The 10 Commandments of Enterprise Startups

There was an interesting article on enterprise startups in CIO.com – Enterprise Startups: A Long Road Ahead. I started my career at IBM, but have been doing startups for a while now – and by far most have been enterprise software startups (Actionbase, ConicIT, Correlsense, Itemfield). eXeedTechnology and Dapper were the only “non-enterprise” software startups of the bunch. What was said by the jury in the article (or at least what how I read it) really resonated with me, and the experience I have with enterprise software startups. I think services based enterprise startups are probably different, but I don’t have much first hand experience with them – so this only for software. Here is my list of ten things an enterprise software needs to pay attention to early on:

  1. An enterprise software startup needs a REALLY compelling value proposition for anyone in the enterprise to even consider them.
    • That means you are addressing a KNOWN pain point that hasn’t been addressed before
    • or are drastically lowering the cost of doing things already being done
  2. Unless you provide direct value to the business user (in other words, value that they can see for themselves or their direct reports) you’ll be talking to IT.
    • Even if you provide direct value to business user, unless you can deliver COMPLETELY over the web, you’ll still be talking to IT.
  3. If you are talking to IT – you need for them to understand what is in it for them, not just for the business users.
  4. Points 2 and 3 mean only people that directly benefit from your product will be willing to pay for it – a really important lesson.
  5. Channel sales work only if you are replacing a known functionality. If you are doing something new, channels just don’t work. Later, when you have identified the customer, established the need and method of selling you can start using channels.
  6. Direct selling to enterprises is expensive – really expensive. I believe that is the real reason enterprise software is so expensive – multiple proof of concepts, mutiple stakeholders that keep changing along with the requirements, integration with legacy systems and exitsing work processes – all make for a long, expensive process. If you aren’t selling a product that costs 6-7 figures, you just can’t  afford it.
  7. The big vendors really have a lock on enterprise customers, and have really good, well-oiled sales\marketing machines. They may not have the best products, or even the right products – but even today no one gets fired for buying IBM – and IBM (or any of the other large enterprise software vendors) is really good at selling at all levels.
  8. If you have a tactical product (solving a relatively low level business problem), you’ll have trouble getting people’s attention, if you are selling a strategic product the large vendors will generate so much static that it will be hard to get a message across.
  9. The platform you build on matters – everything else being equal I would choose Linux, Java with a Browser UI (maybe MS if I had to, but only for the UI). This works in almost any enterprise (of course the exact version of each could be a problem too). On the sophisticated UI side, I worry a bit about Flash, but HTML5  still isn’t widely adopted – so if possible I would try and use neither. If push came to shove, I would probably opt for HTML5.
  10. Analysts play an important role – if you are doing something that is already on their radar, make sure they know about you (and like you). If what you are doing isn’t on their radar – the best thing you can do is convince them that it is the next big thing.
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