More here : http://blog.gandalf-lab.com/2009/07/enterprise-it-future-sales-model.html

Mike, Since I am an apps guy, I do not have an answer to the DB issue that you raised – you may be right. I know that SQL*Server, MS’s DB, is cheaper and is probably more popular with the SMB.

On a related note I want to continue on this topic of selling enterprise apps to the SMB. I like your point about not getting too excited about the low-hanging fruit. In other words, it is NOT easy to sell to the SMB. At Oracle it used to take us a long time (over 6 months) to close an ERP deal to a $100 million revenue company. Having run my own little startup for the last 22 months, I can see why it takes a long time to decide to buy from a big vendor like ORCL – the SMB customer doubts whether ORCL will provide the type of support needed by an SMB.

I could discuss this and related topics for a long time. My general assessment is that an SMB (revenue less than $50 million) should buy a product that the SMB can implement/install without much consulting help. At present the companies I would recommend are Intuit (Quickbooks for very small businesses), NetSuite (for larger but still small SMBs), Microsoft (for the slightly larger SMBs).

The other point I want to make is that SMBs need to be trained on business best practices such as procurement, order management, accounting etc. Process is more important that product – but I am digressing from your main point – sorry.

Great to read about the meat and potatoes stuff which is what applications is!

Being in business for long what I can say with my experience is, with big business units a small to medium sized service provider is never sure for how long the contract would remain with them as big organizations are always on lookout for getting the most competitive services and don’t bother about forming too much relationships i.e. in most of the cases or they make you dependent on them, although the contract may yield you better profit margins. Whereas with SMBs/SMEs it’s more of a relationship and working together rather then plain business sense. They look more to each other as partner so one can compromise with comparatively lesser compensation owing to stability in the business.

Sonal Maheshwari
USourceIT: Riskfree IT outsourcing/ sourcing partner for SMBs/SMEs

I agree with you on SaaS 100% — I didn’t mean pre-packaged software when I used enterprise software. Server-side software allows you to continuously update, maintain one version for support purposes, collect analytics, and so on. I think we’re on the same page entirely.

Also agree with you on the fact that the large enterprise should offer dramatically better user experience (and ideally SaaS, too). I suspect that the willingness of large players to adapt their roadmap to the largest customers will mean that the move of SaaS up to the high-end enterprise may take longer — but that’s where it will end up.

And as both you and Nick know, sometimes you need hands-on folks to evangelize and iterate product development in the early days — my point is simply that, whenever possible, companies should do so not as a long-term sales model but rather as an “overlay” with the hopes of doing less and less direct selling.

This may not be true for the Fortune 500 or Global 2000 for certain IT purchases, but the SMB is just so poorly served today that there has got to be a ton of opportunity there…

Excellent points, all six. Will check out The Open Road. Thanks again for your thoughts.

On the DB side, Oracle has done well at the high end of the SMB market. But doesn’t Microsoft dominate the SMB DB market (in terms of number of customers and number of servers) with Microsoft SQL Server?

A successful direct sales can cover up many R&D flaws by winning over early adopters before usability is “baked”. Further, R&D and Product Management should leverage their direct salesforce in terms of product/market feedback.

Interesting end of quarter reading.