Yam­mer is an SAAS clone of Twit­ter, pro­vid­ing pri­vate net­works for groups and com­pa­nies. See this post for a good descrip­tion of the service.

When Yam­mer won the TC50, we wit­nessed two sequen­tial waves of reac­tions. The first was lauda­tory and praised a com­pany that found how to mon­e­tize a ser­vice like Twit­ter, where it had hith­erto failed. The sec­ond denounced its per­ni­cious busi­ness model. I fit squarely in this last camp. Here’s why:

Yam­mer lets any­one with a com­pany email address cre­ate a net­work open exclu­sively to the other per­sons with a valid email address on the same domain. Yam­mer adver­tises heav­ily this: any­one can open a secure and safe pri­vate net­work to ben­e­fit from twitter-like fea­tures inside your busi­ness. Oh, and it’s free, so why don’t you go ahead and ben­e­fit from all this great­ness ? Well, in fact you do and Yam­mer has had a good growth (but not quite like the impres­sive expec­ta­tions it had). But the twist gets you at this point and it hurts.

The twist here is in the busi­ness model. If your com­pany wants to man­age the net­work, then it has to pay. And the price is per user: the more users, the higher the price. So essen­tially, it is bait and wait: bait for the employ­ees to cre­ate a net­work and use it, wait for cor­po­rate IT to come, want to man­age it and spit out the cash.

But even when pay­ing, what you can get in terms of con­trol is very low. For the major­ity of large com­pa­nies, what you want is not a sys­tem based on email address, but one based on your SSO sys­tem. Mainly for one rea­son: you want to con­trol which ones of your alumni keep their access to the net­work, if any. Yam­mer doesn’t offer that, so you take a large risk by assum­ing you will man­u­ally do it. They also offer IP restric­tions, but that doesn’t solve the prob­lem either.

The only workaround offered is for employ­ees to sig­nal a for­mer employee when they spot them. Trust me, it won’t work. As wor­ry­ing is the con­tent own­er­ship issue which belongs to the user up until the point where the com­pany is pay­ing for it and claims the net­work. Even if cov­ered by the T&Cs, I imag­ine the poten­tial legal issues aris­ing from a change of own­er­ship with­out express con­sent of the users. What does this all mean?

The main con­se­quence for me is a loss of con­fi­dence in the “web 2.0″ appli­ca­tions as a whole, as they are viewed by a lot of peo­ple. Let me explain. It’s already dif­fi­cult to con­vince cor­po­ra­tions to use inno­v­a­tive appli­ca­tions from small com­pa­nies, espe­cially deliv­ered as a ser­vice. You com­bine the risk of deal­ing with small play­ers that can go bust in the short term and the risk of trust­ing them on their SAAS imple­men­ta­tion (yes, even with due dili­gence). We try to mit­i­gate that by explain­ing rep­u­ta­tion is a sig­nif­i­cant asset in this area as well, and com­pa­nies not play­ing by the rules have more to lose than to win.

But with busi­ness mod­els like Yam­mer emerg­ing, then the loss of con­fi­dence is not just for them, but for all the other appli­ca­tions as well. So this is bad for insid­ers within com­pa­nies try­ing to push for these appli­ca­tions, and bad for a whole bunch of other com­pa­nies. Because it raises the dif­fi­cul­ties to move them within the enter­prise. Bernard Lunn is not say­ing some­thing else in his review:

The rea­son Yam­mer was con­sid­ered bril­liant was that it had a “cun­ning rev­enue model”. Let me see if I’ve got this right. You use Yam­mer rather than Twit­ter to restrict the Fol­low­ers to your col­leagues. So you can dis­cuss com­pany secrets really securely. (That, by the way, was a joke!) You use your cor­po­rate email ID (Gmail, Yahoo etc not allowed). All that is free, so mas­sive viral adop­tion. Then com­pa­nies want to claim/control the con­ver­sa­tion. So they pay for all users on Yam­mer with a cor­po­rate email ID. Yep that is cun­ning all right. Other words come to mind as well.

What the bot­tom line? Small com­pa­nies can prob­a­bly use them, but in their place I would use one of the numer­ous alter­na­tives avail­able and not trust a com­pany like that. Big com­pa­nies should avoid Yam­mer at all cost and go with reg­u­lar alter­na­tives (as inno­v­a­tive and SAAS). And that is prob­a­bly the first and only appli­ca­tion I would sup­port the ban of on cor­po­rate networks.

UPDATED — 12/21/08 : Included full quote of Bernard Lunn’s arti­cle on RRW instead of just a link.