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Tag Archives: enterprise 2.0

Enterprise Software Lessons: The Challenges of Acquiring International Customers

Last night, I was having dinner with some executives from one of our partners discussing their recent successes on acquiring customers and developing enterprise mobile solutions powered by our KidoZen platform in Eastern Europe and Asia. During our conversation, I couldn’t stop thinking that one of the main reason behind our partner’ success is their deep understanding of those markets and the dynamics to effectively execute on them.

Establishing a solid international customer presence is one of the hardest endeavors for any company but it’s exponentially more difficult in the enterprise software space. The main reason that makes international expansion so difficult for enterprise software companies is that customer acquisition, pricing and even negotiation dynamics are really influenced by the cultural and socioeconomic aspects of a specific region. These challenges are not as apparent in areas like North America and Western Europe that share a lot of economic, social and cultural commonalities but it’s very obvious on almost every other case. Underestimating socioeconomic, cultural and historic differences is one of the main mistakes made by enterprise software startups attempting to acquire international customers.

In order to mitigate those challenges, I typically advice startups to focus on establishing the correct strategic alliances with other enterprise software vendors with the right market and business-culture understanding and the professional reputation to be successful in a specific country or region. Even though establishing mutually beneficial and effective strategic alliances is an incredible hard effort, it can be extremely rewarding in the long run. Particularly in the enterprise software space, strategic partners can complement your product or service with the right connections, customer acquisition and delivery processes that will help you to organically grow znc be successful on that market. Attempting to acquire customers internationally all by yourself, can result in an exhausting exercise that will distract you from your main missing or creating great enterprise software technologies or services.

 
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Posted by on February 8, 2013 in Uncategorized

 

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Enterprise Software Lessons: IT Services Keep Gaining Momentum

Yesterday, big data consultancy Think Big Analytics announced a 3M angel round led

by Daniel Scheinman with participation from WI Harper Group. Think Big Analytics specializes on providing professional services around the implementation of solutions powered by on-premise or big data technology stacks.

This founding round is another example of the increasing interest of VC firms in elite IT professional services firms that focus on hot enterprise software trends. Just a few years ago it was unconceivable for a top VC firm to invest on a professional services organizations. Lack or recurrent revenue, long sales cycles, scaling challenges etc were often cited as factors that conspired against the VC interest on these type of business models.

However, the rapid emergence of new technology trends such as big data, private clouds, enterprise mobility, security among others have slowly but steadily beginning to change those dynamics. Given the difficulties for IT organizations to implement these technologies on their own, professional services firms can enjoy of highly lucrative deals in areas that are making a huge difference in the enterprise.

In my opinion, this trend is only going to get bigger in the next few months and we are likely to see more boutique consulting firms raising different rounds of institutional capital.

 
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Posted by on February 6, 2013 in Uncategorized

 

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Enterprise Software Lessons: The User is not The Buyer

Last weekend I was reading a fabulous article by Roman Stanek on which he presented a series of arguments that demonstrate that, despite movements like the consumerization of IT, enterprise software remains very old school. When debating about the article with a colleague, we found ourselves having a very interesting discussions about the hidden factors that still cause enterprises to resist revolutionary movements like the consumerization of the enterprise. Among those factors, there is one that enterprise software startups almost always managed to ignore: in the enterprise, users are not necessarily the buyers.

The intrinsic characteristics of the enterprise software sales model represents a major difference about the acquisition and monetization process between enterprise and consumer software technologies. In the enterprise, software products are typically either targeting hundreds or thousands of users or providing important infrastructure functionalities that will be used by dozens of applications. Either case is sufficient for enterprise software products to be subjected to various approval and compliance processes that go well beyond the acceptance of the initial users.

Why is this important?

Well, as an enterprise software startup, you need to understand the dynamics of enterprise software sales models and surround your product with the right sales models that help it navigate the technology acquisition processes in the enterprise. Here are a few suggestion I found useful:

  • Find a champion: The most important aspect of an enterprise software sales process is to find the right people within your customer’s organization that are so in love with your product that they are willing to champion it’s adoption within the enterprise.
  • Give your champion incentives and ammunitions to sale your product”: Now that you’ve found your champion, you need to offer him the right materials, tools, incentives and other elements so he/she can be effective socializing your product within the enterprise.
  • Reduce friction: As a principle, enterprises tend to resist disruptive changes. If you have the option, make sure your product is easy to acquire in a non-invasive mode.
  • Speak at different levels: Sales processes in the enterprise involve people that are not the target audience of your product. Regardless of whether you are selling to developers, IT Pros, marketing, etc make sure you can present the value proposition of your technology from different standpoints like executive, technical or sales that are easily understandable by the different groups in the enterprise.
  • Be patient: Selling to enterprises is a bit of a chess game, you have to stay patient and make the right moves at the right time.
 
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Posted by on February 1, 2013 in Uncategorized

 

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Enterprise Software Lessons: Fighting IT Paralysis with Innovation

These days I spend a considerable amount of times working with CIOs discussing strategies to embrace modern enterprise software techniques such as big data or enterprise mobility within their organizations. One thing that still amazes me is the large number of obstacles that enterprises still encounter embracing innovative technologies.

The sad contradiction is that, in any organization, you can find talented IT leaders that are eager to bring innovation into their companies. Contrary to popular believe, great developers and managers in IT are also eager for innovation. However, time and time again, these forward thinker leader struggle against processes and policies that were created decades ago in a time on which uncontrolled IT innovation could have been, in fact, harmful to an organizations.

But IT organizations need to understand that those times are gone!

The idea of constraining innovation in the name of security, compliance, stability is simply ludicrous. In the era of cloud computing, open source dominance, software as a service, software virtualization the costs of experimenting and innovating are almost insignificant compared to the potential benefits.

In a nutshell, IT organizations need to move away from the contradictory position of wanting innovation while enforcing the policies to shut it down. The new technology revolutions have brought enterprise software back from the dark ages but IT organizations need the forward thinkers, the innovators, the linchpins to implement great solutions.

In this new renaissance of enterprise software, aspects such as IT policies, compliance rules and business processes should be established to help innovations to be applicable in the enterprise but never to constraint it. At the end, the harm that lack of innovation can cause enterprises in terms of talent, morale, competitive differentiation and even culture are significant larger than any potential damages they can incur by fomenting innovations.

 
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Posted by on January 25, 2013 in Uncategorized

 

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Enterprise Software Lessons: Forget About Virality and Focus on Network Effects

In recent years, the consumerization of the enterprise have caused an emergence of a decent number of enterprise software startups that leverage consumer market techniques to acquire customers. However, that phenomenon have also caused a lot of misconceptions among startups about the customer acquisition dynamics in the enterprise. Arguably, the most notorious of all those misconceptions is about trying to achieve viral adoption in enterprise software products.

Virality is one of those concepts inherited from the consumer market that startups keep trying to replicate in the enterprise in vain. Who wouldn’t want to have the viral effects of technologies like Facebook or Dropbox in their enterprise software product. However, the customer acquisition models in the enterprise make true virality (a la Facebook) almost impossible to achieve in the enterprise.

The fundamental principle of viral adoption is that users of a product naturally engage or attract new users. This principle is fundamentally contradictory with the way most enterprises operate. Even if that wasn’t a barrier, the sales cycles of most enterprise software products break any potential viral adoption cycle.

Instead of dreaming about viral adoption, I believe enterprise software startups should focus on a more achievable element: network effects.

The network effects concept was introduced by venture capitalist extraordinaire Fred Wilson in a brilliant blog post published a few months ago. Essentially, a product with network effects have the ability to form “networks” around the technology. A network is a group of connected entities that contribute to the technology. The main two types of networks in enterprise software products are people networks or data networks.

Classic examples of network effects can be strong developer communities, B2B models that make a company naturally engage their partners in the user of a specific product or data marketplaces on which users contribute data sets that can be used by other users.

Whether network effects are really hard to achieve in the enterprise, they provide a very unique defensible market position for an enterprise software technology. If a bigger enterprise vendor attempts to compete against a product with network effects, they don’t only need to provide a superior technology and customer acquisition models but also figure out a way to compete against the different networks established around the product which is almost impossible to achieve.

 
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Posted by on January 17, 2013 in Uncategorized

 

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2013 for Enterprise Software Startups: A Year of Natural Selection

In the last few weeks of 2012, I received a number of emails referring to a growing preference within the venture capital community for revenue focused enterprise software startups compared to market-share consumer startups. While the argument is way more complex than what can be expressed in the light of this blog post, there is certain true to the fact that the tight economic times and the poor performance of recent consumer-based software IPOs have impacted the consumer VC market.

However, despite this VC love, I think this year is going to be “interesting” to say the least for enterprise software startups. The uncertainty of the world economy, particularly the US markets, fiscal cliffs, the budgets cuts established in most IT departments as well as the large number of startups that raised angel funding and are now competing for a Series A are just some of the factors that, I believe, will make 2013 a challenging year for most enterprise software startups.

Like any other challenging time, this upcoming year offers a unique opportunity for the better companies to solidify their market presence as a lot of the weaker competitors won’t be able to survive some of the phenomenon listed above. Not to sound apocalyptic, but my advice to the enterprise software startup community is to operate as it we were expecting another economic downturn. We certainly already started doing that on our side. Here are a few of the aspects I consider relevant:

Focus on Revenue

If driving revenue wasn’t your immediate goal, now it should be. In 2013, focus on finding and nurturing the revenue producing engines of growth of your company. Discovering the different avenues by which enterprises can acquire your software will provide you with the necessary resources to keep growing during economically uncertain times while building a loyal and committed customer based.

Focus on Organic Growth

These are not the times to foment rapid growth in order to just capture market share. In my opinion, this year, enterprise software startups should focus on growing organically based on revenue and optimize for being extremely efficient operationally.

Target Relevant Markets

These are great times to be in the enterprise software business. With revolutionary technology movements happening in areas such as cloud computing, mobility, big data, gamification, etc the opportunities for building relevant enterprise software companies are tremendous. However, with the uncertainly of the economy, I believe enterprises will invest on the areas that are key to their growth and set everything else aside. In that sense, enterprise software startups that are targeting mission critical areas are likely to receive a lot of attention from customers while the others would have to wait for better times.

Go After the Big Guys Money

Tough economic times can affect the big enterprise software vendors more than any other startup. While the big enterprise guys struggle to convince companies to spend large sums in complex enterprise solutions, leaner, more efficient and technologically superior startups can find an opportunity to capture that customer based with more attractive solutions.

These are some of the key advice I have for enterprise software startups in 2013. I have a lot of ideas about this topic but I will save those for a later post.

What about you?

Any words of wisdom for enterprise software startups in this new year ?

 
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Posted by on January 3, 2013 in Uncategorized

 

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A Recipe for Failure: Big Egos and Mediocre Talent

A lot has been written about how big egos are one of the most harmful aspects in teams and companies. Typically, people associate big egos with individualisms, selfishness and all sorts of other elements of not team players. In my experience, the truth is a little more complicated than that.

While I agree that big egos can almost always be somewhat harmful to team dynamics, I think they can be used as a catalyzer for many aspects of the team if they are backed by the right level of talent and accomplishment. On the other hand, I’ve always find that the most harmful and vicious type of big-egos are the ones coming from mediocrely talented and not accomplished people.

My reasoning here is very simple: For the most part, talented and accomplished people have high aspirations and don’t get let their egos get on the way of small things that might impede them to accomplish great things (that can in turn bust their egos even more J ). Under the right conditions, highly talented folks can use their egos as a motivator and drive the rest of the team with them.

Contrary to this group, you will often encounter people that are not very talented, haven’t built or accomplished anything worth talking about in life but still manage to nurture a big ego related to some minor achievements that, sometimes, are relevant to people that share their same limited vision of the world. I find these types of people the most harmful in a team environment. As anyone with big egos, the mediocrely-talented folks would love to be successful and accomplished but lack the talent or vision to do achieve that by themselves and also the character to rely on more talented people to lead them. Instead, mediocrely-talented people operate in a sort of small distortion field and always try to drive attention to themselves related to not important things.

If you are working on a team environment, you are likely to easy identity the mediocrely-talented people with big egos. They are the ones arguing about the non-important things and constantly highlighting how hard they are working on that problem that nobody cares about. They are the people that think that everyone else around them is an idiot but still can’t manage to deliver anything great and always have someone else to blame for their failures (most likely the rest of the team). I’ve certainly encountered a few of those in my professional career and so have you.

Whether you are building a business or delivering a great project that you care about, my advice would be to, without hesitation, get rid of the mediocrely-talented big egos around you. They will only cause harm and, like any other mediocre soul, they will always find pleasure working on some other non-important thing that they can take all the credit for.

 
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Posted by on October 11, 2012 in Uncategorized

 

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IT Solutions Providers Still Don’t Get The Consumerization of the Enterprise

For decades, enterprise software was commercialized using a top-down approach that required long sales cycles and the blessing of the IT department. In recent years, the enterprise software industry has witnessed companies embracing consumer friendly product and commercial techniques to simplify the user experience and delivery models of their products. The industry has referred to this phenomenon as the consumerization of IT and has triggered a renaissance in the enterprise software industry.

While the enterprise software models are constantly being improved to drive more innovation and simpler delivery models into the enterprise, the IT services industry seems to be stuck in the same mindset of the early 2000s. Even though most IT consultancies and system integrators have been relatively successfully embraced the new enterprise software technologies, the solution delivery mechanisms, sales cycles and customer acquisition models don’t seem to have changed at the same pace of its technology counterpart.

Even when embracing new technology trends such as enterprise mobility or big data, most IT solutions are still delivered in the same top-down painful approach that requires slightly long sales cycles, formal vendor evaluation procedures and the blessing of IT departments. In addition to that, most IT solutions still get delivered in the traditional models on which the solutions is implemented by an IT solutions provider and later transition to the customer for maintenance, support and future upgrades.

While this model will still be relevant for years to come in the enterprise, I am of the firm opinion that IT services organizations should start drawing lessons from the new enterprise software ecosystems and modernized their delivery models. In some sense, the complexity of the IT services business models and solution delivery models can be very harmful to the enterprise software ecosystem. Aspects such as leaner delivery mechanisms, simpler engagement models, recurrent and affordable pricing models and the ability to support and enhance IT solutions in a more agile way bypassing a lot of the red tape imposed by IT organizations are going to be at the center of the next generations of IT solution business models.

I will share some more ideas about this topic in a future post.

 
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Posted by on October 8, 2012 in Uncategorized

 

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Enterprise Software Lessons: Simple Is Easy to Understand but Hard to Build and Hard to Sell

Every other startup in the history of enterprise software claims to have the simplest solution to the domain problem they are solving. Seriously, have you ever heard anybody, even Oracle or SAP, say that their software is complex to use while selling to a customer??????

Psychologically, the reason why everyone claims to excel at simplicity if because simplicity drives adoption because it and removes friction from end users to embrace your product. Marketing aside, we all know that most enterprise software is not simple because the complexities of the problems in the enterprise domain. More importantly, as a startup, you need to very conscious of the fact that simplicity is very hard to build and really hard to sell.

This seems like a very simple statement but it’s really not. Striving for simplicity, requires a methodical engineering and user experience effort to hide the complexities of specific business or infrastructure interfaces behind very intuitive interfaces. With our latest product(www.kidozen.com ), we literally obsessed about reducing each one of its capabilities to its simplest representation and still managed to not get it right a lot of the times.

Secondly and most important, a lot of entrepreneurs mistakenly associate simplicity with reducing the number of features in a software product. While that could be certainly the case in the consumer market, the story is a bit different in the enterprise. For years, enterprises have acquired features based on feature richness and have even established processes such as RFI or RFPs solely intended to filter out vendors that can’t check out a few boxes. A lot of times, striving solely for simplicity might not be enough to convince enterprises to give you money for your software and you have to find the right balance between simplicity and feature richness.

Simplifying problems in the enterprise is not an easy task and some of those problems are far from being simple. As an enterprise software startup, my advice would be to attentively listen to your customers and domain experts while designing new features. While simplicity will always have its detractors, customers can provide a great level of insight about the nature of the problems you are trying to solve. While achieving simple solutions to complex problems will speak highly about your product engineering wise, stay aware that it might also impose additional burden during the sales cycle trying to convince customers that simple is better than complex.Who knew…..

 
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Posted by on October 4, 2012 in Uncategorized

 

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Can a Startup Be Successful in Both the Enterprise and Consumer Markets?

In the last few years we have seen an explosion of enterprise software startups that are embracing consumer technologies and delivery models to revolutionize the enterprise software ecosystem. The industry has baptized this phenomenon as the “consumerization of the enterprise” and has produced complete industry segments such as enterprise social networking, gamification or enterprise mobility within the enterprise software market. In the middle of this phenomenon we can regularly find people within large enterprises that use consumer based technologies to do their job and bypass the complexities of the equivalent enterprise technologies.

All these factors have made me questioned if a startup can be really successful in both the enterprise and the consumer market. At this point, my answer would be that is possible but highly unlikely.

The financial attractions and the clear opportunities for building meaningful business in the enterprise market, have drawn more and more consumer-focused startups to attempt to make inroads into that space. By and large; most of those attempts have resulted on either failures or mediocre successes. From large companies like DropBox to a decent number of the social and mobility players, we’ve witnessed consumer startups continuously being unsuccessful trying to growth a presence within the enterprise. It certainly has taken giants like Google or Microsoft years to be relevant in both the enterprise and consumer markets.

Without doing a forensic analysis, I believe we can trace the roots of most of these failures to the drastic differences between the technical DNA and the business models of consumer and enterprise software. As a startup, defining a successful business model and capturing a solid market segment is a very difficult endeauvor that will consume most of your time and resources. Trying to be relevant in drastically different areas such as the consumer and enterprise markets will entail an exponentially higher effort that can, sometimes, drive the company in completely opposite directions in a lapse of a few weeks.

Even though there are a few exceptions to this rule, I don’t think a startup can be really successful in both the enterprise and the consumer markets without hurting their identity and customer base. After chatting about this topic with a few VCs friends and other executive advisors to companies, some of them have bluntly confessed that they often see a startup trying to tackle both the enterprise and consumer markets as a clear sign of a lack of vision and execution focus and a clear recipe for disaster. In my opinion, as a startup, is always better to stay focused on a specific market, gain solid traction, learn some lessons and try to expand into different areas from there.

What do you think? Can a startup be successful in both the enterprise and consumer markets?

 
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Posted by on October 1, 2012 in Uncategorized

 

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