Cracking into the business of social networks

In the merger of Oracle and Peoplesoft, hundreds of thousands, if not billions, of dollars walked out the door, claims Antony Brydon, CEO and co-founder of social networking company Visible Path. Each of the 5,000 people laid off left with a valuable network of contacts, which was not adequately considered before the ax fell.

Another example: because of the delays in finding the right people, Brydon's former company lost $40 million in value during the multi-month process of selling his company to a larger firm.

And here's another big number: one Fortune 1000 company evaluating Visible Path's software found 53 million documented relationships when three degrees of separation from one individual are included.

Visible Path's premise is that there is value, or "capital," in these relationships. And those connections need to be documented and analyzed, much like corporations need to manage any other asset they have.

Social networking services are trendy but these services don't appear to be widely understood by business professionals. Most people, it seems, simply agree to be "Linked In" but don't actively use it on a daily basis for their jobs.

But different niches appear to be forming in the social networking market, which could change today's usage patterns.

According to experts assembled at a Visible Path event in Cambridge, Mass. on Monday, the likes of LinkedIn and Spoke Software are trying to sell to both individuals and corporations.

There are some compelling business applications of tracking social relationships, perhaps the most obvious being sales. Other applications include human resources, ie hiring and retaining people, and sharing contacts in research and development, says Brydon.

Is enterprise social networking the next CRM industry? Maybe not. But certainly worth watching.