Should it be the Goal for Enterprise Software Companies to “Own the Customer” & Place “Barriers to Entry”?
Doug Hadden, VP Products
FreeBalance is a medium-sized Independent Software Vendor (ISV) with considerable success competing against very large Enterprise Resource Planning (ERP) vendors. We are sharing 16 lessons learned by bucking conventional wisdom to encourage industry innovation and creativity.
Companies selling into the “enterprise” and “government” markets introduce barriers to competition to where enterprise software firms effectively “own the customer” rather than the customer owning the software.
- Enterprise software market consolidation reduces competition through acquisition
- Enterprise software firms acquire middleware vendors (database, application server, virtualization etc.) to lock-in customers to a complete software stack
- Enterprise software firms are using hardware appliances for further lock-in
- Enterprise software firms generate the majority of revenue from software maintenance while forcing upgrades (with one notable exception in the ERP world)
- Enterprise software firms are trying to prevent 3rd party maintenance firms from operating
- Enterprise software firms audit customers to uncover new ways to charge them
- Methods designed to manipulate the market and reduce competitiveness is not ethical
- Forcing the cost for upgrades when there is little or no value is not ethical
- Power is shifting from companies to buyers thanks to social media and the increase in available industry information
- Enterprise software market is moving out of the so-called “tornado” meaning that customer-centric processes are critical to growth
- Enterprise customers have alternative “middleware” choices through open source technology
- Trust has become the critical factor in repeat business
- No forced product upgrades
- Adjust the product roadmap based on customer feedback rather than the other way around
- Support commercial and open source alternatives for middleware to achieve best value and trust with customers
- Organize as a customer-centric organization and use customer scorecard metrics for management decisions