6 Strategies For Cracking The Enterprise Tech Market In 2013

6 Strategies For Cracking The Enterprise Tech Market In 2013:from ReadWriteWeb by Alan S Cohen
With all the recent teeth gnashing about startup investment shifting from consumer to enterprise technology, it's worth noting that successfully cracking the enterprise market is no easy task:

• 70% of the U.S. economy hinges on consumer spending. Even with the pending fiscal cliff, it's kind of hard to ignore the numbers. 
• Enterprise technology is not a short game.

Unlike most consumer technologies, enterprise infrastructure and applications run on a much longer upgrade cycle: 5-7 years. While you might ditch your smartphone every year or two for a newer model, few companies are willing to swap out their CRM systems, storage or security technologies that quickly.
Switching behavior is both the most complicated and important subject in the enterprise technology market. Even if enterprise customers have good reasons to be unhappy with their technology vendors (e.g., lack of innovation, price gouging, poor support), their business runs on that technology. This makes them highly incentivized to see existing vendors address any issues and continue the relationship. As we all know, moving's a bitch.
Of course, enterprise tech is a rich, rewarding game, so it's worth exploring the strategies startups can use to overcome the barriers to switching in the enterprise market:
1. Transformational Technologies. The ultimate startup is the one that changes the game on an incumbent in such a way that the latter neither can block nor retaliate. Classic examples include Virtualization and Software-as-a-Service (SaaS). Because virtualization decouples compute functions from hardware (while running on top of the hardware), it is the ultimate disruptor because it's non-invasive. SaaS eliminates the stickiness of packaged software - and the lucrative support contracts that go along with it. Interestingly, while there tend to be many attackers in Virtualization and SaaS, only a few players tend to win big. Very big: witness VMware and Salesforce.
2. Changing Product Cycles. Catching technology giants in product transition cycles is one of the most effective ways to insert new technologies. However, this usually requires an outside force to speed insertion. Earlier in my career, Intel Centrino drove the need for enterprise Wi-Fi and forced an architectural change. In 2013 you can see many great examples of this idea, including Palo Alto Networks, Splunk, ServiceNow and Workday. These transition cycles don't last forever, though. Over time the incumbents typically build or buy their way into the new product segment and the situation stabilizes until a new cycle begins.
3. Trojan Horses. Sometimes a new enterprise IT category emerges in an indirect way. Cloud infrastructure eliminates the need to buy IT hardware and software; the rental model emerged as form of shadow IT for specific projects that could not wait for corporate IT to respond. It also became the preferred approach for brand new businesses (Netflix streaming). Amazon Web Services and Rackspace, two big early winners in cloud computing, sell computing cycles by the month, payable with with a credit card - often bypassing traditional IT purchasing processes. Once established, Cloud and SaaS vendors can then turn their attention to selling to mainstream IT.
4. New Buying Centers. The multi-hundred billion-dollar enterprise IT game now pivots on competition for the IT "stack," as we shift from the Client-Server/Web mobel to cloud computing. This change has created a new class of IT decision makers such as the "cloud architect." As companies move more to the cloud, this new IT leadership category drives key decisions for enabling new applications, also driving the buying all of the underlying IT components. And these new buyers may not be as wedded to the incumbent suppliers as were the decision makers they supplant.
5. The Consumerization of IT. The iPhone led to a watershed change both in enterprise mobility and computing. Not only did it challenge corporate purchasing patterns ("I buy, you enable," also known as BYOD, or Bring Your Own Device), it eliminated a final barrier to what constituted a business device. This is less about "consumerizing" enterprise IT, but rather, adapting enterprise IT to leverage consumer technologies. In addition to mobile devices, apps are challenging the application market for business software.
6. Coalitions of the Willing. For most small companies, hiring a large enterprise sales force and entering a year-long acquisition cycle is likely to be an expensive exercise in futility. Sure, you might be able to make a living selling to universities, hospitals and niche verticals, but attacking the Fortune 500 requires friends who need another reason to re-engage in a selling conversation. Manufacturing and strategic partnerships with hardware makers made a lot security companies rich during the client-server era (e.g., McAfee, Symantec). Today, companies like Box are changing the game through new kinds of partnership integrations.
Frontal assaults are the hardest attack strategy for an enterprise startup. Attacking a powerful technology company's profit sanctuary tends to piss them off. If you can pull it off, it might just get your company acquired, but run a big risk of perishing in the attempt.
That's why this tends to be the strategy of large companies (e.g., HP's acquisition of 3Com to attack Cisco) and does not have a great track record. The assault on the business PC by iOS and Android tablets and smartphones may turn out be a more successful example, but, Apple and Google and Samsung are hardly startups.
It can be done, of course. Many decades ago, Microsoft's PC operating system was such a technology and for a generation, a small company in Redmond changed the world. (With a big initial boost from IBM, of course.)
Current technologies that might have the power to force enterprises to switch and create hugely successful startups include Apache Hadoop, Network Virtualization, Flash Storage, and Cloud Storage and Collaboration. That's where I'd look for the next big thing.

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