The rise of enterprise marketing

Building an enterprise software company used to be largely about sales, because enterprise software was sourced and purchased by high-level business people. Those business people needed to be charmed and convinced, an activity that was distasteful to many technologists.

Internet-based delivery (“SaaS”, “cloud”) dramatically lowered installation costs, letting individuals or small groups buy software on discretionary budgets or use basic versions for free. As adoption spread throughout the organization, the value of the software eventually percolated up to high-level business people who could write large checks to get features big companies need, such as administration, security, integration, compliance, and support. This ”bottom-up” approach was pioneered by Salesforce and open source companies like MySql. Recent enterprise success stories also follow this model, e.g. New Relic, Yammer, Twilio, and Github. Many of these companies have processes that would have seemed crazy ten years ago – e.g. sales people only handle inbound inquiries or only call customers who already use their product.

Thus enterprise software went from being about sales (one-to-one) to being about marketing (one-to-many). Marketing requires crafting a compelling message, figuring out the right channels and then optimizing. But the most effective marketing is a compelling product that can be easily tried. As a result, as Benchmark’s Peter Fenton said recently: ”We’re seeing a fundamental shift from sales-driven companies to product-driven companies. The companies that are leading the way there let this consumer and product focus permeate the culture of their companies.”

One of the most visible manifestations of this shift is the refreshingly accessible language on modern enterprise websites. Sales-driven enterprise software companies speak the arcane language of CIOs. Marketing-driven companies talk directly to business users (e.g. Yammer) or developers (e.g. Github).

This is good news all around. Enterprises are more likely to get software that incorporates the advances made over the last decade in consumer software. Startups get a shot at creating this software, and get to do so on a fairly level playing field. The product and marketing focus should also attract a lot more technologists who were turned off by sales. The only losers are incumbents who continue to pursue the old model.

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.

The enterprise: buyers versus users

Why does most enterprise technology feel like it is a decade behind consumer technology? For the same reason our health care system is broken. The “user” isn’t the same person as the “buyer”. In enterprise software the user is generally a non-IT person but the buyer is usually, at least in part, the IT department.* (In healthcare the “user” is the patient and the “buyer” is the doctor or insurance company).

SAP bought SuccessFactors today, in a big win for “cloud” based enterprise software. The cloud might sound like a buzzword but is in fact a vastly superior architecture, not because it makes installation and updates easier (although that’s good too), but because it starts to remove IT from the purchasing process, meaning the user and the buyer are, increasingly, the same person.

* A corollary to this is that IT-related enterprise software, i.e. infrastructure, is generally pretty good.