Why is enterprise tech so far behind consumer tech? Because it can be.

Brian Manning put it nicely in a comment to my post yesterday about enterprise software:

In my opinion, enterprise technology is WAY behind consumer technology for one reason: because it can be.

In a [B2B] transaction, one good salesperson (the “seller”) only has to sell one person (the “buyer”) on the value of the technology. Once the product is sold, the buyer forces their 50,000 employees to use that technology whether they like it or not. A good salesperson with a good deck can do this fairly reliably.

And a good account manager can typically retain the client for a while; employees usually get used to the product and rarely complain enough for the buyer to cancel the contract and force the seller to improve the product. As a result, an enterprise product can suck and still flourish.

With a B2C product, this is much, much more difficult. The seller has to sell 50,000 individual “users”, one by one, on the value of the product without the luxury of a face to face meeting or 18 holes on the golf course. The B2C model forces the seller’s product to “sell itself”. As a result, a consumer product can’t suck if it wants to flourish. It has be good. Much better than the enterprise product needs to be.

Fortunately, as I discussed yesterday, trends like cloud-based delivery (aka SaaS) are starting to align the interests of enterprise users and buyers.

http://www.visionsmarts.com Benoit Maison

It is not just that the buyer neglects to ask the end-users’ opinion.

The primary purpose of enterprise software is not increase the productivity of the employees, it is to enforce procedures. Purchase limits, approval chains, review processes, documentation requirements, etc, etc. Productivity comes second in many cases.That’s why some god-awful software is widely used. It is not an oversight, it’s a matter of corporate priorities.

http://www.cdixon.org chris dixon

It’s true that many large corporations tend to err on the side of conservatism, including in their uses of software.

http://twitter.com/natetharp Nate Tharp

That lean towards cautious purchases makes it easier for incumbents to grow market share by doing nothing. Hoarding cash by not spending on R&D and only improving/expanding services by gobbling up potential competitors.
FAKE GRIMLOCK

ENTIRE PURPOSE OF LARGE OLD COMPANY IS CONTROL. PROFIT JUST NICE SIDE EFFECT.

http://www.alearningaday.com Rohan

That’s a great point.

It’s also sad though. It seems that if we have the option/can afford to be mediocre, we will..
http://twitter.com/rustlem rustlem

It’s interesting that this is the reverse of how things used to be. Of course, back then, consumers as well as businesses had to spend real money.

http://www.cdixon.org chris dixon

Yeah, historically these things seem to be cyclical, so perhaps enterprise will resurge and take the lead again over the next 5 years or so.

http://www.eqentia.com William Mougayar

Brian made a great point. As I commented in the other post, it’s a pull / push thing. Once your solution is adopted by pull, then you’re winning the consumerization of software inside the enterprise.
http://scalable.typepad.com Brian Manning

Many thanks for the shout out, Chris
Anonymous

More like aligning the interests of enterprise users and vendors. It is rare that “the buyer” is the actual benefactor of the acquired technology.

In enterprise and government, there is a general reluctance to find fault due to the high price associated with such an admission. This leads to entrenchment.

Thus for new vendors, the cloud is a welcome option… allowing for silent and progressive disruption. It’s a better way to demonstrate “better”.
Anonymous

Well, also because an enterprise experiences change as a cost and an individual experiences it as a benefit.

Having 40K employees start seeing a new feature without warning is a baaaaaad thing.

A simple personal example: the DNC flag on a CRM system got pushed to production two weeks before the training on how to use it. Before the training occurred over 20K contacts had been marked DNC by various sales staff. How many of those were correct? 10% by my estimate. How could we find the 18K that needed to be flipped back? We couldn’t. An enterprise contact costs about $6 from a vendor. So that was a $100K mistake.

-XC

FAKE GRIMLOCK

PRICE OF CENTRALIZE CONTROL IS ENTROPY. ONLY FIX FOR ENTROPY IS MORE CONTROL.

GOTO 10. BETTER IS BUILD DECENTRALIZED SYSTEM WHERE ENTROPY DEFUSED BY INDIVIDUAL, NOT AGGREGATED TO FAIL POINTS.BIG COMPANY SHOULD WORK LIKE INTERNET, NOT ARMY.

Anonymous

Fake Grimlock is clearly a successful consultant to many startups and HBR aspiring corps. Cliff salutes Fake Grimlock.

http://www.andrewCbrown.com Andrew Brown

It’s frustrating to see “enterprise software” get lumped in to one big category. There are really two fundamental types of “enterprise software”:
1. software that helps an end user accomplish a task (Google docs, DropBox, SalesForce, Box.net, etc.)2. software the fulfills a business goal, which mostly means back-end business critical infrastructure (think ad servers, payment systems, etc.)The first category is being radically disrupted. The second isn’t, and for good reason.The first category is all about helping an end user do his or her job, whether that be writing a document, sharing documents, managing a sales process, or any other primarily individual task. It’s therefore relatively easy to convince an individual user to switch to a different system- you’re just selling to them as a consumer. There are definitely network effects for some of these products (file-sharing in particular), but adoption can be spearheaded by one person and can spread organically. The second category is essentially infrastructural, and is therefore a classic monopoly. This type of software typically requires the whole company to be on it, has high switching costs, and is often revenue critical. In this scenario you can’t sell to individual users because the goal is not to help these users- the goal is to make more money for the business and/or keep the business running smoothly. It can make sense to buy software with a terrible user experience if it makes up for it by being incredibly stable, well-understood, and feature rich. This is doubly true when the users of the software are relatively low paid, since their time is not worth very much relative to the business impact of the software. If you’re going to build and/or invest in enterprise software you better understand which of these two buckets you fall in. The first is sexy, fun to build, and will get you in TechCrunch. The second is boring, complicated, slow-moving, and controls much of the modern world. The fun part is figuring out how to hack the system to make software that falls into category 2 be look, act, and sell more like software in category 1.

http://lauriekalmanson.blogspot.com/ laurie kalmanson

*all* software should be your category 1. every user is a user — tautological, but true. those billing clerks: mistakes are costly, support calls are costly; multiplied over the lifetime of a clumsy system = huge amounts of dollar waste and human frustration.

http://www.andrewCbrown.com Andrew Brown

I agree with the point that every piece of software should strive for great user experience (for the reasons you mentioned), but that doesn’t mean all enterprise software will be consumerized.

It comes down to trade offs. What is the expected cost of those training those users, their support calls, and their mistakes, versus engineering a better UX? Depending on the numbers of users and the characteristics of the product the answer to that question can vary. You can’t just assume better UX is always worth the investment required.

Another point, which is only slightly related to my argument above, is that the usage patterns of enterprise software are often very different from consumer software. The whole consumerization of enterprise software movement focuses on creating a great experience for the first time user, while often sacrificing speed and ease of use for the power user.

Much of enterprise software correctly gets built for power users, and the first-experience gap is overcome through (often much-maligned) training. This isn’t fun for users, but it can be perfectly rational from a business perspective. However it fundamentally doesn’t work with the process of selling to individual users.

http://lauriekalmanson.blogspot.com/ laurie kalmanson

this pretty much is what i do when i open my laptop: assume better UX is always worth the investment required.
http://lauriekalmanson.blogspot.com/ laurie kalmanson

also (hit return too fast): a strong ux accounts for user knowledge curves; gets n00bs to power users smoothly and differently. training on enterprise is too often required exactly because the ux is broken, not to differentiate the power users from the novices

http://www.cdixon.org chris dixon

I think your distinction might be a little too clean. Some software like Salesforce usually requires a whole team using it to get real benefits. But SaaS delivery has allowed it to percolate up from small teams to larger teams and in turn replace what would normally be considered category #2 software (Siebel). But I think it’s a great point and something I want to discuss more.

http://twitter.com/NateSpeak Nathan Freitas

Great conversation guys. It’s definitely our goal to help end users get their jobs done faster and more efficiently. In addition to that, some of our partnering companies have created completed cloud based Accounting solutions with is pretty exciting to see. Some of our products are meant to be used as a team, and some are great for just one person. It’s been exciting to see how companies are adopting easier applications and I’m looking forward to seeing how the social collaboration piece fits into this space as we move forward. Thanks again!

Irving Fain

Read this yesterday and thought the comment was dead on. Glad to see this conversation on your blog Chris! Lot of opportunity with the enterprise even though it’s tough.
http://lauriekalmanson.blogspot.com/ laurie kalmanson

it’s always more of a challenge to meet user needs when the customer who does the buying isn’t the person who touches it every day, all day.

that said, the gains in interviewing users, knowing users, and meeting the needs of users **and** the business: priceless
http://twitter.com/mudmaps Mark Phillips

Oops. I must have done something wrong settings sales records at Microsoft as my golf handicap is non-existent.
http://www.repeatablesale.com/ Scott Barnett

I’ve been involved in B2B for quite some time (20+ years) as well as cloud and social (not quite as long, maybe 2 years). I’m not a huge fan of Enterprise Software these days, but I’m not sure the B2B bashing going on here is exactly on point. I bet you that if you poll the 50,000 employees working at BIGCO that not all of them like or would use Dropbox, Gmail or any of the other really popular consumer software out there. Yes, it is true that large software companies are building software to a least common denominator – but the main point is, people work differently. If you have software that does something one way (or a few ways), that isn’t going to solve everybody’s need. And if you try to make it flexible to deal with different use cases, you get the 80/20 rule – 20% of your software solves 80% of people’s problems.

The benefit of social/cloud software is two-fold. The first is that the sales “cycle” is infinitely shorter than B2B sales – people vote immediately with their pocketbook (or download) and you can pivot quickly based on what the majority are telling you. The second is that the influencer/decision maker/user are all the same person – whereas in B2B they are all different people (and in many cases, multiple people for each category). They don’t use or vote on your software until they are told to – which is a much different use case.

So, while I love the idea of social software and hope it continues to grow and thrive, I *get* that a large company doesn’t want some users using Dropbox, some using SugarSync, some using Mozy, etc. There does need to be some standardization, and that leads to compromise. I do like what Google and now Dropbox did – where they started with individuals, built out a great following and product, and then later decided to move into corporations – it’s a great strategy, and I hope all enterprise software gets deployed this way some time in the future – but it won’t solve the problem of “sameism” any better than the traditional B2B products do.

http://www.cdixon.org chris dixon

Thanks, great comment. fwiw, I don’t think of what we are doing as “b2b bashing.” For me at least it’s trying to understand b2b better (I’ve learned a lot from the comments) and also where there might be opportunities (e.g. to invest).

http://www.repeatablesale.com/ Scott Barnett

The bashing I was referring to is disparaging enterprise sales reps, saying big companies are just out to milk poor unsuspecting users, etc. I’m not saying those things don’t happen, I just don’t think it’s relevant to the conversation. Large companies have different needs than individuals, and that introduces opportunities as well as systemic problems.

I think the great news overall is that even enterprise software companies need to figure out how to make their software more “liquid” – available to consumer quickly and easily. This gives the customer more control of the sales process and also allows users to try things out without having to pay for a huge install up front. If a B2B company is still trying to “control” the sales and engagement process, I would run the other way. Anybody that is offering freemium, open source, try before you buy (and not the 7 day model, but 30-60 days) is moving in the right direction in terms of engaging with customers. Then the next step is how do you monetize the software and can you be profitable – since “eyeballs” in the B2B world don’t mean nearly as much as they do in the B2C world.

I’m very interested in this thread as well, as it seems we’ve come at this from opposite ends, and perhaps meeting in the middle

http://scalable.typepad.com Brian Manning

Scott, great comments.

The spirit of my comment was not to disparage enterprise sales reps at all. Really, I was simply pointing to the insight that sub-par B2B products can still do well if they have good sales reps because there’s an “agent” that’s doing the purchasing on behalf of thousands of users; i.e. you only have to sell one person or a small group of people to succeed. Whereas this isn’t true at all for B2C products (you have to sell each user, one by one). It’s not to disparage anyone; it’s simply a reality of the system that became clear to me when Chris asked why it seems enterprise tech is behind consumer tech.

That said, there are exceptions all over the place. And there always have been. And more and more companies are leading here by putting their product on the line in a “user first” sales approach as you point out eloquently in your comments above.

On a side note, how the role of the sales rep is changing as more and more companies take this approach is also a topic I find fascinating. I plan to think/write about that in the coming weeks.

http://www.repeatablesale.com/ Scott Barnett

Brian – fair enough… I’ll stop talking about the bashing

Just one more clarification though – you are not typically selling to one person in a B2B sale – you are selling to a team of people, all of whom have a different agenda. You have to learn who the decision maker is (and many people will tell you THEY are the decision maker, but in reality they are not – rookie enterprise sales mistake #1). You need to know who the influencers are (folks that don’t make the decision but have the decision makers ear). And most important, who are your roadblocks. They will smile and say nice things during your meeting, then tell everybody why your product sucks once you leave.

I wrote about this a few months back myself, and do spend a lot of time thinking about this too. If you are interested, my shameless plug is at http://bit.ly/rFu9hr.

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http://blog.thestateofme.com Chris Swan

A few tears ago I summed this up as – enterprise software is sold, SaaS is bought.
Jim Lindstrom

AVC just gave another reason why enterprise tech is so bad. Because it’s more complex, it’s more expensive. Because it’s more expensive, it has a longer upgrade cycle. Because it has a longer upgrade cycle, it’s always based on technologies and design thinking the the consumer space has long-since moved past.
http://www.avc.com/a_vc/2011/12/cheap-willl-be-smart-expensive-will-be-dumb.html

http://www.cdixon.org chris dixon

Yeah that was a really interesting AVC post. Although shouldn’t cloud delivery rapidly improve upgrade cycle and potentially fix this?

http://twitter.com/jrdothoughts Jesus Rodriguez

I wrote this blog post about the state of enterprise a few months ago which coincides with some of your ideas: Enterprise Software sucks but it doesn’t have to: http://jrodthoughts.com/2011/07/07/enterprise-software-sucks-but-it-doesn%E2%80%99t-have-to/
http://blog.teamly.com/about Scott Allison

I understand the overall point being made and agree with it but anyone who’s ever sold to businesses will snort at this line:

“In a [B2B] transaction, one good salesperson (the “seller”) only has to sell one person (the “buyer”) on the value of the technology. ”

There’s hardly ever a single decision maker. Instead you have months of meetings, negotiating hidden agendas, committee or board approvals, multiple influencers to any deal, and then only to discover 3 months in the person you’ve been talking to isn’t the right guy!

http://www.cdixon.org chris dixon

Agreed. I was oversimplifying to make the point that the buyer(s) were generally a set of people who were not necessarily day to day users.

http://scalable.typepad.com Brian Manning

Two other quick additional thoughts on this…

Why is enterprise tech behind consumer tech?

1.) slower development cycles: B2C companies can innovate and release much faster than B2B (often B2B product changes need multiple approvals), “MVP” as a development strategy doesn’t go over well with big companies

2.) many large companies (especially banks) are still on old operating systems and web browsers — many top banks still use IE6. This requires enterprise providers to dumb down their products and allows for less innovation. I don’t think Facebook or Youtube are even operational in IE6
Anonymous

I think another factor at play here is what economists call “Agency/Principal Theory”, applied to the IT department of corporations.
Brian said “In a [B2B] transaction, one good salesperson (the “seller”) only has to sell one person (the “buyer”) on the value of the technology”Comments have pointed out that it takes more than one Buyer, but the point is the same: these Buyers are agents, granted responsibility by the corporation (the Principal) to select a solution. Yet they optimize their own interest, as you would rationally expect them to.I’m now CIO of a Company. When I meet someone, the first question is “how big is your budget” or “how many people work for you”. I was previously founder & CEO of a few start-ups. The questions were more like “how many monthly uniques do you have?”. As CIO, my career is better served by a 9 month Oracle EBS deployment than by a 9 minute NetSuite sign up.This certainly plays a role in the slower adoption of cost cutting innovations in the enterprise world.
http://estatecreate.com henryyates

Good to have you blogging again – enjoying the reading.

Our approach, which seems to be working, is to hit the front end business people (who will be using our product) hard with marketing. They then forward our email to the tech/online marketing person. Once they get enough recommendations we get a meeting, and, as we have been referred by the business this usually overcomes the “we do not need your product as we are building one ourselves” objection/empire building response.
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Chris Dixon