Last week I did several reference calls on a new project we were looking at in the enterprise IT market. In each case I was speaking with a senior IT executive at a large financial institution. The calls were not to the company's existing customers, but rather to people I just felt would be thoughtful on the company's market opportunity.
As it turned out, each had actually evaluated the company's product and they started out the conversation by saying how impressed they were with the company's technical approach, how it was really innovative and superior to other solutions, and how much they liked the company's management team. So far, so good.
Then I asked the obvious next question: so did you buy the solution? In each case, the answer was no. The why behind the no, however, is what is illuminating on some of the recurring challenges for traditional start up enterprise IT companies. Although they used different words, the consistent themes were:
- We went with our incumbent vendor. We know their solution is not as good, but it is good enough and it is already integrated into our infrastructure and we know how to work with them.
- This project, while important, was not high enough on our priority list to get everyone's attention. Given tight budgets, the only new initiatives we are doing relate to driving revenue or addressing pressing regulatory changes in our business.
- The company wanted to do a paid pilot with us to prove how much superior their solution was, but given a pilot required standing up new iT infrastructure and integrating into some of our core systems, this was a significant undertaking and not something we were willing to do given point two above. Further, the pilot was required to demonstrate the business case which left us in a Catch-22 situation.
Many of the takeaways from this conversation are the same as I wrote about two years ago in my long enterprise IT post, but I felt they are worth repeating in the light of this conversation. First, if your product/market focus requires a traditional enterprise IT approach, which for me means high touch direct sales with a product that requires some level of IT support and integration, you better make sure that:
- Your "superior solution" is significantly superior. As in 10 times better, not 50% better.
- You are focused on a company's top three strategic initiatives, because nothing else is going to get funded in amounts or in a timeframe that will make you happy.
As you have likely figured out, these two things are hard. In the fast paced technology world, sustainable 10x product differentiation is uncommon and fitting that with the ever-shifting strategic priorities of large organizations is even harder.
The alternative, of course, is to think creatively about ways to reduce the friction in the adoption process which is why we continue to be attracted to open-source, freemium and SaaS business models. Instead of the conversation I had above, imagine if the customer was able to download/ sign up for the company's product - without consuming any IT resources or getting into a lengthy procurement cycle – and then use the product and see its value. If the product was easy to use and understand, did not require deep integration or if it did, the integration came "pre-built" via some partnerships, the potential customer would have been able to develop its business case and pre-qualify themselves as a relevant customer. Thus they would consume minimal resources from the vendor until they raised their hand and said, I am ready to buy. While this is by no means easy, if you have the right focus across your company in terms of product management, development and sales and marketing, it is likely an easier approach than trying to find that magical 10x better product that meets your customers top strategic priorities in an era of constrained budgets and shifting priorities.
Hazard Lights 
I meant to respond to this weeks ago, but was sidetracked. A friend of mine got me thinking and I was reminded of this blog, so I figured I’d come back to it.
I ran the tech of a SaaS for many years that had to serve enterprise customers (particularly very large law firms and their clients — very large financial firms). We were a VERY new way of doing things for them and there were many hurdles to overcome. A few lessons I picked up from that.
1. The Enterprise Sales Game – SaaS benefits from having really cool self-provisioning abilities. These are good for Enterprises, but they want you to have a sales person and trainer physically onsite for deployment/support even if there IS no actual deployment. They’re used to having people they can talk to about sales and about training and about support. They don’t just want to send an email. What we found is that even if they client could do EVERYTHING online, they still wanted us to engage them as a traditional IT vendor, as if we were HP.
2. SLAs… And mean it – Even if you know that your uptime is better than their IT guys, they’ll want it in writing. This back-and-forth of contracts is a pain for the sales process. If a tech startup deals with an enterprise, it better have the ability to handle SLAs and negotiations. Like the above, self-provisioning is great on the tech end, but nothing in Enterprises is self-provisioning. It also means that the startup needs to have done lots of paperwork — proof of security audits, security questionnaire, technology questionnaire, etc. The turnaround time for this stuff is quick (a day or two) because enterprise organizations expect this stuff to be done. After all, HP has it done, why not you?
3. 10x better — totally agree. The startup needs to have at least one feature that no one else has AND it has to be a feature that translates directly into money. We had a type of searching that no one else had that saved them 100x the work. That translated into money. That was a good thing. It was hard to argue with the clear dollars and cents.
4. Once you get one big name, make sure they let you use it — We got two big cases early on: Oklahoma City Bombing and MS Anti-Trust. We got permission to use that in our material. That was enough to make other enterprise/government organizations start to trust us. If we were good enough for them, we’re good enough for anyone else.
5. You’re really a 24/7 operation — Enterprise customers, especially enterprise IT, expect maintenance and such to be done with 0 downtime or during times like Christmas or 4a on Sundays. If you’re serving an enterprise IT client, make sure your own staff in ALL your divisions (Customer Service, development, Infrastructure, etc) has some sort of fast-response on-call system. Not just an answering service, but being able to talk to an expert in 5 minutes.
6. SME – Subject Matter Experts in the client’s space are important for the sale/customer relationship. We were in the legal space, so we hired lawyers for much of our client interaction. Made the senior management of the client happy because they figured were weren’t just IT folks, but actual lawyers. They could trust that. Make sure the customer interacts with people who are true experts in the field, not just customer service people who are experts in your organization.
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