The phrase “consumerization of the enterprise” is used a few different ways. I would argue that it’s one phenomena with a few different aspects. When we’ve used the phrase here at ReadWriteEnterprise, it’s usually to refer to the rise of user-owned smart phones in the enterprise. But there are at least two other major aspects: a movement by vendors to offer products that look and feel more like consumer products (ie, Facebook) and the “grass-roots” adoption of technology in the enterprise, generally driven by freemium solutions. It’s the latter we’ll be focusing on today. Jive CEO Tony Zingale had some harsh words for freemium enterprise solutions during his Enterprise 2.0 Santa Clara keynote, and this weekend Ben Horowitz made the case that old-school enterprise solutions will continue to dominate.
Every day I hear from entrepreneurs, angel investors and venture capitalists about an exciting new movement called “the consumerization of the enterprise.” They tell me how the old expensive Rolex wearing sales forces are a thing of the past and, in the future, companies will “consume” enterprise products proactively like consumers pick up Twitter.
That scenario, granted, is likely too optimistic. Horowitz points out that Yammer, one of the biggest beneficiaries of the freemium model, now has a sales staff. And we’ve covered why it’s not entirely unfair that incumbant vendors have an advantage in the enterprise.
But that’s missing the point. Yammer’s freemium model gets the company in the door at places it never would have been otherwise, and without the hard-selling Rolex wearing sales people who keep dropping by to talk to the IT manager when they “just happen to be in the neighborhood.” Companies like Yammer don’t want to be in the shadows forever – that’s why its offerings are “freemium” not “freeware.” So it’s natural to have a sales staff. But the grass-roots adoption for these companies is real.
There’s two different ways these “grass-roots” or “shadow” IT projects can take:
- Enterprise-wide deployment. This is the direction that Yammer is taking and will still look a lot like traditional enterprise IT, but with freemium products making part of the sale.
- Deployment only within a team, department or business unit. This is the approach companies like Huddle and Survey Monkey have taken and has been remarkably successful.
Take the example of Salesforce.com. It didn’t even have a free version, but it managed to get a foothold by selling to sales managers who needed a solution today and were tired of waiting for their IT departments to deploy Siebel. Now Salesforce.com has a place at the establishment table, but there are new insurgents sneaking their way into the enterprise.
Horowitz details the convoluted process of making enterprise software purchases as one of the reasons that consumerization won’t be the dominate paradigm, seemingly forgetting that this purchasing process is a key part of what’s driving the movement. Managers don’t want to wait months or years for financial approval and deployment. They want their new tools yesterday. And if they can get a cheap monthly subscription expensed and service delivered through the web, they don’t see a need to go through IT. Earlier this year, SurveyMonkey CEO Dave Goldberg told us that SurveyMonkey doesn’t even have any sales people.
SaaS enables users, not just managers, to try before they buy. Cloud computing makes delivering these services cheaper, and feature sets are becoming more commoditized. That’s a huge opportunity for small companies to displace big vendors without investing in huge sales teams. Even in enterprises where a significant deployment of some social media platform has been made, individual teams and users will have the option to choose other products and services if the enterprise-wide solution doesn’t work for them. Huddle co-founder Andy McLoughlin told us that many Huddle customers are teams that didn’t want to use their companies large enterprise solutions.
For IT, this presents both a challenges and opportunities. The challenges include security issues, integration and the need to support multiple disparate systems. The opportunities include reducing deployment time, offloading support to the customer service teams at SaaS providers, and a potentially happier user base. Forrester has been making the case that IT needs to become less of a gatekeeper and more of an enabler by helping staff use their products and services of choice safely and effectively. That’s unrealistic to ask in most enterprise IT departments right now, but it’s not an implausible future.
Photo by Hamed Parham
