Analyst Report: What Enterprise Software Vendors Could Learn from the Consumer Space


As I noted recently, the gap between enterprise collaboration tools and what we might term “consumer tools” has narrowed considerably. And as far as software is concerned, staff have been integrating consumer products into their workflow more and more over time. This is happening for a couple of reasons: First, there are inefficiencies (in either functionality or ease of use) in corporate software provided to employees by the enterprise (Lotus Notes, for example, is a program many enterprise users hotly dislike). And software tools once considered solely for consumer use are becoming more business-friendly; Skype, for example, recently launched its Skype for Business services, which allows a business to manage its employees’ Skype usage, and also integrate Skype’s services into an existing PBX system.

Just a few years ago, such a scenario wouldn’t have existed. Consumer-grade software couldn’t match the functionality and power of the enterprise tools, where most of the money and, subsequently, innovation, went. Additionally, corporate IT departments were able to keep very strict control over both the kinds of software employees used and how they used it.

Then Web 2.0 hit the consumer software space, bringing many advances like Ajax and REST to the forefront and making consumer-grade software apps much more powerful and feature-packed. Since then, consumer web applications have innovated at a incredible pace and simultaneously cast considerable influence over the enterprise, which still struggles to keep up (some of the reasons for this are explained in this article from Bruce Cleveland). With those factors in mind, then, here are five crucial lessons enterprise software vendors can learn from the consumer space.

1. Foster innovation through third parties.

Innovation doesn’t have to come solely from within a company. Many successful startups in the consumer/SMB app market offer very simple tools that focus on solving a single problem. This simplicity allows other vendors to build tools that interoperate with and enhance the product, using open and documented APIs.

Take, for example, Dropbox. It focuses specifically on the problem of cloud file storage and sync, then offers a viable solution by providing a simple storage area with flexible pricing. Dropbox has an open API, which makes it easy for third parties to build additional applications that use the service. There are many other apps that integrate with Dropbox. A great example is GrabBox, which is a useful productivity-boosting app for the Mac; it enables users to quickly share screenshots via their Dropbox just by hitting a keyboard shortcut.

Most large enterprise programs like Lotus Notes/Domino also have well-documented APIs. They tend, however, to be very complex. They also don’t reside in the cloud, which means building web apps that interoperate with them is difficult. If enterprise-grade software like those programs used a more modular (and cloud-based) approach, it would encourage third-parties to innovate on top of existing tools and software, much like they do in the consumer space. This in turn would help to prevent enterprise users from drifting towards consumer tools.

Of course, some enterprise software vendors do this already: Salesforce’s, for example, takes plenty of cues from the consumer space by using a cloud-based strategy and opening up a well-documented API. And there are hundreds of third-party apps in the Salesforce AppExchange. The company has been profiting from its approach: Revenues for fiscal year 2010 grew by 21 percent over the previous year.

2. Release early, iterate often.

“Release early, iterate often” is a mantra adopted by many startups in the consumer space. The model allows a company to rapidly introduce new features into its software and react to consumer feedback without having to carry out complex, expensive and time-consuming user testing. Many consumer apps are released with a beta tag; new features and functionality are changed as feedback from users is received.

While this approach allows new features to be integrated into consumer apps quickly, most business customers wouldn’t appreciate vendors releasing”beta” apps that are not completely reliable, or ones with shifting functionality due to the constant tinkering. However, giving business customers the opportunity to try out new features (perhaps in a sandboxed “VIP beta program”) could give them the chance to provide more input into the products they use, as well as have more say over functionality. It would also allow the vendors more opportunity to try out new features.

Google is a good example of a company targeting the enterprise space with this approach: Google Apps admins can elect to “opt in” to new services and features, while individual users can add experimental “Labs” features to their Google products.

3. “Freemium” works well.

One reason consumer tools are popular in the workplace is that many of them are free. Employees can integrate them into their workflow without having to get official approval because (at least to start with) there is no expense that needs to be approved by management. And most of these tools are simple and only require a web browser to use.

Enterprise software could learn from this approach: Free software is useful because it allows users to “try before they buy,” so to speak. As CEO Aaron Levie points out, freemium can be a very useful strategy for products that have high switching costs, such as CRM tools. Customers benefit because they’re allowed to see, without incurring much cost, if tools adequately fit into their workflow. Vendors benefit by gaining customers that may not have tried a product due to its prohibitive costs.

4. Ease of Use Matters

Many “old-school” enterprise software apps are best described as unwieldy: Their user interfaces can be complex and require training to use. Lotus Notes’ UI, for example, has improved in recent iterations but is still disliked by many users who find the program frustrating.

Users will be reluctant to use complex software and could possibly even be unaware of its complete functionality because of this. Most enterprise collaboration software will have file sharing capabilities built-in, for instance, but if that software is too complex and tricky to use, staff will turn to programs like Dropbox instead.

Intense competition exists in the consumer space. As a result, great care is taken on the part of software app developers to ensure their products are easy to pick up and use without extensive, complex training. These apps are usually attractively designed, right down to the promotional copy on the web site. Wufoo, for example, is an app that makes building web forms and surveys easy, fast and even fun. Applying a similar approach to enterprise apps would encourage adoption, lower staff training costs and discourage employees from being tempted to bring in their own consumer tools and thereby risk compromising company security and policies.

5. Use social features to encourage adoption

Many of the best consumer apps have social features that encourage users to get their friends and contacts using the tools as well. Facebook’s “Friend Finder” is a good example of this type of feature. But even apps like Dropbox encourage users’ contacts to take up the app through the use of emailed invitations. When a person sees that many of their friends are using a particular app, they’re likely to check it out themselves.

An app that uses an approach like this is Socialtext, a corporate social networking and collaboration tool that takes a lot of cues from services like Facebook and Twitter. By taking the social sharing features that make Facebook so compelling for consumers and applying them to the enterprise space, the developers have made an app that encourages users to share information and spread knowledge around an organization.

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