By Deborah Gage
Microsoft?has been quietly operating a group inside its Redmond, Wash., headquarters called Yammer North in an effort to integrate?Yammer?into its vast software business, Venture Capital Dispatch has learned.
Last July Microsoft paid $1.2 billion in cash for the business social networking company, which was then about four years old. It was a deal that raised the valuations of enterprise startups throughout Silicon Valley, according to venture capitalists, but Microsoft executives considered it a coup.
Not only could Microsoft use Yammer?s social network to round out Office 365, Microsoft?s cloud-based Office suite, according to Microsoft Corporate Vice President Jeff Teper, but the company was also intrigued by the way Yammer develops software.
Like other young Internet companies, Yammer rapidly and frequently releases changes to its software, testing some of its iterations on users and collecting data on how the software is used and which changes are accepted best.
For Microsoft, which has a pre-Internet history of updating software every few years, Yammer was ?right on edge of the comfort zone of our enterprise customers,? Teper said. ?We update quarterly, and we said, ?Huh, what do you do to deploy new things weekly? How do you test things out, changing and tweaking the experience so customers don?t push back??
Yammer North is composed of Microsoft people, not Yammer people?Yammer has retained its offices in San Francisco and is aggressively hiring, Teper said, while the Yammer North team, which is about 70 people, is responsible for integrating Yammer technology across Microsoft SharePoint and Office 365 and for ?bringing Microsoft processes and approaches, where appropriate, back to the Yammer team.?
Yammer and Microsoft function as an extended team, according to Yammer CTO Adam Pisoni, with Microsoft people participating in Yammer ?hack days? and Yammer helping Microsoft learn to move more quickly. Pisoni also spoke about Yammer?s development methods last month at an event in San Francisco called ?Engineering the Yammer Way.?
But Microsoft, whose Office software has a billion customers around the world, has something to teach Yammer too, according to Teper. ?Yammer had a bleeding edge customer base who, when they signed up for Yammer knew what they were getting into,? and if a customer complained about changing the user interface or moving things around,?maybe they were not the right customer for Yammer,? he said.
Yammer North?s Nate Fink, who?s worked at Microsoft since the mid-1990s, said Yammer is great at speed, while Microsoft is great at scale. ?The Yammer culture is strong and powerful. The Yammer acquisition happened at the best possible moment for us,? Fink said.
Write to Deborah Gage at deborah.gage@dowjones.com. Follow her on Twitter at @deborahgage
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