The enterprise strikes back
2013 is going to be the most significant year yet for enterprise companies. Get ready for it. With lackluster public offerings from just about every hyped up consumer oriented tech company, investors are losing faith. It’s all out in the open now: Groupon hit its all-time low, Zynga’s stock plummeted below the value of its assets, and Facebook is oscillating above and below 50% of its initial IPO price. Meanwhile, Salesforces’ $20B market cap has been climbing for nearly a decade–amazing. Workday’s sustained pop to $7-8B is probably surprising to the founders themselves. And, put your seat belts on for the impending Box IPO–Aaron Levie is fierce.
The time is ripe for the uninnovative “dinosaurs” of enterprise to be disrupted. Salesforce started it by displacing Siebel’s software that had to be installed. Box is doing it to Microsoft’s Sharepoint by making it as easy to use their products as it is to sign up for Facebook. At the same time, the sales model for enterprise companies has shifted considerably. Not every sale requires a long, arduous RFP process where you must convince multiple layers of a large corporation. Software installed on premises is expensive and hard to integrate–creating unnecessary friction. However, the services on the “cloud” can instantly be implemented and utilized while remaining elastic especially in cost. Salesforce helped pave the way for relaxing the security concerns many companies had with their valuable data being somewhere else. Now enterprise companies simply have to convince any person in the company to expense products that will enhance their productivity or help the business grow–just as long as the cost is small enough that no one in legal or IT notices. Starting small, then proving your value over time has made it easier to get in with the entire company later on.
Just as the sales model has changed, so have the ways customers interact with products. The new and “hungry” enterprise companies are built to outpace their market leading competitors. The first shift was moving installed software to the “cloud.” The second shift has been making products accessible to anyone, removing the need to talk to sales. Google has had its own cloud of cheap commodity hardware it runs its software on for years now. The next shift into mobile has begun and the “hungry” companies aren’t standing back watching consumer products pioneer the way. In fact, they’re doing it themselves by getting into the market and taking the opportunity to out position their rivals who haven’t even considered the platform yet.
The displacement of consumers to mobile has created a new challenge: design. Every company, enterprise or otherwise, is dealing with thinking through how to best design their products for mobile. For most of the “dinosaurs” in enterprise, design has never been a part of their DNA. Customer experience isn’t either because once the deal is signed by IT, then it’s up to actual people who will use the product to deal with learning how it works. Would those same end customers put up with that experience with respect to which mobile phone they will use? No, because they are making the decision. Companies like Asana, Stripe, and Box are beautifully designed products that understand the decision makers are steadily becoming the people who use the products. And, they understand it’s difficult for their competitive counter-parts to build in design DNA after the fact. Besides, who wants to be blamed for upsetting an entire customer base that is generating hundreds of millions if not billions in revenue a year. It’s competitive low-hanging fruit.
The enterprise opportunity is rapidly changing with a more efficient sales model, new platforms, and an emphasis for designing products for the people that use them. Additionally, predictable revenue, huge market caps, and new competition culminate into a perfect storm. Levie is right: “enterprise is getting sexy” and 2013 will be the year of enterprise.
Thanks to Laura Savidge, Tim Trefren, Andrew Wei, Nicole Leverich, Bill Clerico, and Aaron Levie for your valuable feedback.