In a demonstration last week, IBM showed off its social software, which borrows heavily on the collaborative computing and social networking reflected in Web sites like Google and Facebook. Demonstrating social banking and insurance tools, IBM clearly expects social software to play a mainstream business role.

Social software for business truly is a nascent market. There are many small players with various tools, such as Jive Software or Socialtext, to a few big players like IBM, Microsoft, and EMC. Gartner did not name a leader for the category in its latest Magic Quadrant for Social Software, but it did put IBM closest, right on the border of the leadership category, on the strength of IBM’s Lotus Connections product and Sametime. Both loomed large in the recent IBM demo.

For the finance group, there is at least one big finance process that can benefit from social software — budgeting. The budget process typically entails numerous meetings and numerous messages passing among many people.

Social software refers to software that in various ways facilitates collaborative work. The latest social software goes even further by encouraging participants to create and share content. In the finance department, this might be as simple as asking people to brainstorm ways to cut spending or to streamline a business process. Social software, however, starts to get really interesting when companies extend it to customers and prospects.

Forrester Research put out an interesting report on what it calls community platforms. To Forrester, these platforms are increasingly critical to brand success: “With U.S. online adults increasing their adoption of social networks and online communities from 25 percent in 2007 to 35 percent in 2008, more brands are paying attention to this growing trend.” Obama got elected, in no small part, due to his campaign’s effective use of social and community platforms.

Social software can be effective for small and midsize business (SMB). Luis Benitez, an IBMer, discusses social software for SMBs on his recent blog. He sees three primary business uses:

1 — Recognition, increasing the organization’s public exposure

2 — Customer service, trying to manage word-of-mouth

3 — Accessibility, enhancing the organization’s value through accessibility to a community that augments what the organization does

Maybe the most interesting application demonstrated by IBM last week was Olympus: Avatars for the Web. Here, attendees participating in an online conference are represented by mildly expressive avatars (cartoonlike representations). The avatar, controlled by the attendee, can smile or frown, look confused, or give thumbs-up or -down gestures in response to what is going on in the meeting. The goal is to make the meeting more engaging for both the presenter and attendees.

Another demo, Sametime 3-D, extended collaboration into a private 3-D virtual environment similar to Second Life. Again, the result is a much more engaging and compelling meeting.

With so much available from blogs to Facebook, from Twitter to virtual worlds, the way in which organizations communicate is changing fast. The new tools may not immediately appeal to today’s older managers but don’t be surprised when the new generation of employees expects the budget meeting to be held in a virtual 3-D space with expressive avatars. ###