most valuable opportunities. It will include a profile for every company in the world, who you know at those companies up to three degrees to help you get your foot in the door, and the product and services those companies offer to enable you to be more productive and successful. It will digitally represent every economic opportunity offered by those companies, full-time, temporary and volunteer, and every skill required to obtain those opportunities. It will include a digital presence for every higher education organization in the world that can help members obtain those skills. And it will overlay the professionally relevant knowledge of every one of those individuals, companies, and universities to the extent that they want to publicly share it.”
That is a whopping data of course. Nadella links the Economic Graph pretty well with the company’s cloud services, Azure.
A linked cloud
While answering an analyst’s question, as according to GeekWire, Nadella referred to Microsoft Graph – a unified API endpoint for accessing Outlook, OneDrive and other cloud-resident Microsoft data – calling it “the most strategic Microsoft app API, even for Azure developers.” Now, with the LinkedIn purchase, “We have one more: the LinkedIn Economic Graph,” GeekWire quoted Nadella as saying.
The online publication further quotes the Microsoft CEO:
“When you expose [these Graphs] to developers and then also give them all the cloud infrastructure, that’s when you have the higher value. The combination of these higher-level services that also have APIs, along with the infrastructure services, is what gives Microsoft’s cloud the most unique monetization capability and long-term return capability.”
We’ve already seen how Office 365 gets populated with LinkedIn data. And then there’s of course Azure to keep all this data afloat on cloud.
