Rackspace (RAX) priced today at $12.50 / share near the low end of a range of $12 to $16 per share through a dutch auction process.

It was a tough deal to get through even with Rackspace’s high quality numbers. They ended up raising $187.5 Million in cash (down from an initial desire to raise $400 Million when they filed back in April 2008). Still, it’s an opening and a deal done … let’s see who follows.

Stock started trading at $10/share down from the pricing of $12.50/share, and closed at $10 after a climb for most of the day. See below …

Goldman, Sachs & Co., Credit Suisse Securities (USA) LLC and Merrill Lynch & Co. are acting as joint book-running managers for the offering. W.R. Hambrecht + Co., LLC, Jefferies & Company, Inc., Cowen and Company, LLC, RBC Capital Markets Corporation, JMP Securities LLC, Signal Hill Capital Group LLC, and E*TRADE Securities LLC are the co-managers for the offering.

It appears that enough buyers exist in the $100 Million range to get IPOs out … will be interesting to see what kind of liquidity exists above and below that threshold, or even if more try to come out in the $100 Million range.

On the heels of Salesforce.com partnering with Google Enterprise to integrate Google Apps into Salesforce.com, Google has now done an equally extensive partnership and integration with SuccessFactors around embedding Google Apps and other apps into the HCM SaaS applications of SuccessFactors.

Google’s enterprise playbook seems like it is, or should be, clear … continue to build the collaborative productivity applications on the backs of consumers, layer & integrate them into the main enterprise SaaS apps via partnerships, and then probably consolidate those companies into Google - i.e. acquire SFDC, SFSF / TLEO, and others in core SaaS categories where the players are getting enterprise traction (i.e. above only SMB).

This is not the first time somebody has suggested that Google might acquire Salesforce.com, but the path is becoming clearer, and it would be more logical as part of a broader SaaS consolidation play along with SuccessFactors, and potentially others like Omniture and/or Taleo.

Even Eric Schmidt has commented publicly about the core nature of apps to Google (quote below was pulled from here):

CEO Eric Schmidt described apps as one of three strategic components for the company, alongside search and ads, adding that charging businesses for apps is a business that looks like it is going to grow very nicely for us.

What is unclear is the potential timing of this playbook being executed …

Some reasons why it might happen quickly are below:

• Cisco or somebody else (Microsoft) takes a strong interest in acquiring Salesforce.com, which could force Google’s hand as SFDC is a unique property
• Google feels pressure to diversify more quickly from its pure advertising model sooner due to the economy and other factors

Regardless of the above, I would consider betting that Google starts running a playbook like this within 18 to 24 months at the latest. The need for new growth engines may be motivation enough to move quickly, and as Henry Blodget points out, building out an enterprise-class sales & support infrastructure is not something that happens overnight.

It certainly seems like the clock has begun to tick faster for Microsoft on its Exchange / Sharepoint / Office franchises. With that at stake, the fascination with Yahoo is an even bigger head scratcher.

Here is a great article from today’s Boston Globe about how Comcast and Southwest Air are using Twitter - fascinating stuff. It also highlights Dell’s social media efforts, and the IdeaStorm concept for bringing their customers inside their organization to co-innovate (Customer Inside).

From Josh Bernoff, Forrester Research analyst and co-author of Groundswell (a great read for anyone considering Social Media efforts in business):

“We’re in a world where one person, by their actions, can make a company look bad, and it can get echoed and amplified over and over again,” said Josh Bernoff, an analyst at Forrester Research and coauthor of “Groundswell,” a book about business and social technologies. “The power has shifted, [so] that big companies now have to be worried about one individual with a microphone called a blog.”

These are clearly emerging case studies of how enterprises are making use of Social Media, but are certainly harbingers of great things to come. Many of the highlighted use cases are for customer engagement, which means the enterprises are recognizing the growing voice and power of their customer base due to the Web 2.0 technology revolution.

If you look at how Southwest is using Twitter and Social Media in general, you can begin to see the emergence of new business processes that are different than those developed in the Business Process Re-engineering initiative … or dare I say it, Next Generation? These are agile and collaborative business processes, which will be required of all companies aspiring to be Next Generation Enterprises.

At Southwest Airlines, the social media team includes a chief Twitter officer who tracks Twitter comments and monitors a Facebook group, an online representative who fact checks and interacts with bloggers, and another who takes charge of the company’s presence on sites such as YouTube, Flickr, and LinkedIn. So if someone posts a complaint in cyberspace, the company can respond in a personal way.

It’s also interesting to see how enterprises are sparked into action. A couple - Comcast (b/c of Comcast Must Die and other YouTube campaigns) and Dell (b/c of Dell Hell) - were kicked in due to strongly negative publicity. Others like Southwest Airlines seem to have taken a proactive approach to provide an engagement channel for their customers. Even those that were kicked in, like Comcast and Dell, deserve strong kudos for their social media engagement efforts … it would have been easy to dismiss these efforts as only point cases amongst tens of millions of customers, completely edge. However, these companies took proactive action, and should be long-term beneficiaries of this effort.

Reacting to customer complaints is only the tip of the iceberg when it comes to delivering a Next Generation Customer experience, and embracing customers to co-innovate new products and services, which is exactly what social media platforms such as Twitter, Facebook and others can enable companies to do.

I’ve also found other companies using Twitter in a proactive manner … including JetBlue and Whole Foods.

The future is bright!

After being on the buy and sell side of many merger & acquisition transactions, one thing that is clear is that cultural integration is one of the toughest aspects of bringing two companies together following a transaction. It is the largely unwritten reason for why many (and some will say most) mergers & acquisitions fail. This article about Disney’s acquisition of Pixar in last Sunday’s New York Times highlights a high-profile acquisition success story, in an industry where many M&A deals do not pan out as expected. The intriguing parts of the article had to do with some quotes from Bob Iger, Disney’s CEO, and his philosophies on M&A transactions.

Bob has been on both sides of many deals, and has seen first-hand the time and attention that needs to go into cultural integration, and the consequences of not doing it right. Bob also recognizes that cultural integration is probably the largest predictor of whether an M&A transaction will be successful and meet its original goals.

There is an assumption in the corporate world that you need to integrate swiftly, Mr. Iger said. My philosophy is exactly the opposite. You need to be respectful and patient.

Key to the successful integration, analysts say, has been Mr. Igers decision to give incoming talent added duties. Instead of just buying Pixar and moving on, Mr. Iger understood what made the acquisition valuable, said Mr. Price, the author. If you are acquiring expertise, he said, then dispatch your newly purchased experts into other parts of the company and let them stretch their muscles.

The more deals I do, the more I am in Bob’s camp per the above quotes. It is in our capitalist nature to want to do things better and faster. However, mergers/acqusitions are largely about bring people of different (corporate) cultures together - and this is true more so in today’s knowledge-driven economy than ever before. We certainly want to do things better all of the time, but the speed at which we do it should not be a sole measure, especially when trying to integrate people. The concept of shared experiences, and creating / fostering ways for these to happen, is one of the best culture melding techniques available, and Bob suggests this in the above quotes regarding ’stretching muscles across the company’. Some good things still do take time.

One last interesting quote from the article is below

It took about a year before there was a collective letting down the guard, he said. Initially people were thinking, Is something going to happen?

Even in the best of cases, such as the Disney/Pixar deal, the same dynamics of M&A apply - typically a constant and natural fear that something is about the change or be cut at any time, no matter how well things are going. It takes time even when things are going well to build up mutual trust and respect. The best deals happen when the mutual trust and respect exists, builds over time, and both parties work together over the right period of time, making key decisions along the way to implement the desired change.

Many thanks to Jerry Bowles at Social Media Today (SMT) for featuring me two weeks ago as the Blogger of the Week, and for the cross-mention on SMT’s sister site MyVenturepad. The traffic and suggestions coming from the posts were great and I am still looking for more feedback on my blog layout, and name/brand. I do hate that picture and have yet to find one for my online profiles that I like … wonder what that says!

Across the blogosphere, the topic of “Enterprise Social Software” was hot this past week.

• Fred Wilson asks if the term itself is an oxymoron.
• Sam Lawrence makes a case here on how social software vendors, including his own Jive Software, and SocialText, Atlassian among others, could upend the incumbent enterprise vendors SAP and Oracle, while referencing this article about a recent Forrester report about these emerging collaboration vendors.
• Dennis Howlett debates Sam and makes a case here for why the incumbents will not be upended, and partially bases his argument on this viewpoint on enterprise inertia from Sig Rinde.
• Jeff Dachis of Razorfish fame raises $50mm from Austin Ventures to pursue the social networking application space within the enterprise
• Last, but not least, Oliver Marks provided a good synthesis of this set of conversations.

The buzz is great news for those of us betting on collaboration and social networking as fundamental disruptors to the traditional enterprise landscape and as fundamental enablers for the next generation of value creation from enterprises of all kinds (corporate, governmental, non-profits, and others). It means something is happening, and it surely is.

However, I feel the debate about this “Enterprise Social Software” market is being viewed through the wrong lens. It is a great set of reading, but it seems that most of the conversation can be summarized with the phrase “Where’s the beef?”. This is consistent with ongoing discussion around Enterprise 2.0 continues to swirl around the topic of the lack of repeatable case examples of ROI for wiki, blog, forum and social network applications.

The perspective that I believe is missing from all of these conversations is that the next generation of enterprise applications - Enterprise Social Applications - are not strictly about wikis, blogs, forums, etc. The emerging Enterprise Social Applications market, as discussed in the conversations listed above, should be about how those Web 2.0 capabilities (blogging, wikis, forums, social networks) are applied to applications to solve the business problems of next generation enterprises.

The problems to be solved by and emerging demand for these new applications arise from three underlying multi-decade mega trends hitting large enterprises today - Globalization, the Talent Crunch and Web 2.0. The push toward being global and acting global will force enterprises to have much more agile, open and collaborative business processes, and the applications to support those processes. The same thing is true with the talent crunch which is upon us - as boomers “retire” and the Net Generation enters the workforce, the demands for more agile, open and collaborative work processes and applications will grow dramatically. This is how the Net Generation gets work done. The fact that Web 2.0 is upon us and that wikis, blogs, forums, social networks exist enables all of this - however, these capabilities are not the specific applications which will be the next generation of enterprise applications, or Enterprise Social Applications as coined in the conversations this past week.

Much of the conversation focused on whether the legacy vendors, SAP, IBM, Oracle, will be dethroned by the emerging social software vendors of wikis, blogs, forums and social networks. I don’t think the real debate is about whether the incumbents will be dethroned or not. This movement is not about dethroning the incumbents. They will be embraced, and the true next generation of Social Enterprise Applications will leverage these legacy applications, primarily as data services for the new apps. If we focus on the definition today of Enterprise Social Applications, i.e. wikis, blogs, forums and social networks, then there is a debate as to whether the legacy vendors will replace them or be replaced. In this regard, I tend to agree with Dennis Howlett, that the legacy vendors will lay the tracks of collaborative infrastructure slowly buy surely across their massive customer bases. We’re seeing this happen (with strong anecdotal evidence) already with Sharepoint and Microsoft in the large enterprises, and I would expect to see Oracle/BEA, and IBM/Lotus to be there too. From the perspective of truly different agile and collaborative next generation Enterprise Applications, this is fine either way - the important part is that the collaborative foundations are established and accessible with webservices, and not so much about who is providing it.

The emerging need large enterprises have is to harness and operationalize these collaborative capabilities and Web 2.0 norms into true next generation applications to enable them to remain highly competitive in the coming decades solving problems around global execution, the talent crunch, collaborative customer experience, and collaborative leadership and planning.

So, if wikis, blogs, forums, and social networks are not the next generation of social enterprise applications, what will those applications be? That is exactly what we are working on today with hundreds of our Global 2000 customers at nGenera. Here is an example of a problem statement that we typically see today, with a focus on the Pharmaceutical industry. In Pharma, filling the drug development pipeline is more challenging than ever and the industry is not immune from the talent crunch or the demands of the Net Generation. While a large percentage of the workforce is considering or entering retirement, the demand for new drug development is higher than ever and the challenge for finding new breakthrough opportunities is as tough as it has been. A pharma company can ignore these issues and continue to solely rely on a shrinking in-house staff of thousands or researchers to innovate in this challenging environment and see its global competitiveness erode, or it can take a new, collaborative approach to drug development and talent sourcing. While sticking a wiki in the R&D department certainly will help, it will not be a breakthrough, and to Sig Rinde’s point above, without some level of process and ownership, it will not survive in the enterprise environment or be operationalized more widely in the enterprise.

What the pharma companies need are a true set of On Demand applications for Innovation that can manage agile and collaborative processes of talent sourcing by project - reaching out to millions of scientists and researchers across the globe in marketplaces scattered across the web - to facilitate an R&D process across the ultimate collaborative team of inside and external professionals (some of whom will be “retired” former employees) who aggregated to execute against project goals, and all of this done across many initiatives across the enterprise. Integrations with back office applications will be required. Mashing up web marketplaces where this external talent aggregates is necessary. A process for onboarding the candidates must exist (find, qualify/credential, accept) as must a process for compensating and providing proper incentives. The relatively small, tight internal R&D core drives the innovation and process through the applications, and the worldwide body of available qualified researchers and scientists engage in the process on a project by project basis either directly or through aggregation points mashed-up in the pharma company’s Innovation application.

I believe applications such as this, and the required leadership development, research, education, and process development offerings to support these new collaborative applications, are the future of enterprise applications for companies which seek to be competitive worldwide in the coming decades while navigating the globalization, talent crunch and Web 2.0 waters. Current collaborative applications such as wikis, blogs, and social networks provide us a glimpse into the possibilities, and will likely be an enabler, but alone are not the applications or the answer.