The following is a guest post by Denis Pombriant, CRM industry analyst, author, and CEO of Beagle Research Group.
Why is enterprise sexy again? I take a long view of the question and position it within a macroeconomic trend. The short answer is that enterprise software is sexy again because its time has come around again. But here are some details to consider:
- More than anywhere else, enterprises live and die on the saying that they spend money for only two reasons: To make money and/or To save it. So we are witnessing a paradigm shift, which your question alludes to. Conventional, or I suppose we must call it legacy, enterprise software was built for a paradigm whose major attributes included client-server as state of the art, manufacturing as the primary business activity and one size fits all products. That’s all gone.
- We are also at the end of a macroeconomic wave often called a Kondratieve Wave, or K-wave for short, whose major attribute was information technology (IT) as a competitive tool. IT has become so much embedded in the fabric of business that it is no longer a disruptive innovation or differentiator. You either have IT or you go out of business.
- The end of a K-wave usually brings a collapse of prices as everything commoditizes. As your products lose their ability to command high margins, your only choice is to get lean or go home. Companies that elect to go lean use information technology to shave cost. Big companies need more technology than any others.
- The end of a K-wave (which can last 50-60 years) implies a new beginning. But it takes time for a new wave to spin up to the point where it can support the huge demands of the enterprise. Salesforce and NetSuite are each over ten years old and only in recent years have they become successful at penetrating the early adopters of the enterprise. Social solutions are less than ten years old. Twitter was founded in 2006 and Facebook in 2004. It has taken a long time for them to scale to be able to support enterprise volumes and equally long to demonstrate value to the enterprise.
- The new enterprise business processes that will demand increasing amounts of these and other technologies are only now being built out. Until there were tools resident in the cloud, able to collect and crunch massive amounts of data it was futile to try to imagine new business processes but now imagination can take wing. A great example is Zuora, which has invented subscription management. Zuora couldn’t have been imagined until cloud computing and SaaS became successful and companies became aware of the pain of doing business in a subscription world with manufacturing oriented ERP systems. See my book, “The Subscription Economy: How Subscriptions Improve Business” and pay attention to the last chapter on metrics. Most of the metrics don’t even make sense if all you know is ERP.
So, why is the enterprise sexy again? Its time has come again. There is a new business paradigm to be addressed and there is money to be made and saved by those who get there first. Enterprise is sexy because money is.
Denis Pombriant the founder and managing principal of Beagle Research Group, LLC. His work appears in most major CRM publications both in print and online, in North America and in Europe. His new research on social media adoption and benefits with Esteban Kolsky was published in August. His new book, “The Subscription Economy — How Subscriptions Improve Business” is available on Amazon. Pombriant is always working on a book and he maintains an active research, writing and speaking calendar. He lives and works near Boston.
Special thanks to Craig Rosenberg, CEO and Editor of Funnelholic Media for connecting us with Denis.