The Enterprise Technology Equation

Enterprise companies need to stay competitive. They need new solutions to their business needs. Often, new technology can drive these solutions. So why do technology startups often fail when they attempt to sell directly to enterprises? The answer lies in the “Enterprise Technology Equation.”

It’s true that new technologies are often the driver of new solutions for enterprises. But the problems with selling directly to enterprises are numerous:

1. Lost in the noise. Enterprises face a dizzying array of startups trying to sell to them. Enterprises don’t have time to evaluate each of those startups, so they end up ignoring nearly all the inquiries. The only proven way to break through the noise is to have a personal connection to the enterprise. Most startups don’t have those connections, so they fail to gain traction in the enterprise market.
2. Complex sales process. It’s never simple to sell to enterprise. There are typically multiple constituents and a complex political environment to navigate. Often, the startup’s lack of insight into the complex enterprise environment leads to missing value propositions for buyers or influencers, leading to the loss of the sale.
3. Long sales cycles. Given the complex sales process and the array of individuals that need to align to approve a sale, the sales cycle can be extremely long. Startups often don’t have the resources or bandwidth to spend on extended sales cycles. They need to focus on sales they can close this quarter.

All of the above are certainly true, but the most important reason that startups fail to successfully sell into enterprise customers is that their solution, no matter how user-friendly, is never easy to implement in an enterprise environment (regardless of what their engineers think!)  This fact is at the heart of the Enterprise Technology Equation.

Both technology product companies and consultants play a critical role in delivering real solutions to enterprise customers. Consultants and Systems Integrators are the ones who can take a core technology and turn it into something of value for the end customer. A systems integrator can take that core technology and integrate it into the various bespoke back-end systems typical of an enterprise environment. Consultants can not only handle the integration but also blueprint best practices for the setup and running of the solution. In addition, consultants can help with the organizational changes that come with new processes and procedures.

And because consultants don’t develop core technology themselves, they rely on their technology partners to bring innovation to their customers. Without these technology partners, consulting companies (and especially systems integrators) would have nothing to deliver to customers. The consultants need the core tech companies, and the core tech companies need the consultants. And enterprises need both in order to get the solutions they need. This is the symbiotic relationship of the Enterprise Tech Equation.

Given the criticality of the Enterprise Tech Equation to consulting companies, it’s surprising that more consulting companies aren’t focused on developing early relationships with the most promising enterprise tech startups. I believe that consulting companies must push themselves to be more like venture capital firms and work to identify promising potential technology partners at the earliest stages. Like VC, large consulting companies have the budget and expertise to do this. The holdup is the risk involved—something that VC has built into its model, but consulting does not. Consulting companies must understand that out of 20 high-potential partners, perhaps only one will turn into a large partner driving many millions of revenue. Currently consulting companies are largely shying away from this kind of risk, but I believe they must embrace it and build it into their financial models. The ones who can successfully do this will win the ability to generate substantial new revenue and remain relevant in a world of next-generation technology.