As end users start driving software adoption in enterprises, the result is a mashup between Enterprise Sales and web 2.0 - Enterprise Sales 2.0?
First came web 2.0, then bubble 2.0, and now enterprise sales 2.0. The last of these came to me as I was listening to Con Goedman, head of business information for Shell International, give a presentation at Software 2006. As he spoke of overseeing the transformation of IT’s role at Shell, I realized that what he was describing represented a 180-departure from the practices of most enterprises back in the 90s. And boy was it refreshing!
Whereas in the past, IT decided what software end users would use, Mr. Goedman’s IT group is now letting its users take the lead in selecting their tools. Contrast this with the past decade when buyers—typically CIOs—made software purchase decisions with little input from end users. The result? Millions of dollars worth of software sitting on shelves, because users saw no value in it—and nobody had bothered to consult them.
That’s because back in the 90s, the mantra for most sales and marketing folks was, “Sell to buyers; ignore end users!” I remember a presentation at an Oracle sales kickoff in which the speaker stated that the only way to succeed in selling to the enterprise was to approach the task from “top down”—that is, by calling on the top of the organization (ideally the COO or the CIO). “Don’t bother with the users,” the speaker said. “They have no budgets and no decision power.” Even then, I wondered how many calls a CIO would actually entertain. Apparently many. Those were the days when IT mattered.
But times have changed. These days the above approach rarely works: IT budgets are earmarked for existing suppliers, and CIOs are unwilling to take risks on new technologies. After all, these days, IT doesn’t matter anymore.
If it is end-users who are leading the new adoption cycles in enterprises, it should come as no surprise that the software companies that are making headway selling to the enterprise are open-source and on-demand companies. By their very nature, companies in these categories focus on the end user and enabling the end user to try and use the software with no input from IT. Thus, most companies in these categories target end users in their marketing and sales efforts.
Consider JBoss: This open-source company has become a poster child for enterprise sales 2.0 by generating $50 million in revenue for what is, in essence, support and training. This surpasses Oracle’s J2EE revenues. And when you consider that Oracle’s revenues include license fees, JBoss’s numbers look even more impressive. Some technology pundits estimate that JBoss has been able to displace $300 million worth of license revenues from Oracle, IBM and BEA. So much for Oracle’s famed marketing and sales prowess!
Another company using the enterprise sales 2.0 approach to its advantage is Zimbra. In my last column, I wrote of the numerous innovations this company has adopted to take on entrenched competitors like Microsoft and IBM in the messaging arena. But perhaps the innovation that matters most at Zimbra is its extreme focus on end-user adoption: It has created an addictive interface that turns users into evangelists; end users are able to take immediate advantage of the software (they don’t have to convince entire departments to use it); and they don’t need IT’s support or blessing to use it! This is what I call selling to the user—the enterprise sales 2.0 model in action—and it works: Within four months of its product launch, the company had already announced several customers, including a 100,000-seat deployment at H&R Block.
Will Zimbra displace Microsoft and IBM? Probably not. But it can make a nice business selling to niche markets that Microsoft and IBM haven’t reached. Similarly, will Microsoft, Oracle, and SAP lose their app dominance in the next three years, as Ann Winblad posited at the Churchill Club? Not likely. But by bypassing the old IT guard, new players are carving market niches the big boys haven’t touched.
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Posted by: joseph | September 19, 2009 at 11:46 AM