OK, so I was skeptical when a round of funding for LinkedIn earlier this year established a valuation of $1 billion for the social networking site.

But maybe that's because I didn't truly grasp the possibilities. A company that apparently does is SAP. It became an investor in LinkedIn during the site's latest infusion of capital, worth $27 million. Though it may be a bit preemptive to speculate on the reasons for SAP's interest in LinkedIn, Ian Hendry, the CEO of WeCanDo.biz, offers some interesting thoughts on ZDNet UK.

LinkedIn users often boast hundreds of connections, many of them former coworkers or contacts from previous jobs. They can use the network to stay in touch with these folks, get recommendations (akin to references on a resume), inquire about business opportunities, and generally do the kinds of stuff they might have once performed in physical networking settings such as conferences or meetings. There's value there, but it isn't exactly compelling.

It gets considerably more interesting if you imagine, as Hendry does:

But what if you could then press a button and the contact details for your whole network then move into your CRM system. As your relationship with those connections develops, SAP enables you to attach processes to them to ensure you achieve your objectives and no opportunities slip through the net. Neat. But best of all, all the customer records in your SAP are updated by the customers themselves! No more duff data.

Clever! A number of us at IT Business Edge who are on Facebook and LinkedIn often muse that we could get more value from them if there was some direct integration with our business systems. The "fun, but not so useful" vibe is why I use Facebook mostly to connect with family and friends and rarely use LinkedIn at all. (To our systems admin: No, I wasn't snubbing you. It took me over a month to respond to your invitation to connect because that's about how often I check out LinkedIn.)

When I wrote about Oracle's Social CRM services back in June, one of my main criticisms was that at least some of the services would rely on the willingness of sales people to share contacts and other data with their colleagues. The title of my post summed up my opinion pretty well: Problem with "Social" CRM: Salespeople Want Commissions, not "Community."

In contrast, LinkedIn relies on users' willingness to keep their own information up-to-date and to share their own contacts and other data. Active users of LinkedIn (read: not me) do this already. While I can foresee privacy concerns, I bet most LinkedIn users would OK this kind of access to their data, since letting other users feed it directly into their CRM systems is a fairly logical extension of how at least some of the data is already being used. Writes Hendry:

I'm seeing the power of a system tapped directly in to public profiles where your target market and customers will happily maintain all their current contact details, as well as telling you their likes and dislikes (this could work just as easily on Facebook, where there is way more personal information to mine than there is on LinkedIn). So may SAP be, but I would imagine LinkedIn is seeing what it could charge SAP users for the live connection into its database.

Hendry predicts that other CRM players, such as Oracle, Microsoft and Salesforce.com, will want to get involved with social networks as well.