I'll start off by saying I'm a closeted entrepreneur in my heart, however by day I've been selling Enterprise Software for 10yrs+. The latter is what's kept me from doing my own startup for a decade, the income is addictive but the business is not straightforward. To give some context, the average deal size for me is around $250k, but I generally work on large enterprise deals that run $2M+. Two years ago I sold over $70M in software to just two companies, neither Fortune 500. Needless to say income is substantial in this type of sales where base salaries are easily $100-$150k and you can find yourself earning at least $250k in a slow year, and as good as maybe $1M in a very good one. However, I'm different than most enterprise software sales people. Before selling I spent years programming, architecting systems and continue to work hard to keep my skills up b/c I love this stuff.
Marketing and selling software to enterprises is the most dysfunctional cycle of decision making you will ever see in business. In almost all cases the individuals in the business who actually derive value from the technology are entirely disconnected from those who make the purchasing decisions. Many times those purchasing decisions are made based on "perceived" synergies with other software systems already owned from the same vendor, having never been vetted by the actually consumer in the business. Enterprises represent a huge market to be served by well designed/functional applications. Keep in mind that most Enterprise SW contracts have customers paying yearly maintenance charges that are 20% of the original license cost and sometimes more...
The thing to understand in selling into this market is you need to adapt your "logical" marketing and sales strategy to the way enterprises buy. I say adapt b/c you can't make or help a dysfunctional buyer behave differently. These companies like centralizing technology decisions, large multi-year commitments and have complex IT accounting considerations. You need to be aware of their existing legacy infrastructures and have a story of how you "play nice". You need to have partnerships with existing large Enterprise SW companies (IBM, HP, Microsoft, Oracle,etc) and you need to have Rolex wearing sales guys who have the connections and can get deals done - http://techcrunch.com/2010/11/13/new-enterprise-customer/
If you do all that, just moderately well, a large SW company would swoop you up really fast. They can't innovate new marketable products worth crap, all they do is buy. And although we hear about some of those acquisitions there are many, many more that don't get as much press...
However in contrast to the approach above I have been whiteness to a handfull of startup business models that have done really well at infiltrating the enterprise based on their distribution and user engagement model. Take Yammer for example, their model allowed for people in large companies to start using it (for free) without having to get any approval from their IT departments. I had a CIO friend of mine who never heard of Yammer until I mentioned and showed him where over 100 of his company employees were already active on it. Large companies have to worry about compliance, document retention, etc. His first reaction was to block it via the firewall, but then he was smart enough to see it as an opportunity to invest in a technology that had actually been proven to deliver value by people within his own company. Software or services that can get into the enterprise like a cockroach, breed and spread under the radar have a really good chance of getting a CIO's attention in a good way - it's an opportunity for them to invest in a solution that works and guarantees that their business will get value since its already been proven on an small scale.
"The thing to understand in selling into this market is you need to adapt your "logical" marketing and sales strategy to the way enterprises buy. I say adapt b/c you can't make or help a dysfunctional buyer behave differently."
Is it easier to sell towards the good inclinations or the bad inclinations of a company?
Good inclinations is pretty obvious for us in the tech start-up scene. Think Yammer.
Bad inclinations is basically playing on fear and laziness of the large corporation. I know of a small company that makes pretty good money selling what is basically an advance employee tracking system that enforces internal security policy and procedures. It's a nice way of saying "Let's track all employees to quickly discover threats like Yammer before it spreads amongst the company to create a security hazard". Or, "we must force everyone to go through our department because that's what policy says thus using your software to do so". Of course, the reason they don't want to use this department is because they are more dysfunctional then the rest of the company. Software which enforces the bad policies and procedures of the company but allows them to "feel" more secure.
It is not impossible but just takes its own cycle and hard as @diskdoctor has mentioned above.
To add to this there are a bunch of questions that you should answer well before Indirect Purchasing department (yes, the department that makes the purchasing decisions on all items that are to be used internally).
1. What is your business continuity plan?
2. Annual revenue. Would you remain in business long enough?
3. Technology stack - what does it take to maintain it?
4. Does it align with their tech stack recommended by architectural team? (not necessary if there is a good justification).
5. Partnerships / integrations.
6. Customer references of similar scale.
...
The best way for a startup could be the Yammer way - make it very attractive for users within the organization to drive it bottom up or have some real strong partnerships to drive it through.
thanks, I am glad to could contribute something here... I have often enjoyed the thoughtful dialog this community provides...
skrish, I agree, especially for a community such as Hacker News the Yammer way is the best way. If I were to start a company right now I would look to build something that an individual within an enterprise could acquire and get value from w/o involving their IT departments. As a bonus I would try to engineer some type of social, sharing or collaboration element where that individual would get exponentially more value if their coworkers also used the technology. I would closely study the technologies enterprises use at their core and figure out a way to expand, enhance or even exploit. As an example companies like Geckoboard or Leftronic could find opportunities in the enterprise by providing tight integrations into Salesforce.com, workflow/rules (Pega) data warehouses (DB2, TeraData, etc) and analytics (Cognos) - that is how large companies like IBM, PG, and GE run and manage large parts of their organization. And they could charge 10x for those features and companies would pay. CIOs like to buy software that will logically fit within their enterprise architecture. Sure, systems like DB2, SAP, Websphere, Cognos, OmegaMon, Dynatrace and Linux on z/OS (Mainframe) don't sound as sexy as working with MongoDB, Redis and Node.js but in my experience that's where the real money is. Some would argue that the future isn't DB2 or Linux running on a mainframe, but take a look at DB2 it supports in memory key/value stores. Linux on Mainframe is probably the most stable, cost effective way to run Linux on a large scale, especially if you must have a mainframe for legacy CICS apps anyway. No CIO of a large company is going to stake their career on something mission critical that relies on Cassandra or MongoDB, they go with something that works with DB2 b/c its their corporate standard and you simply don't get fired for "Buying IBM". They may experiment with new technologies on noncritical tactical projects, but face it that's not where the real money is. Companies like iRise, Roambi, Apptio, ITKO (acquired already), Splunk, Jive and Okta have the enterprise "hook" figured out in my opinion... Sure, some are "mature" now but they all started as startups...
rdl, on hiring sales people... We are a unique bread as we are hungry and heavily coin operated. The key to hiring sales people is finding those that have a track record of success. Track records not only demonstrate their ability to do the job, but they have existing networks, know how to build partnerships and most importantly know when and where not to waste their time and your time. So where do you find us/these people? Search Linkedin profiles, poach within other enterprise software companies and your network of other founders/mentors/executives who have been sold to by or employed good sales people. I was a sales manager for Rational Software for several years, the latter is how I filled almost every opening. Interviewing sales people can be tricky, they are trained to "sell" and "close". I usually look at a couple things... 1) Do they job hop? a new job for a sales person every 2-4 years is ok, but any shorter may indicate they can not sell and just keep getting pushed out. 2) Demand to see their W2 to validate past earnings. This may sound overboard but every software company I've interviewed with recently asks every sales candidate for that. The W2 doesn't lie, you want to hire the person that consistently makes $300k+ a year. They know how to do the job and they also know where not to waste their time trying to sell something they don't understand well enough.
I am a SWE by day at bigco you've heard of. I've thought about trying out enterprise software sales. It seems to me that it may be easier to dream up enterprise opportunities given more customer interaction. Would you mind if I contacted you offline to learn more about the enterprise sales side?
Marketing and selling software to enterprises is the most dysfunctional cycle of decision making you will ever see in business. In almost all cases the individuals in the business who actually derive value from the technology are entirely disconnected from those who make the purchasing decisions. Many times those purchasing decisions are made based on "perceived" synergies with other software systems already owned from the same vendor, having never been vetted by the actually consumer in the business. Enterprises represent a huge market to be served by well designed/functional applications. Keep in mind that most Enterprise SW contracts have customers paying yearly maintenance charges that are 20% of the original license cost and sometimes more...
The thing to understand in selling into this market is you need to adapt your "logical" marketing and sales strategy to the way enterprises buy. I say adapt b/c you can't make or help a dysfunctional buyer behave differently. These companies like centralizing technology decisions, large multi-year commitments and have complex IT accounting considerations. You need to be aware of their existing legacy infrastructures and have a story of how you "play nice". You need to have partnerships with existing large Enterprise SW companies (IBM, HP, Microsoft, Oracle,etc) and you need to have Rolex wearing sales guys who have the connections and can get deals done - http://techcrunch.com/2010/11/13/new-enterprise-customer/
If you do all that, just moderately well, a large SW company would swoop you up really fast. They can't innovate new marketable products worth crap, all they do is buy. And although we hear about some of those acquisitions there are many, many more that don't get as much press...
However in contrast to the approach above I have been whiteness to a handfull of startup business models that have done really well at infiltrating the enterprise based on their distribution and user engagement model. Take Yammer for example, their model allowed for people in large companies to start using it (for free) without having to get any approval from their IT departments. I had a CIO friend of mine who never heard of Yammer until I mentioned and showed him where over 100 of his company employees were already active on it. Large companies have to worry about compliance, document retention, etc. His first reaction was to block it via the firewall, but then he was smart enough to see it as an opportunity to invest in a technology that had actually been proven to deliver value by people within his own company. Software or services that can get into the enterprise like a cockroach, breed and spread under the radar have a really good chance of getting a CIO's attention in a good way - it's an opportunity for them to invest in a solution that works and guarantees that their business will get value since its already been proven on an small scale.