
Enterprise - fookyong
http://yongfook.com/enterprise.html
======
pinaceae
Barrier of entry is a different in enterprise than in consumer (aka social)
space.

In enterprise, the customer _is_ the customer and pays for something.
Contracts, SLAs are in play. Who is the customer for Facebook?

In enterprise, the purchasing decision is not made by the end-user. You choose
to use Facebook or Dropbox. Some middle manager, sometimes a C-level one made
the decision to use Sharepoint for you.

In enterprise, support is expected. 2nd level, 3rd level, something. No
support means no contract.

In enterprise, country borders are real. You want to roll out in Spain? You
need licenses that cover this, need to define support, need a way to roll out
there (requirements, implementation, etc.) and very often you need
localization. And, if applicable, you have local data security laws in play.

Essentially, in enterprise:

1., You need sales people. Highly paid sales people that bring in their
networks. Your website is worth nothing. 80% of your success in enterprise is
sales. Your product is simply not that important.

2., You need to know how to build "product" for your initial target group -
the people making purchasing decisions. Which can be diametral to what the end
users actually need. You need shiny demo features which do not ruin your
product in live use.

3., You need configurability. Nobody, ever, in enterprise uses something out
of the box. The beast with many names (Accenture, CapGemini, Deloitte, etc.)
needs to be fed with the blood, sweat and tears of hapless victims caught in
workshops and UATs. The iPad has disrupted this cycle so profoundly it is
amazing to watch. No pure software solution has achieved this so far though.

Dirty little secret: A team of 5-8 top-people can implement and roll out any
global system. Reality? Hundreds of various consultants running around
creating nothing but confusion. But why does this irrationality exist? Because
global companies hire their consultants to be middle managers or even be
C-Level IT officers. The business model of the big consultancies is
practically HIV - penetrate the customer, infect the host, lower the defenses,
repeat. The various alumni orgs of those firms form strong bonds. Look into
the LinkedIn history of a IT manager and you know which consultancy is being
hired, no matter how bad projects turn out to be.

As stupid as it sounds - enterprise is for grown ups. Garage start ups created
by college drop outs have a competitive disadvantage as it is not the product
that counts, but the right, expensive sales people. Seniority, experience,
personal networks are critical.

~~~
jacques_chester
Most enterprise software is actually small business software that has grown
into the role. You can start with a SaaS that charges thousands of SMEs a
double or triple digit sum, and slowly work up the food chain to the multi-
million dollar contracts.

And there are thousands of such niches. Millions, really. They're all around,
everywhere. Find any office, anywhere, in any business. You will find some
repetitive-but-business-critical proces being performed by someone following a
yellow photocopied guide taped to the wall above the fax machine.

~~~
pinaceae
you're absolutely right.

but, scaling up is difficult.

start in the wrong country and you have a big barrier. you need to start in
the US, no way around it. single biggest homogenic market (language, culture,
legal). your 3 sales people can cover a lot of ground. start in France and
great, once you have France where do you scale out to? Germany? The US? Your
French sales people are likely worthless outside of France.

You see this pattern in enterprise companies. Way fewer in central Europe than
there should be. Germany's SAP made it, Software AG follows. Cegedim in
France. UK has advantage of US-ties. Eastern Europe? Kill yourself (outliers:
Skype, Kasperksy). Qliktech started in Sweden and nearly died. Only after it
was re-located to the US it kicked off.

~~~
jacques_chester
I agree that the USA is the market that matters most; but the second best
starting position isn't Europe -- it's the Anglosphere. Great Britain,
Ireland, Australia, New Zealand and South Africa in particular and I think in
that order.

It's easier to move into the US market from Australia, for example, than it
would be from France. Common language, lots of shared history, ease of travel,
all that stuff.

~~~
pinaceae
one could argue that the UK and Ireland are Europe, but I fully agree - the
Commonwealth countries are second best. don't underestimate timezones though.
UK has a way better fit than Australia when it comes to covering US and
Europe.

~~~
jacques_chester
Oh timezones are crazy. I'm literally on the other side of the planet from the
US east coast.

I'm working on a niche business tool at the moment and it's at the back of my
mind that upon moving into the middle tier, I'll need to think about having
someone in the USA simply to act as level 1 support.

That said, Patrick McKenzie of patio11 fame pointed out that he's using a
virtual assistant service to fill that role. That might be my first port of
call.

/sorta-kinda-maserati-problem

~~~
davedx
I've had a couple of jobs at places in Europe / the UK who basically had a
tiny sales office in the US. One of them was a small business of only around
15 employees total, and they still had a sales guy in LA or NYC.

I guess it would be the same with support. The only job I've worked in a tech
support role in, only had enterprise customers in Europe.

------
jacques_chester
I made a similar point a few weeks ago, though minus the amusing anecdote:

<http://chester.id.au/2013/01/05/on-selling-to-consumers/>

The point is that most of the money in the world is actually in the hands of
businesses. They are using it to do whatever it is they are responsible for
doing in the overall structure of production.

And most of the software they rely on is terrible. Or non-existent.

The reason, though, that everyone works on consumer applications it's easy to
put yourself in the place of the customer (for a similar reason it seems that
by law every dozenth web app firm is peddling some sort of issue tracker
tool). Plus all our hero figures are consumer-facing.

~~~
fookyong
great post.

you, like me, are in a non-US-sized market so I wonder if that has something
to do with it.

perhaps like me you've been watching local, globally-facing B2C startups fail
over the last couple of years when there's tons of enterprise problems to
solve right at home.

~~~
jacques_chester
It's just that people don't realise how big the non-consumer market is. In the
essay I referred to, Hayek fairly neatly demonstrates that quite small
increases in a consumer market can have multiplicative effects on the
structure of production.

In this very thread people are griping about the "difficulty" of selling to
businesses. I don't know what to make of that.

When you sell to a business you still sell to a person, it's just that said
person feels like they are paying with monopoly money. They have a
psychological distance that a consumer just doesn't have.

I'm interested about your observation on the size of our domestic markets
changing our thinking. Possibly. It would be interesting to see where the
Chinese startup scene are focusing their efforts; they are already dealing
with a USA-sized middle class and it will only get bigger.

~~~
CurtMonash
You are not selling to "a" person. You are selling to a group of people, with
a variety of biases and self-interest, not all of whom you will necessarily
even meet. That's what makes sales complex.

~~~
jacques_chester
A lot of the time, there is a particular individual who has the cheque-signing
power up to $X. For such a person there is a psychological distance from the
act of spending -- it's not a _personal_ loss if the purchase doesn't pan out.
Whereas for individuals spending their own money, the simulation heuristic
makes purchases of unexperienced goods or services much scarier.

Hence my "monopoly money" remark.

I think you have correctly reflected that a purchasing decision may have input
from many different parties. But these people matter from a sales perspective
only so far as they influence the decision of the person with the chequebook.

~~~
notahacker
The flip side of that is there's usually little for that particular individual
to personally _gain_ from spending that monopoly money, even if it actually
helps department X cut costs or raise sales dramatically, whilst a
conspicuously bad _change_ to companies' spending patterns may still get them
fired.

------
sachingulaya
I've had my target on two separate pieces of unsexy enterprise apps. One is
the most popular mini-storage management software. It's basically a CRUD to
manage and search available units. It also has some basic accounting
functionality built-in and credit card processing.

I built an MVP, showed it to a friend whose father's company pays 300k/yr for
a 130-site license. It took me about 3 weeks. Even though it worked he told
his son that he didn't think it was possible that I could build something in 8
weeks that could match the software he's paying ~28k/mo to license.

I built the MVP as an exercise in learning a language so I wasn't very
attached to it. I dropped it and went to working on my current startup.

~~~
i386
The problem wasn't that he didn't believe you, he just thought your offering
was too cheap (price and labor). Next time, tell them it took you 6 months
with a larger team and ask a lot more for it.

~~~
sachingulaya
We knew eachother personally before this. The plan was to pique his interest
with an MVP and then decide how to proceed. With no interest from him I
switched gears to one of my other ideas...and its been going better than
expected.

------
michaelfeathers
I heard Cem Kaner say once that software has the "cat food problem." The
people buying it don't consume it, so the quality is low.

I think that sums up the enterprise space well. It's all bought by people who
are not using it and want to be as hands off as possible. That is the core
problem - you have to look good on paper (read: big feature list) to get
attention. It's a space for heavily-bankrolled startups or people who are
creatively repurposing existing software. Mostly the latter.

~~~
apapli
I'm finding more and more this isn't the case (I agree with you that it
definitely has been that way in the past though).

More and more business people are tech savvy enough to know what they want
nowadays, they might get IT in to do some initial work (vendor screening etc),
but any real business impacting decisions are made by the people who
use/benefit directly from the software investment, unless of course you're
selling IT management software to IT departments.

~~~
michaelfeathers
True. It is getting better.

------
pearkes
If the culture[1] developing in Silicon Valley around "lean startups"
continues to be anti sales and marketing it's going to be challenging to land
business from an enterprise customer.

Embrace the sales team. You won't get far without them.

[1] <https://twitter.com/ericries/status/22988803940>

------
jkaljundi
Startups, you don't have to start in enterprise. You can start with SME B2B,
do that really well, and then look at enterprise. Whole B2B is much larger
than the enterprise.

~~~
joshuakarjala
Yes.

In my experience, small to medium sized business, experiencing growth, are a
great place to start.

Typically they have started out using some sort of closed source industry
standard product (Access, Hosted Webshops, eg.) and are now starting to bang
their heads against the wall.

Usually the business owner is affected personally by these headaches, so is
much more proactive on getting them solved. Also you can get into a nice
research/development/feedback/training loop, directly with the handfull of
users, who will be using your work.

------
CrLf
"Every day, hundreds of millions of people go to work and hate the piece of
shit software they have to use to perform their jobs."

The problem is: they will hate it no matter what. Realizing this is the most
important step - IMHO - to understanding why enterprise software sucks so
much, and nobody does a thing to fix it (or isn't able to).

When you build Facebook, your users are voluntary. If they hate it, they don't
use it and you end up with only the ones which happen to like it.

When you build an accounting application for some corporation, your users
_must_ use it to perform their jobs. So... since most of your users would
rather be doing something else - anything else - than using your application,
you see why they have absolutely no good feelings towards your application, no
matter how good it is, no matter what you do. At the very least, for the
nicest of your users, it means work... it means no fun at all.

This is why all enterprise software sucks... People simply give up trying to
build something nice because, in the end, it doesn't matter. Your users will
never _love_ your application, they won't even choose it.

Too negative? Well... just look at any given corporation and cry.

------
jiggy2011
I sometimes think that many of the B2B type products are actually best
developed as open source solutions.

The company in the example could probably have had massive cost savings and
greater efficiency by simply switching this system out for any one of the open
source CMSs and hiring a few people experienced in developing on those
platforms. Of course I appreciate that such things are not so easy in
practice.

Common business requirements are often exactly the sorts of things that are
economical to develop as open source. For example over my business career I
have developed all kinds of mini frameworks , jquery plugins etc for
businesses where these is really little reason (i.e competitive advantage to
the company) for not making these things open source.

A big hurdle in selling to business is also "what happens if the three man
team behind this product get hit by a bus, go bankrupt etc".

An active open source project or a product from a large vendor like Microsoft
gives them peace of mind.

~~~
codeka
I once worked for an enterprise-y software development company. They had an
enterprise-y source code control solution. I can't remember the name off the
top of my head, but just checking out the latest code took _literally_ an
hour.

It was so bad that people who were working together would have one person
check out the code, then create a temporary git repository over it, and
everybody would branch off that. When they'd finished working, they'd merge
all their changes together into one ginormous commit into the "main" SCC.

Actually dealing with merge conflicts and building the software was
outsourced, so nobody cared that these enormous commits (usually made months
after the initial checkout) took dozens of hours to resolve.

It was the most bizarre thing I've ever witnessed.

~~~
jiggy2011
Some of the big ticket tracking solutions are even worse. For example in the
past I have used stuff from "Peregrine systems" (now owned by HP) that was so
bad that actual ticket tracking was done via shared .xls files and we
dedicated a team member each day to putting the data into Peregrine.

That VCS system sounds a lot like just plain CVS (though perhaps under a
different name), I remember checkouts under CVS taking an age.

------
hnwh
this sounds great, but my question as a startup developer, is how would we get
past the iron curtain of these businesses? You basically need to be on the
inside, in order to recognize a problem, and develop the solution. Not to
mention the fact that, if the existing thing somewhat works.. why would the
business want to change for a "technically" better solution?

~~~
trapexit
These are just limiting beliefs.

Don't believe me? Good. Treat them as hypotheses and _test them_. You will be
astonished.

(Except for the last bit about why businesses buy; you're right there. The
reason that big company decision-makers buy is not that the new product is
"technically" better. They buy because they are convinced that the new product
will deliver a better return on investment and also convinced that the
decision will not blow in their face and get them fired.)

~~~
Radim
You mean, build a statistically relevant sample of B2B products and then
"test" selling them to enterprises?

I guess I must have misunderstood, because this is not worthwhile advice :)

~~~
trapexit
The example hypothesis is: "you do not need to be on the inside, or have a
pre-existing connection on the inside, in order to create a successful B2B
product".

How would you test this? Yes, one way is to build B2B products without any
input and then try to sell them. Many people try to do this. This is, as you
pointed out, a really terrible approach.

A much better approach is just to hit the streets or the phones and talk to
potential customers. Maybe you think they'll blow you off (and in my
experience, yes, some of them will). But what I'm asking you to test
experimentally is that 100% of them will blow you off. I have actually tried
this, and the surprising result is that this is simply not the case.

But don't believe me. Try it for yourself.

Once you have people who will talk to you, then you can find out their
problems. Once you know what their problems are, you can see if other people
in that position have similar problems. Pick the most painful one of these
problems, and, with your new industry insider friends to guide you, build an
awesome product.

My big point here is that one should not simply accept limiting beliefs about
what is and is not possible without actually putting them to the test. Do the
uncomfortable thing. Grow.

------
ddrt
Interesting article and I see where the author is coming from. However, I'm
incredibly distracted by the photo of a man clearly about to put a straw in
his eye.

~~~
fookyong
heh. that would be me.

here's the larger version of that pic:

<http://d3br966ilz90nq.cloudfront.net/assets/images/me.jpeg>

the thing almost poking my eye is part of the plastic hoops that form the
handle of the bag. and it's just the perspective - it's not particularly close
to my eye :)

------
grinnick
One of the problems you're going to run into is simply that the switching
costs for an enterprise size company looking to change from a CMS like this
are going to be huge. People are going to want retraining and orientation of a
level that most early stage startups just can't support. That's why with
enterprise software it's not the product that matters as much as the
supporting infrastructure.

------
karterk
There are lots of worthwhile problems to solve in the enterprise space - none
of which can be solved from the comforts of your chair. This is precisely why
many people lean towards B2C. They _think_ that yet another photo-sharing app
is easier to market.

B2B is hard in a different sense. You need to be involved enough with an
industry to learn the way it works and get to know people who you can contact
to sell a better product. If you're just starting out, it's going to be very
difficult to get medium sized companies to take you seriously. It becomes
easier if you already know the decision making person.

------
gomox
This is exactly what we do at InvGate - modern tools for enterprise IT
management, conceived with a modern approach to deal with problems as old as
computers themselves.

------
tragomaskhalos
So true - but it's not just the _end_ products of enterprise software
development that are basket cases in the big orgs: on my previous project,
literally every piece of (client supplied and mandated) software we had to use
- CASE tool, document management system, release management and test / fault
tracker - was a multimillion pound pile of shit for which Google would turn up
a dozen superior free replacements. Funny old world.

------
calinet6
Great advice, there are thousands of problems to solve, and so much money to
be made.

But it's _hard._ And it ain't fun.

------
apapli
Coudln't agree more.

Some comments as a biz dev guy (and very ordinary coder):

1\. Don't feel you need to hire a sales gun with a network. A sales person
with an awesome attitude and belief in your product is quite sufficient. I
sell to mid-market companies (100-500 employees), that is a pretty huge
segment of the AU market and I expect is the same in many other countries.
It's literally impossible to expect to hire salespeople who have great
connections across such a broad space. The best you will find is they can line
up a few "first meetings" in one vertical. Maybe good connections at 1
company, maybe 5, but realistically 15+? Forget it. Any salesperson who tells
you differently is talking themselves up more than they should. The job is
about cold calling, running events, lots of demo's and lots and lots of
discovery, to find real solutions that work for rational business buyers who
won't sign off on something until they see its benefits.

2\. Have a look at some of the faster growing software firms. They are moving
up to enterprise, but often started in SME and the mid market. Start in the
middle rungs and you'll find a big hole - comments on some of these threads
seems to suggest the decision is binary - either small SME's or large
enterprises. The gap in the middle area is huge. You can also generally skip
the complications big consultancies bring with them too, most customers
budgets and corresponding demands are too small for them to get interested in.

3\. B2B buyers care more about fixing their problem than the underlying
technology. IT buyers always prefer to find a "platform", and take bite size
chunks out of the real business problems in a phase 1,2,3,x over months/years.
I know big companies using Mailchimp, because it was initially purchased with
a credit card by a marketer. A good demo targeted to meet the customers needs
(which you have explored previously) gets you much further than trying to
build the perfect solution for IT (unless you are Oracle, SAP, salesforce
etc).

4\. If you're selling SaaS, it's not about a shiny demo with no product
substance underneath. Perhaps if you're asking for $50 per month you can get
away with it, but after a month or two you'll lose your renewal. If you're
asking for $10k per month at least one person's job will be on the line
internally, they will do their research to make sure there is substance to
your claims. Same goes for $1k in a smaller business, it is all relative,
especially in this post-GFC age.

One final comment. Sales people aren't expensive if you structure their plans
right. Their bases should be low, their bonuses should be high. Make it so if
they sell $1M they earn about $250k, you can get away with a sub 100k base.

Sales people are expensive if you pay high bases to unmotivated, un-passionate
people who are just good talkers.

Knowing this, either make a call that you will build a successful business
without salespeople (aka Mailchimp, Atlassian), or ensure your value
proposition and price points are tested enough to support a full timer.
Elastic which might work as a nice "middle" option as well (I'm not
affiliated). <https://elasticsales.com/>

------
michaelochurch
I'm going to avoid the obvious stuff, like the importance of a sales team and
support, and the fact that the decision-makers will never use the product.
Those have already been covered.

The worst thing about trying to sell to the Enterprise is that it's mind-
bogglingly _slow_. The feedback cycle is not there. With a consumer app, you
can start with a rough demo, A/B test it, roll out new features, and scrap
ideas that the market rejects. You don't give a damn about reputation issues
because whatever people say about your product will be buried in 3 months. If
the market rejects what you are building, it will be merciful enough to do so
immediately. Build something else.

When you deal with the Enterprise, expect prospective clients to take _months_
to make up their minds. Half a year isn't atypical. Getting paid on time can
be difficult, too. You also have to worry about bad-faith clients who'll use
their social connections (to nominally "competing" firms) to black-ball you if
they don't get what they want. In B2C, that's some idiot mouthing off on
Twitter. Who gives a shit? At scale, there's no such thing as bad publicity.
In B2B, it can be lights out.

I worked for an enterprise startup that failed. One of the most frustrating
things was that, at the time, I could not evaluate whether the CEO was making
the right decisions. I still can't. "The client needs <X>". Well, then <X> is
what we do. I wasn't in the room with that client. When you build for
consumers, there's enough consistency in aggregate humanity to get a sense of,
if nothing else, whether you're doing a good job. With the Enterprise, the
feedback is slow, opaque, and polluted by invisible political forces within
the clients, so you never know for sure.

This leads into one other thing about the Enterprise. You will hate the word
"requirement". It will make you want to throw chairs. Why? Because 90% of so-
called requirements are nonsensical features that damage the project's
conceptual integrity beyond repair. Ten percent are actually vital, by which I
mean you aren't doing your job if you don't address them. Good luck figuring
out which are which. Start here: [http://steve-
yegge.blogspot.com/2008/08/business-requirement...](http://steve-
yegge.blogspot.com/2008/08/business-requirements-are-bullshit.html)

I am not saying that the Enterprise is a bad place to be. Clients are probably
less obnoxious, on the whole, than investors. The client needs you to solve a
problem, while the investor sees you as a social inferior (a poor, a prole, a
hustler with a hand out). However, I am going to say that the rapid feedback
cycle that you might expect in an entrepreneurial environment is not going to
be there. You can wait 6 months on a deal, only to have it fall through
because of some external event that had nothing to do with you (such as your
contact getting fired, moved, or promoted into a less hands-on role).

~~~
pnathan
As someone involved in enterprise purchasing occasionally, all of this is
true. Particularly notable is the timeframe and the random external events
killing the sale.

If you're going to sell to enterprise, be OK with 2 year sales cycles and
ensure your salesperson is running lots of leads.

