Three Ways Enterprise Software Stays the Same
As enterprise software moves into the world of SaaS and consumer technology innovations invade the workplace, how we design, build and sell business technology both changes fundamentally and remains exactly the same. Do you know how your company needs to change? And how to hold on to the fundamentals that work?
Extremely creative start-ups have folded or only realized moderate success due to the false assumption that what works for consumers will work for the enterprise. On the other hand, traditional enterprise software providers that assume the consumerization of IT will not change their business may be at risk as well.
I have found that there are three fundamentals about enterprise software that have not changed and probably won't (for a while):
1. Enterprise IT buyers prefer to buy from a person. No matter how much digitization permeates our lives, people will continue to make large software or software as a service purchases from people they like and trust. When IT decision makers trust a person selling a product, they trust the product and the organization, too. That's why successful salespeople are always successful, regardless of the territory or company they represent.
Net net, enterprise software companies have always and will always sell most effectively via an enterprise sales force and/or a partner network.
2. Security, compliance and management still matter. IT technology restrictions may not seem logical to the user, but the need to mitigate risk and comply with requirements is real. Adding the word "teams" to the end of consumer software does not make it ready for business. Tools to manage tens of thousands of users, if not hundreds of thousands, in an efficient manner are essential to enterprise software.
Mid- to large-sized organizations, particularly those that are publicly traded, face a fair bit of regulatory pressure. A technology provider may be highly secure and have a terrific consumer following, but if it doesn't meet the compliance bar, it will not be blessed and made a corporate standard by IT.
3. Product roadmaps can't be hidden from customers. IT needs predictability, and enterprises will continue to demand a certain degree of transparency from their SaaS providers. SaaS companies used to the consumer market risk losing enterprise customers if they introduce new features by simply rolling them out to users. Enterprise customers need to know what's coming.
The Six Assumptions
Now that we know what stays the same, how will the new world order of SaaS fundamentally change enterprise software? Here are six assumptions you will need to embrace to succeed in the SaaS world:
1. Sloppy user experiences won't be tolerated. Users will go rogue to be more productive and more mobile. An enterprise software company that designs for IT and neglects to create a delightful user experience will lose when it comes to adoption. Emphasis on product usability and design will separate the winners from the losers in the world of SaaS.
2. Simplicity trumps feature-rich. For decades, enterprise software companies have jammed more and more features into their product to meet every IT and user need. Successful companies in the mobile-first/cloud world tend to do one thing really, really well. Keeping the product simple and elegant will trump a complex, comprehensive solution that no one uses.
De-featuring will be as important as adding new features. Taking out features that only 2% of the population uses, makes the experience less cluttered for 98% of users. At Syncplicity, we focus on interaction flows to increase usability instead of piling on more features. If it takes a right click to find a function in a long list of options, a product manager screwed up!!
3. Instrumentation makes simple possible. Knowing what features users actually use is a core part of product design. We use instrumentation to measure how people respond to what we build, we iterate, we repeat. Our goal is not simply adoption of our solution, but engagement. Unlike traditional enterprise software, SaaS provides deep insight across the entire customer base about what users find most helpful. By bringing the best to the top, we continuously make our tool easier to use.
4. Users expect continuous improvement. An 18-month product release cycle is a thing of the past and companies that fail to respond quickly to market demands will not persist in this new world. Users want constant improvements to the way they work without radical changes that require retraining or that disrupt productivity. Changes that improve workflow without interrupting it will make your enterprise software indispensible.
5. Subscription pricing will replace perpetual licenses. One of the big changes in enterprise software is the shift from perpetual licensing that hits capex budgets to subscription-based pricing that hits the opex budgets. Buyers easily renew subscriptions for enterprise software with high levels of adoption and engagement. Sellers with products that add value and delight users will gain long-term customers and a continuous revenue stream. Software that does not solve a user's problem will not get used, and the subscription will be cancelled.
6. Customer success is a C-level priority. When the risk shifts from buyer to seller, the buyer has to make user engagement a top priority. A customer recently told me they had no problem paying good money for software that delivers value, they just have a problem paying upfront for technology that they are not likely to use.
We encourage new customers to start with a 25- to 50-seat pilot. Our customer success director works with the first users to get a feel for the benefit that the service brings and then helps IT scale their success. Any enterprise software company that doesn't have a customer success director who reports directly to the CEO or general manager should think long and hard about changing that immediately.
These material shifts in philosophy and operating models will affect all enterprise software companies. Companies in denial or unable to change due to market pressure will not be able to make this shift and their days are numbered. Are you seeing these shifts within your organization? Where are you finding challenges? I would love to hear your thoughts.