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TECH TALK: Enterprise Software: Start with SMEs and Services

March 29th, 2001 · No Comments

The enterprise software opportunity is vast, and yet the hardest steps are the first ones. Where does one begin? Who are the first set of target customers? As we set out to answer these questions, it is enlightening to keep in mid what Geoffrey Moore has to say in “Crossing the Chasm”, giving an analogy with the Allied invasion of Normandy on D-day June 6, 1944 (we are, after all, fighting a war!):

Our long-term goal is to enter and take control of a mainstream market (Eisenhower’s Europe) that is currently dominated by an entrenched competitor (the Axis). For our product to wrest the mainstream market from this competitor, we must assemble an invasion force comprising other products and companies (the Allies). By way of entry into the market, our immediate goal is to transition from an early market base (England) to a target market segment in the mainstream (the beaches of Normandy). Separating us from our goal is the chasm (the English Channel). We are going to cross that chasm as fast as we can with an invasion force focused directly and exclusively on the point of attack (D-day). Once we force the competitor out of our targeted niche markets (secure the beachhead), then we will move out to take over additional market segments (districts of France) on the way toward overall market domination (the liberation of Europe).

This, then, gives us ideas for the strategy companies need to adopt to win the mainstream markets. Start with the smaller enterprises and offer a whole product (integrated with services). Then, move up the value chain one notch to target medium enterprises in one or two specific sectors.

Finally, use that as the base to win mainstream acceptance. The key in all this is winning the SME market.

Here is a strategy for that:

  1. Define SMEs to be companies outside of the world’s largest 2,000 companies (G2K). A Significant value in an economy lies with the SMEs. 80% of the supply chain of the larger companies comprises of SMEs.
  2. SMEs do not want to remain as SMEs – they want to grow bigger.
  3. SMEs lag big business technology adoption by 2-3 years.
  4. SMEs need “whole products” not part or piecemeal solutions, which means product and service. SMEs want a “car” not parts-and-labour.
  5. Pure ASP offerings (web-based enterprise software) will not work because connectivity is not perfect.
  6. The solution lies in offering a hybrid solution (ASP and Server-based, available on the local network).

Services are important because they help complete the offering – make it a whole product. SMEs need services to help in their computing needs, communications needs and in the core business processes. Services are also where India’s cost advantage can be leveraged. This becomes the trump card (the ability to integrate product and service) in the conquest for the enterprise marketspace.

Tags: Tech Talk

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