Enterprise2.0Startup general interest

The consumerisation of enterprise software

By July 11, 2011 No Comments

The consumerisation of IT is a much talked about theme of the last ten years or so.  The definition per Wikipedia is:

Consumerization … describes the trend for new information technology to emerge first in the consumer market and then spread into business organizations, resulting in the convergence of the IT and consumer electronics industries, and a shift in IT innovation from large businesses to the home. For example, many people now find that their home based IT equipment and services are both more capable and less expensive than what is provided in their workplace.

A newer but perhaps unsurprising trend is for enterprise software companies to start adopting the disciplines of consumer internet companies, or the ‘consumerisation of enterprise sofware’.  I had an inkling that things were heading in this direction back in 2007 when I wrote about edge-in adoption of social software at the enterprise, and now I think they are finally getting there.

Here is a list of the relevant ‘disciplines of consumer internet companies’:

  • Focus on creating amazing user experiences
  • Key metrics are customer lifetime value, customers acquisition costs and customer usage
  • Daily/weekly/monthly iteration of the product based on observations of customer use
  • Launch with minimal feature set (minimum viable product)
  • Low cost development leveraging open source software and the cloud
  • Minimal expense from the customer to get started
  • Minimal time commitment from the customer to get started
  • Great customer support

Companies employing these disciplines are winning because they offer a better service for the end customer.  Too many IT projects still fail and by following the above disciplines new wave enterprise software companies reduce both the chances and the cost of failure.  Two big ticks.

This doesn’t necessarily mean that selling has got any simpler though, at least to large enterprises who still have to run complex processes to ensure internal consistency, value for money, and compliance.  Whilst it is undoubtedly becoming easier to make small sales via the web, enterprise sales folk are still needed to land big deals.  Salesforce.com has expensive enterprise sales people and so will just about every other large software company (it is pretty much impossible to be a large software company without selling large enterprise deals).  Ben Horrowitz did a good job of explaining why on Techcrunch:

large companies employ complex processes to ensure that major purchases make sense. These processes generally span many different organizations and stakeholders. It is not unusual for a purchasing decision to include people from many different IT departments (e.g. development, security, operations) and business functions (e.g. Finance, IT, Legal). The decision often involves technical decision makers, economic decision makers, and risk management decision makers.

Often these processes are so complex that almost nobody inside the company knows how they work. Excellent enterprise sales reps will guide a company through their own purchasing processes. Without an enterprise sales rep, many companies literally do not know how to buy new technology products. A top notch enterprise sales person not only knows her customer’s process better than the customer, but will be skilled at characterizing the value of her product to each decision maker independently. This will involve product demonstrations, proof of concepts, complete return on investment analysis and even competitive positioning. The sales rep will work with the various constituents to help characterize the value proposition to their management teams.

It is difficult to do all that on the web.

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