Enterprise software · Startups

Is starting an enterprise software startup worth the hassle?

Manoj Sahoo Lean Six Sigma Black Belt Project Manager at Freelancing (Self Employed)

December 12th, 2016

I was talking to a few people who worked for a big company. The software they use are some of the worst software I've ever seen. The workers there hate it and it makes them unproductive. Sounds like a good place to make a start-up, right?

That is until I found out the people who use the software have virtually no input in purchasing it. Not even the IT people who have to maintain it has any input in it. All purchasing decisions are made three states away in a purchasing department that buys stuff by list of features - whether or not those features work efficiently or even correctly for that matter.

How is this maze navigated? Is it worth the hassle if you don't have deep contacts and relationships inside every big company?
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Michael Leeds CEO & Founder

December 12th, 2016

I have one word for you: Salesforce. Everything you say is real: the process is a nightmare and lots of people use software they hate because someone else decided to buy an enterprise license. C'est la vie. Welcome to enterprise sales. It sucks. Until it doesn't. And yes, you will probably fail. But if you win, the rewards can be huge. So i'd make sure you have something real, talk to people who would use it and make sure they can try it without enterprise approval (sales people and teams could try the Salesforce product without corporate approval). If you have something real and people will actually find a way to use it, you're off to a good start. --ml


December 13th, 2016

There are things like MicroServices which you can focus on. I assume you are not the size of SAP and not in a position ask someone to throw them out when you walk in. Depending on the problem to solve, you can create plugins which integrate with existing ERP systems and provides specific value in a very specific domain. Pure API based is what I would recommend.

Of course, goes without saying that contacts on the inside are more or less a prerequisite.

Rob G

December 13th, 2016

enterprise sales is a different animal. for a startup it will be a serious challenge and one likely best tackled by working with a partner company that has already penetrated this company. The short answer is big enterprise companies are big and complex and need to serve a lot of different needs. Replacing an enterprise application is not trivial matter. The process is complex and time consuming and the contacts can be large - a small deal might be $200k and larger deals $100 million+ , so these decisions are not made quickly. I can assure you that the people you have spoken with who tell you that purchasing decisions (for enterprise applications) are made by a purchasing department do not understand how these decisions are actually made within their own company. Purchasing departments don't make these decisions. The IT department does not make these decisions. The process to implement or replace an enterprise app usually starts with an executive sponsor (VP, SVP, EVP, president, CXO, etc.). If the issue is important enough they will form an evaluation team which at some point will likely include IT and purchasing for tactical input. IT and procurement can kill a deal/project if they really want to, but they rarely have final approval/purchase authority. So to answer your question: how to navigate the maze: if you are thinking about starting a company to address this need/market the first thing you should do is find a cofounder or 2 who has extensive enterprise sales management experience (not only selling applications to enterprises, but building teams and negotiating, etc.). You would need to have a very compelling story and extensive enterprise experience yourself to build such a team, but it can be done. Here's a related post by Mark Susster. https://bothsidesofthetable.com/the-coming-shift-in-enterprise-software-17bdfd61ebb2#.y3ct4sn99

An alternative and much faster rout would be to team with a larger vendor who has the market presence and resources. You will still need to convince this partner company of your value add. If they are worth their salt they already know the company and the opportunity.

Ozzie Sutcliffe ServiceNow Consultant

December 12th, 2016

You can't fight City Hall

Shahab Riazi Sr. Manager, Enterprise Services, SAP

December 12th, 2016

That is precisely why enterprise sales are as challenging as they typically are in the real world. The only way to make this work is to either:
1. Work on a pain point that is so evident and well known that you can get past that initial hump of denial - This would not be a good option for the obvious reason that this will be a competitive space and hard to crack for a startup because of the competition from other startups (since you won't be the only one with the bright idea) and from other enterprise players who are trying get their toes in.

2. Look for an emerging solution area such as cloud integration like mulesoft, for instance. About 4 years ago, Mulesoft founder did a presentation at one of the conferences that I helped put together and he said something that I found to be very true across all enterprise software startups: The enterprise startup is a long term affair, lasting anywhere from 5-10 years, possibly more. It is a long term commitment. 

My advice, think about the space you want to get into very carefully and expect to commit to that startup for a longer time than other startups might demand. BTW, more funding cycles would be par for the course as well.