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This cannot be over emphasized: >Your biggest competition isn’t just other startups, perpetually licensed on-premise packages, homegrown solutions, or incumben

This cannot be over emphasized: >Your biggest competition isn’t just other startups, perpetually licensed on-premise packages, homegrown solutions, or incumbent vendors. It’s inertia...the target company’s urge to do nothing. So how do you make enterprises care enough to act? I've found that as "obvious" as saving money should be as a change agent, in many organizations that doesn't move the needle. Products that increase revenue usually gets far more attention than money saving products. Competitive leapfrogging / strategic value even more, but that goes to Mark's about understanding and identifying their initiatives. Would also add: identify their incentives. Make heroes the organization rewards.

exelius 12y ago
Totally agree. If you look at your company, where are your "rockstars"? I don't mean rockstar developers; I mean the most ambitious, most well-connected (and highest compensated) people in your company. It's a trick question: they're almost always in sales, marketing or product because these are the parts of the organization that drive profit. This is true of almost every company. It's not a secret why Salesforce was the first real SaaS success story: companies are a lot more inclined to spend money to make money than to spend money to save money. Growth is the name of the game; cost cutting is usually only a focus once growth is no longer an option. That's why I groan whenever I see something like yet another IT operations management platform. Would the company be better off buying a software package to manage their IT, or firing all their IT staff and hiring a managed services provider to fill the gap? Operational cost cutting has a lot of different modalities that are often mutually exclusive, while you can more easily chase down multiple paths for revenue generation.
- rubensmead 12y ago
  Does ServiceNow count as "yet another IT operations management platform"? Do they make you groan because their IT applications business is doing so well? Or because you think they're overhyped and will crash and sputter?
  - exelius 12y ago
    Yes, they do. And I groan because it's an idea I've probably heard a thousand times. Companies will have success, but there will likely be another company in 5 years that overtakes them, and another 5 years after that. It's basically a zero sum market where the entrenched vendor's scale is too big to adapt to the new use cases that pop up every 5 years or so, so a new vendor pops up, becomes the entrenched leader, and the cycle repeats. ServiceNow will likely just get acquired by someone (HP? SAP? Oracle?) and integrated as a module in a massive ERP system. I definitely don't agree with their valuation; they're trading at like a 300 forward PE which is just ridiculous for an enterprise technology vendor in a space as crowded as theirs. They're likely only trading at that level because the analysts are anticipating an acquisition and subsequent bidding war. That doesn't validate the value of their services; just that big enterprise tech vendors are willing to pay a premium to displace their competitors.
jusben1369 12y ago
It's more nuanced than that and can relate to the broader macro environment. You have to think of the organization you're targeting and what's going on at the senior leadership level. What do they believe is happening to their market and their company within that market. During good economic times "saving" money isn't that appealing. Times are good and customers are opening their wallet so the company focuses on topline growth. So your "incremental revenue" is the best story. If an economy is slowing and new sales in general are impacted then cost cutting and savings becomes much more important because the best tool in the world isn't going to make tight customer's open their wallet. Lastly, if you're selling to big old enterprises that in general have sloow growth then cost cutting can be just as appealing as new revenue because they're managing to a bottom line.
- velik_m 12y ago
  The problem with big businesses is that even if the organisation needs and wants to cut costs, its smaller organizational units often have little incentive to do so. So the push for a new cheaper solution has to come from above, which means you have to sell the product to "higher ups" and not to the people who will be using the product. Of course that means the sales people and cheapness of product are then more important than the actual quality of product, which I guess is why there are so many crappy products in the big enterprises in the first place.

exelius 12y ago

Totally agree. If you look at your company, where are your "rockstars"? I don't mean rockstar developers; I mean the most ambitious, most well-connected (and highest compensated) people in your company. It's a trick question: they're almost always in sales, marketing or product because these are the parts of the organization that drive profit. This is true of almost every company. It's not a secret why Salesforce was the first real SaaS success story: companies are a lot more inclined to spend money to make money than to spend money to save money. Growth is the name of the game; cost cutting is usually only a focus once growth is no longer an option. That's why I groan whenever I see something like yet another IT operations management platform. Would the company be better off buying a software package to manage their IT, or firing all their IT staff and hiring a managed services provider to fill the gap? Operational cost cutting has a lot of different modalities that are often mutually exclusive, while you can more easily chase down multiple paths for revenue generation.

rubensmead 12y ago
Does ServiceNow count as "yet another IT operations management platform"? Do they make you groan because their IT applications business is doing so well? Or because you think they're overhyped and will crash and sputter?
- exelius 12y ago
  Yes, they do. And I groan because it's an idea I've probably heard a thousand times. Companies will have success, but there will likely be another company in 5 years that overtakes them, and another 5 years after that. It's basically a zero sum market where the entrenched vendor's scale is too big to adapt to the new use cases that pop up every 5 years or so, so a new vendor pops up, becomes the entrenched leader, and the cycle repeats. ServiceNow will likely just get acquired by someone (HP? SAP? Oracle?) and integrated as a module in a massive ERP system. I definitely don't agree with their valuation; they're trading at like a 300 forward PE which is just ridiculous for an enterprise technology vendor in a space as crowded as theirs. They're likely only trading at that level because the analysts are anticipating an acquisition and subsequent bidding war. That doesn't validate the value of their services; just that big enterprise tech vendors are willing to pay a premium to displace their competitors.

jusben1369 12y ago

It's more nuanced than that and can relate to the broader macro environment. You have to think of the organization you're targeting and what's going on at the senior leadership level. What do they believe is happening to their market and their company within that market. During good economic times "saving" money isn't that appealing. Times are good and customers are opening their wallet so the company focuses on topline growth. So your "incremental revenue" is the best story. If an economy is slowing and new sales in general are impacted then cost cutting and savings becomes much more important because the best tool in the world isn't going to make tight customer's open their wallet. Lastly, if you're selling to big old enterprises that in general have sloow growth then cost cutting can be just as appealing as new revenue because they're managing to a bottom line.

velik_m 12y ago
The problem with big businesses is that even if the organisation needs and wants to cut costs, its smaller organizational units often have little incentive to do so. So the push for a new cheaper solution has to come from above, which means you have to sell the product to "higher ups" and not to the people who will be using the product. Of course that means the sales people and cheapness of product are then more important than the actual quality of product, which I guess is why there are so many crappy products in the big enterprises in the first place.