3 ms·
Sales & marketing for enterprise software is still the largest expense item for most enterprise software companies. Even though more software is self-serve and
by dpcheng2003 13y ago
Sales & marketing for enterprise software is still the largest expense item for most enterprise software companies.
Even though more software is self-serve and provides zero-day value, the biggest enterprise customers still need the Sales & Marketing machine, from front-loading marketing which generate leads for sales people/sales engineers to customer success, etc.
For the longest time, the guys driving the best cars coming out of Oracle's parking lot were the sales people. That's changing, but not as quickly as we expect.
As a point of comparison:
Box
R&D: 37% of revenue
S&M: 138% of revenue
Salesforce (based on last SEC filing)
R&D: 15% of revenue
S&M: 53% of revenue
Oracle (based on last SEC filing)
R&D: 14% of revenue
S&M: 21% of revenue
Interesting exception is Workday (based on last SEC filing)
R&D: 39% of revenue
S&M: 42% of revenue
This is still a winner-take-all business because a typical enterprise customer is still 2-3 years at the minimum (depends on the product; ERP tends to be much stickier). Box is encouraged to spend expensive investor capital to focus on growth (and in the process, limit their tax exposure).
I think it'll be interesting as Dropbox moves more towards the enterprise how much of the typical "enterprise sales" playbook would they adopt?
- mbesto 13y agoFormer enterprise guy here. You're 100% right. Curious, why doesn't anyone here mention SAP when the topic of enterprise software comes up? SAP is the enterprise software company (bigger than Oracle in business software). That being said:[0] - SAP has 15,000 s&m employees (second only to it's 17,000 R&D employees) - Of it's €11B in gross profit, it spends €4B on s&m, or 25% of it's revenue (€16B). It spends roughly the same €4b on software development (Cost of software + R&d) Here's the funny thing. The argument for why cloud is taking over is that the Cost of Sales is supposed to go down. Ya...... (my thoughts on this: http://www.techdisruptive.com/2012/11/28/how-are-we-going-to-make-enterprise-cloud-profitable/ http://www.techdisruptive.com/2012/11/28/how-are-we-going-to...) [0]http://global.sap.com/corporate-en/investors/pdf/sap-2013-annual-report.pdf http://global.sap.com/corporate-en/investors/pdf/sap-2013-an...
- 5avage 13y agoIt's worth pointing out that they count the datacenter and support costs for their free accounts under Sales and Marketing.
- dpcheng2003 13y agoI'd love to see the accounting on that (see it; not do it). It makes sense since they're not customers and free accounts are part of their lead-gen strategy. Good pick-up.