Should Enterprise Software Be Sexy?

Over the weekend, Robert Scoble set off a firestorm in the blogosphere with his post, "Why enterprise software isn't sexy". To be honest, I didn't quite get his argument. But many of the responses to his post do touch on what I consider is an important issue these days.

Nick Carr of Rough Type does a good job of hitting the issue on the head. He starts with ZDNet blogger Michael Krigsman's reply to Scoble...

As an enterprise software blogger ... I feel qualified to comment on the issue: Scoble’s question is irrelevant and meaningless. Robert Scoble misses this point: unlike consumer software, where sex appeal is critical to attracting a commercially-viable audience, enterprise software has a different set of goals. Enterprise software is all about helping organizations conduct their basic business in a better, more cost-effective manner. In software jargon, it’s intended to “enable core business processes” with a high degree of reliability, security, scalability, and so on ...

When I’m at home using Twitter, a great example of cool consumer software, I want to be delighted, thrilled, entertained, and engaged. When I transfer money through my bank, which is certainly a non-sexy enterprise system, I demand the system work every time without fail. There’s a big difference between enterprise and consumer systems, a lesson I suspect Robert Scoble is about to learn.

Carr then comes back with...

I'm sorry, but I think Krigsman is the one who doesn't understand enterprise software - or at least doesn't understand what it could become. The distinction he draws between business and consumer applications is specious. Are we really to believe that making software engaging is somehow incompatible with making it reliable and secure? That's just baloney.

And...

By perpetuating a false dichotomy between the friendliness of consumer apps and the seriousness of business apps, all that Krigsman is doing is giving enterprise vendors cover for continuing to produce software that's difficult and unpleasant to use. Give Scoble credit. He's asking the right question, in his own strange way.

Nick has been receiving a lot of grief on his post, especially from people who follow the enterprise software space, like the Enterprise Irregulars crew. I was in the enterprise software space for a long time and I'm with Nick. I not only feel that there aren't any good reasons why enterprise software can't look as good as consumer software but I also feel that in the near future, enterprise vendors will have to deliver a consumer-like experience in order to be accepted by young users who grow up using consumer Web services.

Also, as I stated in a recent post, more and more business software start-ups are taking a bottoms-up approach to entering a market by enamoring users before penetrating the enterprise. When taking this approach, they have to remember that they are initially marketing to individuals, not organizations, and a compelling user experience is an important criteria for an individual when they decide to use a new service.

What Is The "Purpose"?

I have spent a lot of time working for start-ups in the business software space. In that space, when you are defining a new product, it doesn't take long before the discussion comes around to, "what is the value proposition of the product?". When selling to businesses, the concept of a value proposition makes sense and it is usually related to some sort of financial benefit -- increase revenues, decrease costs, etc.

Now days, start-up companies in the business software space are attempting to penetrate the market using a bottoms-up approach. Rather than selling "high" within an organization using a direct sales force, start-ups are trying to initially market to individuals. The theory goes if you can get a bunch of individuals excited about an offering, then they can act as your evangelists within an organization as you upsell to a broader set of users. The open source business model is all about this. Suppliers of business-oriented RSS readers, like NewsGator, are also taking this approach.

The important notion with this approach is that you are initially marketing to individuals, not organizations. As a result, I would argue that the "value proposition" mentality is not as relevant. When I, as an individual, decide to use a new product or Web-based service, I am not thinking about "value proposition". I am thinking more along the lines of the "purpose" the new product/service is providing me.

If I step back and think of all of the Web-based services I use regularly, each one has a defined "purpose" in my mind. I use LinkedIn when I want to see if somebody in my personal network knows somebody I am interested in talking to. I use MyBlogLog to check on my blog activity. I use Pandora to listen to music online.

I have been putting this mentality into practice recently as I consult with start-ups, especially to those who are initially marketing to individuals. I strongly encourage them to develop a succinct sentence that defines a clear "purpose" they will provide a user. Having such a "purpose" makes the requirements definition process much easier; without such a "purpose", the requirements definition process can easily lack the focus it needs to be successful.

Where Are the Big Ideas?

Rafe Needleman of Webware posted a rant today entitled, "Where are the big ideas?" In his post, Rafe wonders out loud why there aren't many start-ups tackling big ideas and, therefore, requiring big amounts of cash.

Right now, a small team with no money can start a real online business. If the founders are very lucky, they generate revenue and begin to grow. If they are exceptionally fortunate, they get sold to Google for $1.65 billion. But most of the start-ups we cover on Webware.com will languish for a while in obscurity and eventually die. The problems they are solving are not big enough.

This is one of the reasons that venture capitalists are having a hard time. Many are are sitting on funds of hundreds of millions of dollars, looking for places to put large chunks of that money. But you can't put more than a few hundred thousand into a typical Web start-up without drowning it in funds it can't use. Over-funding a company can kill it, just as surely as starving it of resources.

This is a problem, because if a business can be funded by credit card debt, a competitor can come in and start the same business, and undercut whatever profit margin the first business is relying on to keep the Ramen cupboard stocked. Big businesses have defensive walls around them, and often these walls are built with stacks of money.

These are the businesses that I really like--big plays that take big money and major industry expertise to start. If they work, they change the landscape.

The reason there aren't that many big ideas these days is because it doesn't make sense to raise a lot of money when the probability is greater that a "successful" start-up will be purchased by a large company within a few years, rather than going public over a number of years.

Just take a look at the facts...if you look at the acquisitions made by Google and Yahoo! over the last few years, the acquisition price for the majority of the deals was under $100M or "undisclosed" (which means that it wasn't a large number since they only have to disclose details on deals that have a material impact on their financials).

If chances are a start-up will be purchased before they are worth more than $100M, it makes sense not to raise a lot of money. The more money you raise, the higher the exit price becomes for all investors to be happy and it reduces the options a company has over time.

I'm not saying this is a good thing. As I have argued a few times (here and here and here), I believe there is a fundamental disconnect between the currently liquidity climate for start-ups and the funding environment. Until this disconnect goes away, I think we will continue to see a lack of start-ups with big ideas.

Is Tech Blogging Happening Too Fast?

Anne Zelenka has an interesting post at GigaOM. Entitled, "Tech Blogging: The Web Mind at Warp Speed", the post raises the question about whether tech blogging is happening too fast these days. Anne cites a couple people who feel that it is...

Marketing consultant and blogger Brian Oberkirch suggests that tech blogging happens too fast, without enough thought, and that a decrease in ad spending could have a helpful effect:

A minor correction in the ad market might be the best thing to happen to blogging. Maybe writers would turn away from becoming page mills and boring the crap out of us, and instead, will turn back to value, passion, thinking things through, making connections previously unseen.

Forrester blogger Josh Bernoff recently voiced a similar criticism:

When it comes to blogging, faster is often perceived to be better. GigaOm and TechCrunch are all over the trends, covering the same announcements, often within minutes of each other.

Anne, however, feels differently...

I’m not convinced, however, that better ideas emerge by holding back on them, deeply thinking them, and polishing them until they’re just right. With the global Internet mind, offering more tentative and provisional ideas and doing it faster may be a better strategy than sitting in an isolation chamber, devoid of feedback.

And...

If all tech blogs did was rewrite press releases, they would add little to the evolving understanding of technology. What they do instead is consistently introduce timely information and quick analysis into an ongoing conversation. While it’s not a perfect approach, it can contribute to an incremental growth in understanding — especially when that new information is mixed and mashed up by other writers working at different paces and with knowledge of other spheres.

I've been thinking about this lately. Every day, I spend a good portion of time sifting through the RSS feeds of the popular tech blogs I subscribe to. I am finding that for the majority of them, I view them as "news providers", rather than as "news analysts". I see their value as delivering news to me on a timely basis. I go through their feeds quickly, scanning the headline, rather than looking for their analysis. For this category of blogs, I am thinking of unsubscribing to some of them since they are playing redundant roles in my mind.

These days, I place much greater value on blogs that deliver lengthier, insightful posts. Read/WriteWeb, in particular, is a favorite of mine right now. I read their posts more carefully because I appreciate the analysis they provide.

So, from my perspective, I do think tech blogging is happening way too fast.

I Like the Smell of Roses

The sub-title for my blog is, "Things That Rise 'Above the Noise' in My Mind". Based on most of my entries to date, you could easily conclude that I think about nothing but business/work. Fortunately, that is not really the case, as evidenced by a few recent entries on parenting (here and here) and education.

One of the other things I spend a lot of time thinking about is sports, and in particular, USC (that is, the University of Southern California; not the University of South Carolina) sports. Although the football season didn't quite turn out the way we had originally hoped (when analysts were saying that this team could be one of the best college football teams of all time), the season ended on a good note this past weekend with USC, once again, winning the Pac-10 championship and a trip to the Rose Bowl.

When it comes to football, expectations are very high every year at USC. This is not the case when it comes to basketball so it is a pleasant surprise when the basketball team has a good season, as they did last year. Expectations are a bit higher this year since they have one of the premier freshman in the nation (OJ Mayo). So far, the season has gotten off to a fairly good start but none of this really counts until you get to March Madness.