Sep 11, 2012

Four Reasons Why Enterprise Software Got Its 'Mojo' Back: TechCrunch Disrupt

This is my second day at TechCrunch Disrupt in San Francisco.  Disrupt is the largest startup conference in Silicon Valley, attended by many startups, corporates, investors, and press. Mark Zuckerberg gave his first public interview after the Facebook IPO (the conversation drove up Facebook’s price by 4.5% in after-hours trading!) It was amazing to see how passionate & hands-on product person Zuckerberg is. He said the biggest strategic mistake of Facebook was betting on HTML5 and not going native on mobile. I am not sure if all business gurus would agree, but I guess that’s why he’s a billionaire and others are just commentators!

There have been some interesting discussions on enterprise software as well. Yesterday, Reid Hoffman (LinkedIn founder) commented in the Fireside chat that the next wave of IPOs will be enterprise companies with consumer flare. Today, Marc Benioff talked about the growth of (while taking some shots at Facebook and Google!). Prior to that, there was a panel moderated by Leena Rao: “How Enterprise Got Sexy” with Aaron Levie (Box), Kirk Dunn (Cloudera), Todd McKinnon (Okta) and Justin Rosenstein (Asana). The message from all the participants was loud and clear that enterprise software is getting its ‘mojo’ back. Let me outline some key reasons I heard why:

Real Market: I thought the greatest quote of the panel was that ‘enterprise software produces real products for real people to make real money and create real impact’. Enterprise software can help a lot of knowledge workers (100M+ in the US) be more productive – probably creating more change in the world than many consumer social startups.

Design Thinking: Traditionally enterprise software was sold to CIO/ IT. The model is clearly changing to end-user driven purchases including a simple ‘try before you buy’/ freemium option that lets individual users first try out and even buy with their credit card. Dropbox team edition is a great example and so is the Box strategy to target enterprises. All of this meant that the product needs to be extremely simple and intuitive – just like a consumer product – and that puts enormous emphasis on user-centered design. This may be the biggest reason for enterprise becoming ‘sexy’ again!

Fast Cycles: Aaron Levie made the point that some of his customers were using Microsoft SharePoint 2007, which was probably developed in 2005, effectively using a 7-yr old technology for collaboration! The long development and conservative roll-out cycles have been transformed with cloud and mobile, where a 90-day cycle (or shorter) is the norm – helping companies bring latest innovation to the enterprise customers.

Product-centricity: Justin Rosenstein made the point that traditional enterprise software used to be heavily sales & marketing driven (once you have a stable product – as Levie corrected). In the new enterprise world, products need to be adopted by the end-users, placing the onus on the product, instead of the huge direct sales teams & marketing spend to educate the market and corporate buyers.

If you are at the conference, please check out the SAP booth in the startup alley. SAP has established a $155M SAP HANA Real-time Fund and a HANA Startup Forum to build an ecosystem of startups on top of HANA (SAP's real-time in-memory platform for analytics & applications).  SAP has also built several innovative consumer apps on HANA such as Recalls Plus (to help parents track recalls of their kids’ products – my earlier review) & myRunway (for fashionistas – launched in China). Some of these consumer apps could eventually help SAP ‘s enterprise customers engage with their end-consumers through mobile and social apps.

I have seen many interesting enterprise startups at Disrupt and plan to write about some in a later post. Enterprise technologies are clearly not the focus of Disrupt, but it's fascinating to see the innovation and increasing VC activity (Greylock as an example) underscoring the attractiveness of the enterprise market for startups.

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