When I started as a technology analyst (over a decade ago), enterprise technology meant products for datacenters. I’m talking about rooms full of servers and network equipment running applications to help large companies with sales, marketing and accounting. The B2B sales model was characterized by long sales cycles for high ticket, large-scale purchases. The deals were closed by fast talking, deeply tanned men who seem to be perpetually in their middle 30s with good haircuts and golf shirts.
Today that definition of enterprise technology is quickly becoming antiquated. Even virtualization is becoming passé. More and more, enterprises compute in the cloud. It be might be a public, private or hybrid cloud depending on scale, privacy concerns and internal stubbornness. Progressive enterprises often find it more economical to spin up a server and rent the IO. They migrate their data. Their applications are constructed to be multi-tenant. Applications these days help us communicate, collaborate and innovate. And then there is the mobility piece – all these things we do, we need to push out to someplace else. In order to do that we need to secure data – both in flight and at rest. Enterprise is no longer confined to a datacenter (or even the cloud). The deal sizes are often subscriptions designed to scale with usage. The sales model is ‘inbound’ and hopefully frictionless. Sales are often closed over the phone by geeky, mole-boys in dark rooms that you will never actually meet or shake hands with.
What else? Data is now a commodity (like oil). Our formerly worthless data now has value. We need to save it, mine it, visualize it, gain intelligence from it. Leadership is now data driven. Data scientists are a scare resource and worth their weight in data. Open source is now okay. We are learning to trust it a little more. Dev/ops is a cooler crowd with more pull inside the organization than before.
This is why ‘enterprise technology’ has become a really great place to invest. It is not slow moving and stodgy as it was in former definitions. It costs less to build enterprise products than it used to and it has gotten easier to sell them as well. The value of an enterprise startup (meaning the IP) is a little more tangible than in Internet or eCommerce startups, and the iteration cycle is fast enough now that course correction can be made before a product veers too far off course. All this leads to a decent understanding of the startups chance for success before too much capital is sunk into the business.
I think west coast investors have a better idea of what enterprise is. While enterprise startups are becoming ever more common here in the east, they are still pretty rare. Sometimes we east coast investors wedge companies into the ‘enterprise’ category that aren’t quite enterprise. Way to often I hear, “yes, we are an enterprise company our model is B2B2C”. I shake my head. And I believe that will change.
As an east coast enterprise investor the types of companies I’m particularly interested today are…
- Database / Big Data
- Analytics and visualization
- Next generation BI, CRM, ERP
- Backup / disaster recovery / data migration
- Systems management
- Natural language processing
- Financial services applications
- Healthcare applications