What Does The LinkedIn Acquisition Tell Us About The Future of Microsoft Office?

An Article By: David Tan, Chief Technology Officer, CHIPS Technology Group Inc.

I have a good friend that used to work for LinkedIn.  I was talking to him about the company and the data they have access to.  I have always been interested in analytics and big data and what it can tell us.  He told me that LinkedIn could predict with about 80% accuracy when you are going to switch jobs, move, or make some other life-altering change up to 3 months before it happens.  This conversation was over 4 years ago.  Just imagine how much more accurate that number is now!

You see the people you network with, both professionally and personally, are key leading indicators of pending changes in your life.  Not only that, but how you present yourself to the outside world.  Have you ever noticed the seemingly direct correlation between someone updating their job history on LinkedIn, then connecting with a recruiter or series of recruiters, then mysteriously announcing a bold new chapter in their professional life?  It’s not difficult to connect these dots, and LinkedIn owns all the data to make it happen. 

Last week, Microsoft payed just over $26 billion to acquire LinkedIn and their network of 433 million users.  That works out to just about $60 per person.  Since LinkedIn, which did about $3 billion in revenue last year wasn’t independently profitable, we need to take a step back and look into why Microsoft would make this move, and what their grand plans are.  Especially in the wake of some very high-profile, epic failures in the acquisition and integration space – specially Nokia, Yammer and Skype. 

In the memo announcing the deal, Microsoft CEO Satya Nadella mentioned the Microsoft Dynamics line of products 5 times.  Dynamics, which is Microsoft’s ERP and CRM suite of solutions is a very natural fit for LinkedIn integration.  Clearly extending your network out from Dynamics to LinkedIn makes a tremendous amount of sense for doing business.  Let’s say for example you add a new contact to your CRM database and can instantly see, inside your CRM, what contacts you have in common, who else they may have done business with, and other patterns that will help you optimize your relationship.  This level of intimate networking from a single application is extremely powerful and in some ways a little scary, but this is the type interaction you sign up for knowingly when you join a social network.

Dynamics aside, let’s take this a step further and think about Office – Microsoft’s cash cow for the past 20+ years.  In most cases these days, if you have any sort of a Microsoft ID (whether it be Office 365, OneDrive, or just Outlook.com), you have it saved on your computer.  Thus, in most cases, Office knows who you are.  Imagine you are working in Outlook and type the email address of a new contact in the To line.  If Office is wired up to LinkedIn, Outlook can immediately pull in a ton of details about that contact, who else you know that they know, and potentially tips for communicating with them efficiently.  Take it a step further, let’s say you type a company name into a Word document you are creating.  Imagine that company name gets immediately highlighted and recognized as a company.  Simply hovering over it can show you contacts you have at the company, and maybe anyone with up to 3 degree of separation.  Same can easily go for Excel, PowerPoint, or any of the other Office applications we all use every day.

The power of this social graph of contacts is extremely interesting, but also a little off-putting.  If this integration is done right, your professional network will be everywhere at all times.  Talk about the speed of business accelerating!  While I am still extremely concerned about the future of privacy, I see the value in all this, and I’m torn on how I feel it will impact businesses as a whole.  I think it’s clear that Microsoft envisions a new way of working - ubiquitous access to contacts, information, and relationships.   We are already “always connected” but now we’ll also be “always plugged in” and “always communicating” in ways that that could fundamentally change how we work.

One thing is certain though.  Microsoft is betting huge on the future of Office in the cloud.  I probably shouldn’t even say betting – they are there and they are bringing everyone else along, like it or not.  Businesses everywhere need to watch closely and adapt to the changes going on around us.  I know many business owners that still think they can put up a virtual wall around their company and use it to protect employees and information from the outside world.  These days are long over – if this type of deal doesn’t prove that to you, nothing will.  The speed of business and communication continues to accelerate at a break-neck pace.  As a business you must find ways to leverage and own that or you will become obsolete before this latest merger is even approved.