So you are the CEO of a young Enterprise Web 2.0 start-up.  

You are going to be rich!   You’re going to have a 777 with 3 hammocks.   And a waterslide!   You have read 37 Signals’ book: Getting Real.    You have read Harvard’s  Andrew McAfee.   You have read the McKinsey reports on the Next Revolution in Interactions.   You are going after the the 59% of interactions in the world of finance that are tacit.

Now you are sitting in a room at world famous venture capital firm Kleiner Perkins Caufield Byers, and you are about to pitch Ray Lane, former president and COO of Oracle Corporation.

Ray has bluntly said:

Vendors must rethink their products and marketing to succeed in the next era of software business.

Ray has been kind enough to publish his 7 Laws for the New Landscape.

The toughest requirement on Ray’s list is #7

Minimal IT footprint –CIOs are critical in determining how technology is utilized by the company but no longer have to make all the decisions. Ideally, products should be able to be adopted without IT’s approval

The problem is that Ray is a VC. He wants a minimal footprint. He wants you to get products adopted without IT approval.   And he wants you to make money.

Sell Directly to the End User at a Price They Can Expense

The secret to making money with web based enterprise solutions is easy: don’t sell to CTOs, don’t sell to whole departments, don’t even sell to teams.   Instead, sell directly to individual end users.   And sell to them at a price that they can expense.

Avoid the CTO or CIO: Today’s enterprise CTOs and CIOs are in the job of not getting fired.   Many of them do not think in terms of both business risk and rewards.   They are in a cost center.   So they think about cost reduction and risk mitigation.   Preferably total risk elimination.   Cost is budget is power, so in reality, it isn’t such a big driver for many of them.   If you do talk to a CTO or CIO, ask them what percentage of they spend in the last 12 months went to a new vendor with a new product.   That is how much they are focused on innovation.   My guess is that on average, it will be less than 5%.

Avoid the Business Group Leader: If you are talking to a business leader, and you are selling software as a service, they are most likely an early adopter and a visionary.   They have a direct business need and they have the budget to buy your software.   However, they do not necessarily have buy-in from corporate IT.   That takes you straight back to the CTO / CIO, and nothing new gets done.

Sell to the End User: The way to make money is very similar to the consumer world.   Sell to one end business user at a time.   The want a couple of additional non-consumer features, like secure log-in, audit trails and access control tools.   If you make the access control like managing an email list, it should be fairly easy.

How do End Users Pay in an Enterprise Setting?

If you charge $9/user per month, but bill for the whole group, the bill for 30 people would be $270.   That requires sign-off, which requires approval, which gets you back to the CTO / CIO.

If you charge $9/user per month and make each end user pay their own way, then each person has to get the company to cover just $9 in expenses.

$9 is cab fare.

Taxi cab fare doesn’t require approval.

or… $9 might be just cheap enough for people to be willing to cover it themselves.

Maybe they’ll call it a telecommunications expense.

The End Game:

In the end, the CTO /CIO will find out.

However, if you have a good product, you will have had enough time to prove your worth.   The business users will be able to demand continued access to a tool that has become mission critical.

But there are security issues, audit trails and stuff?

Yes.  

Without the co-operation of the CTO/CIO, you will not be able to provide a truly enterprise class solution.   For example, you won’t be able to plug into an enterprise Active Directory / LDAP server.

How do you solve this problem?   Stay tuned…. ;)