Once just trendy gathering places for teens and college students, online social networks are growing up fast. Solution providers whose only exposure to these networks may have been through their kids are suddenly running across them in business. Many, in fact, are starting to explore social networking's relevance to their business models and their customers.

Over the past two years, large companies have started adopting social networking for a variety of purposes, from creating online customer and partner communities to building internal social networks for their own employees. "We've definitely seen a dramatic increase in businesses starting to use social networking as a platform," says Ryan Grant, director of channel programs at Ingram Micro.

Last fall, Ingram Micro itself launched a social networking site, called The Zone, for members of its solution-provider communities (see sidebar, page 29). And overall adoption of the technology seems to be accelerating. Just in the past six months, "many companies have become convinced that they must launch a community or lose their competitive advantage," says Mike Walsh, CEO and founder of Leverage Software (www.leveragesoftware.com), the company that provides the platform for The Zone.

Meanwhile, newly hired college grads and other young employees are bringing their online habits into solution-provider business operations. This generation has grown up with new ways of interacting, including instant messaging and social networking, and expects to conduct their business the same way when they enter the workforce.

Indeed, the difference between the way a 20-something and a 50-something works can be quite striking, says Larry Baum, chairman and CEO of The Computing Center, a solution provider in upstate New York. Baum is 58 and has two 20-something sons.“I’ve been in business for 30 years, and I cannot recall another time when the age of a person so strongly affects how they operate in the workplace,"

As social networking trickles down from large enterprises and bubbles up from younger employees, some solution providers are investigating how or whether social networking will affect them. Some are already using online social networks to find business partners, clients and employees. A few are developing their own internal social networks.Still others see a growing market and are working to build a practice around social networking solutions.

A Crowded, Crazy Market
The universe of online social networks is expanding and morphing so quickly that it's hard to identify all the different categories, not to mention individual companies. First, there are the well-known consumer-oriented networks such as Facebook and MySpace. Then there are professional networks such as LinkedIn (www.linkedin.com). Large traditional IT vendors are also jumping into the market with social networking packages. Last year, for example, IBM announced Lotus Connections, which it calls a platform for "business-grade social computing." In addition, there is an exploding category of vendors that are selling "white label" platforms upon which companies and other organizations can build their own gated communities.

"It"s a very dynamic space right now," says Rachel Happe, research manager for the Digital Business Economy at IDC. Two years ago, she estimated the size of the pure-play social networking market at $46 million and expected it to more than double to $102 million for 2008, a forecast she now calls conservative.

Depending on their roots and their focus, social network vendors offer different features and tools. Sparta Social Networks (www.spartasocialnetworks.com), for example, concentrates on building customer communities that help companies evaluate how people are responding to their offerings.

For vendors who focus on internal corporate networks, it's all about access to trusted and relevant information and people, says Happe. Employees are buried in information, and social networks provide a way to filter out the chaff and focus on the wheat.

Indeed, corporations are starting to view internal social networks as repositories for institutional knowledge and intellectual capital. Companies have been struggling with knowledge management for years,Happe notes, in part because there's little incentive for individuals to take time to formalize what they know and enter it into a computer. In social networks, this information is captured automatically.And vendors are adding sophisticated search technologies into that knowledge base.

How to Capitalize
Some solution providers are starting to explore social networks in their own businesses. 4CTechnologies, a solution provider in Pennsylvania, is impressed with Lotus Connections but is taking a "listen and learn" approach to social networking, says president John Riley. "There is no question that Connections will be on our radar as we interact with our current client base over the next few months,"he says.But already his management team uses LinkedIn and Facebook for things like researching a potential employee's background and to search for high-level professional resources.

The Lloyd Group, an MSP in New York City that has been on Facebook for about nine months, has had "a tremendous amount of success," says Adam Eiseman, CEO. The company has a public profile on the site and has started private Facebook groups for its employees, alumni and partners.

A Facebook connection has already brought in one new customer, and possibly two, says Eiseman. One is a hedge fund manager who is starting a new company. A Ferrari owner, the manager had asked the Ferrari owners' group on Facebook for recommendations of IT companies that could help him set up his new operations. A Lloyd Group competitor, also a Ferrari owner, did not offer service in New York City and so recommended Lloyd Group. "That was over the weekend, and by Monday we had a signed deal," says Eiseman. Subsequently, the hedge fund manager introduced Eiseman to his bankers, who are also hot prospects.

Eiseman's advice to fellow solution providers? "I'd advise them to jump into social networks,” he says. "Don't be afraid of them; they're part of the way the world operates today." But how you participate in social networking may depend on which world you work in. Eiseman has noticed that his younger clients in financial and professional services seem most comfortable with social networking. And the average age of Lloyd Group employees is mid-to-late twenties.

This contrasts with The Computing Center, where few employees are 20-somethings, although the technical staff tends to be younger (and has lately been running up the text messaging bill, says Baum). Also, Baum's customers' managers tend to be middle-aged or older. "Some of our customers are still getting used to e-mail," he quips. That has Baum puzzling over how to use social networking. "We're tinkering around on some of the social networking sites, trying to figure out where this fits into our business model," he says. "It isn't going to be easy for us."

Selling the Solution
Another promising angle relates to implementing white-label social networking platforms for customers.Happe of IDC sees a distinct need for application developers in this market. "Right now one of the problems is that people want it integrated with their technology stacks," she notes. "That's absolutely an opportunity for solution providers."

Sam Smith would agree.He's managing director of two-year-old Vi3 Technologies, a Web application developer that resells and integrates Community Server, a social networking platform from Telligent (www.telligent.com). Smith believes social networking to be the next logical step in Web site development for his small and midsize customers. "Social networking is the next step in the evolution of the Web as a channel," he says.

As that evolution continues, it pays to be on the lookout for creative ways to use and perhaps sell social networking technology. While there is bound to be consolidation among the hodge-podge of current vendors, the business seems here to stay. "Social networking is just getting started," says Rob Howard, Telligent’s CEO. "The next three to five years are going to be very interesting."