Recently, I heard a VC discussing how enterprise software is dead. It got me thinking, “is that really true?” And THAT got me thinking, “what even is enterprise software?”
To ultimately determine whether enterprise is dead, I’ll use my first-hand experiences with legacy digital products to first define what enterprise software was. Then, I’ll compare that with modern products to show what enterprise software has become and highlight what investors should be looking for in this market.
While enterprise used to refer to the software’s ICP, it now refers to the growth strategy.
I first learned about enterprise software as an undergrad in 2002, and undoubtedly, it’s changed a lot since then. After all, back then software was largely on-premise, often installed via CD-ROM, and expensive to install and maintain (major throwback, I know). The technological landscape, and the entities within it, has changed immensely since I was in school. From conversations with investors, it’s clear enterprise in 2023 refers to software geared towards larger companies, with the potential to land and expand within the organization.
Enterprise isn’t dead — it’s just evolved.
The truth is that most investors in the B2B space are looking for opportunities for companies to land and expand no matter where they start.
Where old enterprise used to be plagued by outdated UX, weak brand and unclear messaging, modern enterprise software prioritizes these functions to differentiate from legacy companies and modern competitors.
Take a look at Rippling, an HR platform that proves enterprise software is better than ever. Rippling CEO Conrad Parker sets goals to build and sell multiple products from the outset because he knows the growth potential of a land and expand strategy. HR is arguably the most enterprise-y vertical there is. And switching platforms is still a huge pain in the ass for reasons beyond their control. But by investing in amazing UX, driven by an absolutely best-in-class product management organization that manages their product suite seamlessly, Rippling knows they’ll prove their value early, earning buy-in and growing within the organization.
For other companies, the enterprise play is more subtle. Six years ago, I purchased Pipedrive as our primary sales tool because G2 told me that’s what other similar firms were doing. I bought the product not just because it was recommended but because I knew I didn’t want Salesforce given its size and complexity in 2017.
Innovatemap has grown alongside Pipedrive over time and today, we now spend 5x more annually on it than we did in the beginning. And since Pipedrive proved its value in one area of our organization, it’s worked its way throughout Innovatemap — from sales, to marketing, and even into client management.
While Rippling is more aggressive with their growth strategy, Pipedrive is growing slower and more methodical. They’ve kept their features simple and highly focused. But over the past 18 months, I’ve noticed an uptick in feature releases, meaning they are matching the the growth of the companies they serve.
So while Pipedrive isn’t considered enterprise software by the 2002 definition, its methodical product feature strategy certainly proves that enterprise has evolved.
Why does this matter? If you’ve been on the internet in the last 10 months, you’re probably aware that tech is taking a hit in the market. This correction is like a natural wildfire that will clear out underperformers, making way for new companies to grow. But it’s also hitting large enterprise software, like Salesforce and Microsoft, hard. When Salesforce entered the market, they positioned themselves directly against enterprises. They wanted to differentiate from the slow and outdated goliaths that ruled the industry (Siebel and Oracle). Now, they’ve come full-circle and become what they set out to destroy.
So to answer my own question, the enterprise software model is absolutely alive, but it’s being reborn.
Rather than long-term contracts, on-premise hardware or proprietary data all conspiring to create a moat, successful companies build their moat with brand, design and interoperability.
Companies like Rippling and Pipedrive make me excited for the future of enterprise software. Larger enterprises are shedding talent and market share for new competitors to evolve. These new competitors will have strong brand and messaging, and killer user experience. There is more available capital than ever to fund these startups. And while investors are wise to look for unicorn opportunities, they’d be wiser to seek out investments with strong product and brand competency. This enables smart, methodical and capital efficient growth.
Enterprise is no longer limited to tech behemoths. Now, successful enterprise starts small and grows with the companies they serve.
To hear more of my hot takes, subscribe to my newsletter.
