First and foremost, props to Jevon MacDonald for inspiring the title of this post, indeed I may just have poached the title of something he is working on.
The Irregulars had a thread over the last day that has been moderately commented on, but nonetheless serves as a catalyst for something I didn’t realize I was thinking about. Maybe it’s time to jettison the “2.0” labels and made up market definitions, or at least acknowledge them for what they are, marketing terms. While I am certainly not the first to dislike the web 2.0 term, nor will I be the last, I do want to zero in on a subset that is near and dear to me, enterprise 2.0.
Enterprise 2.0, like all the 2.0 memes, does not describe a market, it describes a set of principles or truths underlying a belief system. The belief system is that technology leads to greater efficiency and specialization of function that brings, and specific to web/enterprise 2.0, that increasing scale fuels a social dimension that enables capabilities the exceed in value anything possible in a standalone, non-networked application.
The principles of enterprise 2.0 are as follows:
- User centric. The problems being solved are user problems, not IT or C level problems. In other words, an order entry system solves a CFO’s problem, while a CRM system principally solves a salesperson’s problem. The fact that Salesforce.com delivered a solid end user application is what led them to 1 million users, not selling a million seats to C-level executives on the promise of better forecasting and pipeline management. SFdC isn’t thought of as
- Web-based. Well duh, but I’m including this to raise a point that is often lost today, that being web-based has degrees of meaning. SAP is a web-based application, so is Google and Facebook, but do we think of SAP as being web-based? No. So what does it mean to be web-based anymore, and the answer is that I’m not sure. With web applications increasingly gaining offline capabilities, integrating with desktop applications, and delivering through mobile clients, well it’s getting kinda hard to pin this down. I think in the end what we are referring to is something in between the lightweight (but scalable) architecture that most web-based apps feature, the strong product management and discipline that enterprise apps typically have, and the cost advantages that open source delivers. What Amazon is doing with AWS absolutely redefines “the stack” and I’m convinced that we have yet to see what their approach is truly capable of.
- On premise capability. Okay, so I just contradicted my point #2 above, it would appear… but I have not. Being web-based behind a firewall or on the public internet are not that dissimilar. There are enterprise 2.0 apps that depend on a network effect or a market that is strongly aligned to on-demand hosted, but the fact remains that many companies and many markets still want on-premise capabilities. This is one point that Oracle and SAP both nailed, rather than chasing the multi-tenant hosted trend they listened to their customers, who by and large simply weren’t asking for it. You see it in the results both of these companies have put up over the last year, just a few days ago ORCL released their Q2 numbers an in that quarter alone they generated more profit than Salesforce.com will do in total revenue for the full year, and on a margin basis both SAP and Oracle (not to mention Microsoft) are far more profitable than any on-demand business application company.
- Low touch sales process. For enterprise 2.0 apps specifically, it’s difficult to make any money with the roll up the bus full of account execs and presales folks on every deal. By targeting departmental users, these companies are simply obligated to get good at a low touch selling process that combines effective web-based channeling of leads and prospects to inside sales and channel partners as opportunities grow in size and reach. There is another post in this one point alone about the merits of efficiently targeting a very narrow application solution vs. a broader “platform play” that can morph into many application needs. Atlassian and Socialtext both do a good job of channeling users to their respective websites, getting a downloadable
- Self-service support. Given the price points and the requirement to resign your customers each month, assuming you are on a subscription model, it’s imperative to deliver an app that requires little up front implementation support and ongoing maintenance. When support is required, a well stocked community of active users can self-support and that not only improves the overall support experience but also reduces the costs of delivering it. We’ll never get rid of vendor support, and indeed, too many companies have erred on the side of understaffing here, but there is a new middle ground emerging.
- The social aspect. Because what we are talking about here is enabling people to work together more efficiently, there is an assumption that enterprise 2.0 fundamentals include a social dimension. What that include is to be determined by the application, and more importantly, the people using it, but it’s omnipresent nonetheless.
There are more underlying principles that can be added to my list, and I hope you will add your own in the comments, but this is a good starting point at moving beyond the term alone.
I do want to address the “dude, where’s my market?” title of this post as it relates to the topic at hand. Enterprise 2.0 is not a market, so what is. Well going back to business 101, a market is an addressable group of individuals or companies with an identifiable pain point and a willingness to pay something to solve it. In economics a market is more abstractly defined as a means of discovering and evaluating information which then enables the pricing and voluntary exchange of products or services between buyers and sellers. Academics aside, I like my definition in this context better.
Coincidentally, yesterday I stopped by Echosign’s offices to wish my friend Jason Lemkin a merry Christmas and later that day I received his annual report to “friends of Echosign”. This company is growing not because they have a trendy set of buzzwords they use consistently, but because they solve a real problem that spans a significant number of prospect buyers, understand how to target and sell it at the price points they do, and manage their costs by taking advantage of efficiencies that technology enables and eliminating potential expenses by having discipline about the product management and development cycles. Jason’s company is a true enterprise 2.0 play, but you won’t hear them referring to it that way, Echosign is a web-based document service for signing, tracking, and storing contracts and other signed documents.
Lastly, I am reminded of a scene in the movie The Hunt for Red October when national security advisor Pelt says to Jack Ryan “Dr. Ryan, I’m a politician, which means when I’m not kissing babies I’m stealing their lollipops.” I have used the terms enterprise 2.0 and web 2.0 prodigiously over the last couple of years, indeed used them as weapons of change when my needs required them, but if you look at my written record on this you will find that my position hasn’t really changed.
In a post I wrote in August 2006 on this brewing enterprise 2.0 thingey:
The answer to this is more involved than just pointing to one buzzword or meme, the answer is that Enterprise 2.0 is the convergence of SOA (something that’s been in the works for a few years), open source, SaaS, and the underlying economic models of all of the above. I could, and should, also throw in collaborative applications and user-centric computing, but I think it’s fair to say that these things could stand independent of the other pieces very easily.
Which gives me yet another opportunity to quote from the previously referred to movie:
Captain Ramius: And the sea will grant each man new hope, as sleep brings dreams of home. Christopher Columbus.
Jack Ryan: Welcome to the New World, Captain.