Everyone is all lathered up about enterprise software, which is great. As we highlighted before, the category has long been the lifeblood of Silicon Valley returns. After a period of over-indulgence in consumer sites and apps that struggle to get to critical advertising mass, there’s something refreshing about just being paid.
There’s just one problem. What many people are calling “enterprise” today bears almost no relation to what people meant by that terms even just a few years ago.
That’s right, like “big data” before it, the term “enterprise” has been stretched so wide that its definition is essentially meaningless.
Enterprise used to mean software that was sold to large corporations or governments. Even companies that sold businesses to smaller businesses — like Intuit — were never considered enterprise companies. Even Salesforce.com and Netsuite were not, because they began doing deals with small- to medium-sized companies. Exactly one hot “next gen” enterprise software company is actually an enterprise software company by anyone’s definition: Workday. Not a surprise it was started well before this wave took off, and not a surprise it was started by the people who built PeopleSoft, one of the great enterprise companies of the last wave.
Today, the category seems to have morphed to include — as near as I can figure — any software that people who happen to work at companies might pay for. It doesn’t matter how big the company is those people work for, whether the company is paying for the software or the user is, whether one person is using the software or the whole company is, or whether you use it at home, work, or both.
To wit, not only do Netsuite and Salesforce look like classic enterprise companies by comparison, but Evernote, Yammer, and Asana are all considered enterprise. Never mind their core business isn’t in selling software to large organizations. I’ve even heard people call Dropbox an enterprise company, even though it’s also considered the consumer version of Box.com.
By this definition, how is LinkedIn not an enterprise company? Companies pay to recruit talent over it. I listen to Pandora at work every day and pay for a subscription. How is that not enterprise? And, for that matter, I could be convinced to pay for Solitaire. Enterprise?
You usually only see this level of label bastardization with a faddy new category, like “Big Data“. (See also: Mobile, social, gamification.) It’s strange that enterprise has resisted it this long, but is now falling victim to it.
It’s easy to blame the blogosphere. In a desperate need to find something interesting to say about a category they famously find boring, many wet-behind-the-ears tech bloggers have simply expanded it to include companies they care about. There’s precious little historical knowledge in the blogosphere, so it’s also possible that most people writing about technology don’t actually realize what the definition used to be. It’s also become a convenient shorthand for specifying that something isn’t consumer-focused. (We’ve been guilty of that, too.)
But the shift is about more than that. In the last 15 years, so many of the foundations that once defined enterprise have been ripped away by technology and business model innovation. The industry itself put the very definition of the category on shifting sands.
While my definition of the category above is pretty simple, there were other things that seemed basic laws of gravity physics with the enterprise biz. Things like having a huge sales force, selling big on the premise multi-million dollar deals, and having the IT manager bless each transaction.
All of that is being decimated by cloud computing, the pro-sumerization of business software, and the freemium and pay-as-you-go business models that have been pioneered over the last fifteen years. And in many cases, very different people are building enterprise companies in this age– people like Facebook co-founder Dustin Moskovitz and Box’s young, spazzy Aaron Levie. That necessarily changes — and you could argue breathes new life– into the model.
Atlassian, for instance, is much closer to the classic definition of an enterprise company than, say, a Dropbox, and yet, they totally lack a sales force. But that’s a timing thing. In any other era, Atlassian — or a company selling that kind of software — would have one. The rules of doing business have just changed, and that necessarily changes the industry to a point. It’s similar to assuming a news organization being created today would be an online business without circulation revenues. But that doesn’t mean anyone with a Twitter account is a journalist.
But it’s time to make a call. Either we redefine what enterprise means — and stick to it — or we agree to stop using what has become a totally empty term.
[Illustration by Hallie Bateman]