…and why start-ups should want to play with them.  Chris commented on my “Are you hearing me? Who needs a new metric post?” regarding my position that an Attention gathering standard (and more specifically an Attention Engine) would be ideal for Enterprises.  He made the valid points that Enterprises are not friendly to start-ups and costly to build the service infrastructue around that they require.

 I thought I’d answer this here as a seperate post, because this is something I’ve been thinking about and I suspect going to be referring back to regularly in the future.  While I’ve never run a start-up, I’ve certainly been around large Enterprises a lot, worked with them, consulted with them and studied them.  Like individuals, it’s hard to categorise Enterprises with the same broad brush, but I’m going to give it a go here.  I should make the point that none of this is aimed at Chris or his company in anyway.

Here are some of the things start-ups should understand about Enterprises if they want to play (and a bit at the end about why they should want to play).

1. There is no doubt that most Enterprises are risk averse, and start-ups can be risky, however this does not mean Enterprises won’t take risks.  Enterprises will take risks if the rewards stack up.  Start-ups need iron clad business cases AND have to be prepared to let Enterprises validate this for themselves by trialling software and assessing the benefit.
2. Enterprises do not consider themselves an endless pot of gold, in fact most of them are cheapskates.  Don’t expect an Enterprise to pay for trialling your software — they expect and demand as much as 60% or more discount off list price from billion dollar software companies.  If you’re selling to an Enterprise, be prepared and willing to let them trial it for free.  On the positive front, poor payment terms aside (they’ll make you wait 60 days for your cash), Enterprises do pay their bills and will pay what something is worth (see point 1).
3. No-one wants to pay twice for something.  Anyone selling software needs to appreciate that Enterprises have long term contracts with major vendors, may be privvy to information that the general populace is not, and generally have an overall direction they are heading in.  Why should you pay for some new software that duplicates functionality you are likely to get in 12 months, will fully integrate with your environment and have probably already paid for to some degree.
4. It’s changing as the world of WEB 2.0 evolves, but generally speaking, Enterprises like to bring things inside their firewall.  I wouldn’t let this stop you BUT you will probably get faster adoption if you can deploy your technology inside the firewall.
5. Enterprises understand that most of the cost of ownership in software is in the support.  Enterprises don’t implement version 1.0 of something, and the general trend of Web 2.0 start-ups to release pre-version 1.0 software or continual released product that’s really just beta builds, while good consumer sense, is foreign to Enterprises.
6. Enterprises LOVE a good open standard.  As Chris points out, Enterprises will want to integrate your product into their environment.  True LDAP support should be a mandatory minimum.  Make your product as open as possible.

So lets be frank, if you’re a start-up, Enterprises are a pain in the butt, they’ll push you round, demand features which are un-appealling to consumers (who cares about LDAP if you’re an individual) and drag out the terms.  So why bother?

Well there are several reasons I think that Enterprises are worth the effort for the brave:

1. No-one got really rich (apart from Google) off the back of ad-sense.  If you think Enterprises are cheap, consumers are even cheaper still, they expect everything for free.
2. Lots of users and big complex systems lead to lots of big complex problems.  Enterprises are crying out for GOOD solutions that help them address real business issues, and the business issues are not that different from those faced in the consumer world. 

So why bother? Well, if you have:

• A unique solution to a real Enterprise issue that no-one else does;
• If you’re willing to let an Enterprise trial it for a reasonable period of time;
• A solution that is robust and rich in its problem space;
• Support and promote logical open standards which will allow integration;
• Can consider letting your software hop the fence to the inside of the firewall (or are willing to jump a few extra hoops if you won’t);

then Enterprises will pay and they will pay well.

In finishing, not every Web 2.0 solution drives a good Enterprise business case, but those that do should be very open to a key market that I think will ultimately assist them in what start-ups want — to be successful and make money. 

You can make money and be successful in the consumer space only, but if your offering makes sense to Enterprises, then don’t be afraid to play.

This entry was posted on Sunday, May 27th, 2007 at 4:59 pm and is filed under Enterprise, Web 2.0. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.