Back in 2006, Jim Lavoie, president of Rite Solutions, a Defense Department software contractor, wanted his employees to play a more active role in innovating new ideas. But he knew a top-down approach from management ordering such behavior wouldn’t work. “Organizations that are smart enough to ask employees for ideas know that the best approach is to do it in a fun way,” he says. “If it’s not fun, it’s work; and if it’s work, it sucks.”

So Lavoie created a game called Mutual Fun. Employees are given virtual money they can invest in ideas created by themselves or co-workers. If enough people in the company buy into an idea and it comes to fruition, those that have invested earn more money. Top earners appear on a leaderboard for all the participants to see and rewards for successful new products or services can be incorporated. Mutual Fun took off and now Rite Solutions sells Mutual Fun as a cloud-based software-as-a-service business application.

Rite Solution’s Mutual Fun application represents an emerging area dubbed “gamification of the enterprise,” which means incorporating game-like features to business applications or settings to encourage collaboration or engagement. It’s a potentially big industry, some researchers predict. Constellation Research analyst R “Ray” Wang predicts that by the end of next year, half of social collaboration tools will have some competition, reward or game elements in them. Gartner predicts that by 2014, 70% of Global 2000 organizations will have incorporated gaming techniques, such as competition, recognition or role-playing, in at least one application.

“The big issue is that everyone’s looking for a way to get people engaged,” says Wang. “Everyone’s looking for the things that will influence behavior.” Competition and jockeying are a natural human traits that can be used to encourage people to do things they may not have done before, he argues.

It’s a young and developing market, Wang says, but there are already a handful of companies offering platforms to build competition, reward and game-like features into business applications. Some of the bigger players include Badgeville, Bunchball, Big Door and Gigya, and Wang estimates $100 million has already been invested in the market. More established players in the collaboration and ERP market are evening getting in the game. Salesforce.com has an application named Nitro, which was developed by Bunchball and incorporates game mechanics into tracking sales figures. Its Chatter feature, which is the messaging platform in the software, has leaderboards that show which employees are most active on the site. Jive Software, a collaboration platform, also has a Bunchball-powered application that involves status levels, badges, team-based goals and competitions.

Early adopters of game applications have been across a variety of industries, from human resources to marketing and sales, Wang says. The idea can be used for both customer-facing programs that build a company’s brand or encourage potential customers to use a business’s product or service, or for internal collaboration use, such as in the Mutual Fun program. On the technology side, Wang says the requirements are fairly simple, ranging anywhere from installing a program that runs either on-premise or in a cloud-based software as a service model, or building customized applications using one of the platforms on the market already.

There are some skeptics, Wang admits, to the idea of bringing “Monopoly”-like fun and games to an enterprise setting. But Wang says fundamentally gamification of the enterprise is about taking a new approach to solving an old problem: It’s a way of encouraging employees and customers to engage with the business. The difference today, he says, is there are tools to automate the process and track its success. Like with the consumerization of other IT functions, such as the trend of employees bringing their own devices to work or using their personally preferred applications, businesses are trying to find ways to incorporate these functions into business processes and applications for the benefit of the business.

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