Enterprise Software’s Youth Drain

My friend Charles Hudson has a great post up about why young people aren’t going into enterprise software as much.

Web 2.0 mania celebrates consumer facing web apps. Not surprisingly, then, I have met few young entrepreneurs who want to work at or (as I did) start an enterprise software company. Enterprise software? How boring.

But like Charles, I think there are a number of good reasons for a young person interested in business and technology to work at an enterprise software company. He says:

Enterprise software companies are a great place to learn how sales, product development, and marketing all work together. …[E]nterprise software offers a much better place to learn the business of software (or just business in general, for that matter) than most web 2.0 customers. In enterprise software, you learn a lot – you can learn a lot about how the direct and channel sales processes works (which is largely absent in most web 2.0 companies), how to manage a longer-run product development process that involves direct interaction with existing and prospective customers, and how more traditional marketing (product and corporate) can help drive effectiveness in software. The interplay of development, sales, and marketing in an enterprise software company can teach a young person quite a bit about how business works and how these three forces need to balance each other.

Bingo. I would add that one of the most valuable things I learned selling into small and mid-size organizations is the importance of psychological and financial buy-in. It ain’t easy to convince multiple people in an organization — each defending his or her own fiefdom — to sign on to your product. The politics can be overwhelming. But the skills you pick up in the process are invaluable and transferable to other aspects of business.

3 comments on “Enterprise Software’s Youth Drain
  • I still consider myself a “young entrepreneur”, but I find I’ve dated myself in a few instances where I’ve talked about the benefit of enterprise software, and working with it. Even just “business software” (take out the word “enterprise”) still scares so many people.

    Consumer-facing Web 2.0 apps are all the rage…I’m too “old” to get it all though.

  • If you do a pathologic dissection of youthful tendencies, they gravitate towards anything that allows them to be disruptive, yield them a core space and let them participate in what’s going to be their future.

    Unfortunately in Enterprise s/w space, there’s little that’s `happening’ on that count.

    There’s only the consolidation game played by big players such as SAP (acquiring Business Objects SA for $7b) and Oracle (that acquired Siebel Systems, PeopleSoft and now angling for BEA systems for $6.7b) or others including IBM, MS and HP rolling up the old carpet from the top, acquiring and merging other enterprise players.

    Where does that leave the youth and his enthusiasm? He knows he will be relegated as the smallest cog in the enterprise wheel unlike his colleagues working on cool consumer centric, venture funded Web 2.0 apps getting much better profile and press. The industry trend of buying mature companies, rather than investing in new R&D is a great turn off for the spring foot. In contrast, there is so much innovation going on with web 2.0, mobility, telemetry and very little of that is making its way, quickly enough into enterprise software. Now you know why they don’t take that road.

    Then there’s the threat to the very future of enterprise s/w from Open Source and SaaS delivery models. They realize that it is no longer possible for enterprise vendors to grow perpetual license revenues at rates that result in interesting businesses.
    Changing labor economics (offshore, rural, lowered contractor costs) have made `building’ new software or extending old software pretty darned cheap. At the same time, packaged software vendors and systems integrators (SI) have not lowered the cost of `buying’ (as against building) much, in spite of all their talk of rapid implementations and accelerators.

    If we reckon the fact that most of the packaged s/w comes with 80% features that a customer has anyway to pay for and configure, but will hardly ever use, it tilts the decision in favor of `build’ than `buy’. That makes package s/w a bad business to be in. It also forces enterprise customers to look at BPO options that give them pay-per-transaction convenience, in case if extending legacy systems or custom building s/w is not a viable option.

    Tell me, does it augur well for the youth when the picture is so bleak…?

  • As someone who cut his teeth on enterprise software, I can say it is invaluable experience. But it is also something that most people are doomed to fail at. In my life I have had about 200 sales people work for me, and the vast majority of them were not highly successful at enterprise sales.

    I once explained it this way to a sales rep (a non-successful one): there are quick twitch athletes and slow twitch athletes. Long distance runners and sprinters are both athletes, but their skills are very different. The same is true of sales people. There are quick twitch sales people, those that like to sell quick deals (things with a sales cycle less than 60 days) and there are slow twitch sales people (enterprise sales people). Both can be successful, but as a manager you have to be able to identify people quickly and know where they are best suited.

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