Somehow the “rules of the game” for the recent consumer software (Web 2.0) seem a lot more simplified than the same for enterprise software. I have read these rules from various sources so I may not be able to identify the sources (that’s not for the lack of attribution). Clearly some rules are very valid in both cases, but as you try to implement these rules, you realize quickly they are not always the path to success. So I thought why not examine these rules and figure out which make sense for enterprise software.
1. Release early: When I refer to enterprise I usually mean companies that make over $1 Billion in revenue. Having sold to enterprises for years I thought I know the rules of the game, but figured the Web 2.0 revolution had changed some of these requirements. Not exactly. Large enterprise still want a highly scalable, robust, secure and “complete” solution. They would not consider a Twitter (with its frequent failures) as a system to pay money for. While at Ariba, we had a alpha version that we called beta and a beta that we shipped as final release to 3 customers. The first few customers literally threw it out. It just did not work and was out too early. It was feature complete & had a very intuitive UI, but would not scale. So the first 3 customers refused to deploy it in production, until those issues were solved.
2. Release often: I have not used Friendfeed a lot, but I know they keep adding new features very quickly. That sounds very cool and seems like they are a company that does things quickly. With enterprise software however a version every other week means user training. I am often asked about the training requirements for customers. “Its simple and needs no training” is what I was told. Not exactly. When you are solving a business problem that’s complex primarily due to the global nature of a large business, users expect training. Think of Microsoft Word. How long have you been using it? Its so easy to use that my 4 year old can use it with no “training” and he does. But try rolling out Office 2007 and you get a training budget that runs into 7-8 figures for most enterprises. Is Microsoft Word “complex”? My son will say No. But over 60% of enterprises are not rolling out Office 2007 since the training costs are higher.
3. Focus on user acquisition then on revenues: I am not sure any enterprise company can realistically go to their investors (VC or otherwise) without a clear revenue plan. I am truly amazed at how many Web 2 startups that are funded have no idea about their business or revenue model. I do know of how Yahoo, Google, etc. all got started without a business model, but they “figured it out” as they went along. But I have to admit, I dont subscribe to that line of thinking. For every Yahoo and Google there are 50 other companies that got started without a business model that failed.
I would love some feedback from some consumer or enterprise software startup entrepreneurs who have successfully followed these rules and achieved success.