Wednesday, June 4, 2008

The Consumerization of Software

I spent a very pleasant afternoon at The Consumerization of Software conference held by SDForum and Accel Partners, exploring the thesis that enterprise software is becoming like consumer software. Can't disagree there.

Kevin Efrusy led us off on the Consumerization Thesis, which had some memorable points, including:
  • A customer needs to understand the value in less than 1 minute, and get the benefit in less than 1 hour, or you are toast
  • Ruthlessly limit scope, # of account touch points required, configuration options
  • Businesses should focus on metrics that reflect customer success
I particularly like the first one, since it is testable and it rings true.

There were some nice takeaways, particularly in a panel titled "A View on Software from Wall Street." Mike Maples (from Maples Investments), speculated that in a few years in addition to traditional financial metrics, SaaS companies will be judged on their viral coefficient. Mike defined this simply as "How much indirect sales does one traditional sale beget?" That is, if I sell $100 of software, how many additional dollars in future sales will come in with no action from me? This could be in the form of additional user licenses, add-on modules, or simply referrals to new customers with the initial customer as the sales person. If the coefficient > 1, sales will multiply naturally, if it is less than 1, the difference will need to be made up in Marketing $$.
  • "don't respond to RFPs, don't respond to large banks." (in response to when to customize to get into enterprise accounts)
  • "we had a voting system on the web for features. we never had a product manager."
  • OK, a bit strident, and I don't entirely agree with the second point. But I completely agree with the overarching theme of simplicity and focus, and that rang true throughout the afternoon.

    All in all, the consensus was clear: the enterprise is being consumerized. Thank goodness, I'm all for it. But maybe we should come up with a better term than consumerization. Anyone for C13N?