verticals - ReadWriteWeb http://www.readwriteweb.com/feeds/tag/verticals en Copyright 2009 Richard MacManus readwriteweb@gmail.com Sun, 22 Nov 2009 08:05:49 -0800 http://www.sixapart.com/movabletype/?v=4.23-en http://blogs.law.harvard.edu/tech/rss 11 Things Startups Should Know About Enterprise 2.0 Yesterday we wrote about Enterprise 2.0 from the point of view of the Enterprise, the buyer. The conclusion was that the impact of social media on the Enterprise was very big, addressing the very "nature of the firm". This post looks at Enterprise 2.0 from the point of view of the vendor, specifically startups. This is a 30,000 foot view, but we aim to get past the hype to insights you can use in your startup. Further posts in our recently launched Enterprise Chanel will drill into specific market segments, companies and technologies.

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  • Subscriptions are the best revenue you can get. Subscription revenue is more recession proof than advertising and more predictable than traditional enterprise software licensing. As long as you don't mess up, you will have a low churn rate. Then your new subscriptions drive your revenue growth

  • It is much easier to get subscriptions from a business than from consumers. Sure we all love the idea of consumer subscriptions, the potential is enormous. But do this reality check. How many subscriptions do you pay for? How many current subscription costs would you love to eliminate or drastically reduce? What would your really (no, really) agree to pay for every month? We are in a serious consumer recession in the developed markets that may last a while. What was always hard, just got an awful lot harder. Selling to business is much easier, if you focus hard on the next rule.

  • The other 80/20 rule. 80% of enterprise IT budgets just "keep the lights on". Only 20% goes to new stuff. I learned this in the technology nuclear winter in 2002, when a 20% cut in IT budgets meant that no (zero, nada) new projects were approved. If you can show how to reduce that 80%, you get a better shot at the 20%. That 80% market is a replacement market. You need to know what cost you are replacing. The incumbents are looking at the 20% budget as well and they have the inside track. You have to attack the 80% to make it big.

  • "Parallel replacement" is new. The old enterprise replacement market was based on capital expenditure write offs. If the client bought a $1m license fee over 5 years ago, you had a shot at selling another license fee for something "better, faster, cheaper". In the new enterprise world of SAAS and open source, upfront license fees are the exception rather than the rule. Buyers prefer to hold onto the old stuff a bit longer until they can see either an open source or SAAS alternative. Replacement is always very risky, leaving incumbents in control and startups banging outside the door in frustration. So you need to show that you can run in parallel with the existing solution for a period until you are established enough to be a viable, safe replacement. Step 1 is run in parallel, step 2 is replace. This is what Google Apps and Zoho are doing to Microsoft office (I use both Google Apps and MS Office. Even though I use Office less frequently I own a license, so why delete it? When I get a new laptop I will decide whether I need to buy Office). To play this new parallel replacement game you need to a) offer a free entry point (the Freemium strategy) so you get traction with a low cost of sale and b) you need to show one very clear new value proposition that will tap into that 20% budget for new stuff.

  • Have one simple new "blue ocean" value proposition that any business user can understand. You need this to access the 20% of budget going to new stuff. Being "cloudy" is not a value proposition, it is simple]y a way to deliver your value proposition. The incumbent can always launch their SAAS equivalent. Your free entry level just gets you through the door so that you get a chance to upsell to your subscription; free is not a value proposition. You have to show how you will do something really basic such as either a) increase revenue with a low cost of sale or, b) reduce cost on an existing process or c) create strategic sustainable advantage in measurable ways. Most likely you will do this by enabling better collaboration/communication, both within the enterprise but also, more critically, outside the firewall to the "extended enterprise". For a startup, this has to be "blue ocean", a market that has not yet been defined by the incumbents. By its very nature, this means the market size will be very hard to define and there will almost certainly not be recognized external authority that has defined the market size. Smart VC understand that Blue Ocean strategy and precise market size estimates seldom go together.

  • SaaS ++ means that Open Source is no longer a problem. Open Source has been great for buyers but it has also taken the entry level market away in most segments and that trend shows no sign of letting up. That is bad news for a startup looking to sell traditional software with a "better, faster, cheaper plus we try harder" replacement pitch. You cannot undersell Open Source. That has forced many ventures with great software and strong teams into the dead-pool. With a "SAAS ++" offering, you can use Open Source as the base, add a bit of new code and bundle it all up with hardware and service in a monthly fee. Unless buyers really want to do all that in-house, using their dwindling internal IT staff, you have a shot at it. SAAS alone however is not a barrier to entry. Anybody can replicate it. Which means (smart) VC will/should pass. You need the "++" bit as well. That is likely to be something to do with viral, communications and network effects that create a growing user base and proprietary data coming from that base. That is the "magic sauce".

  • You need to become a very good financial and data modeler. You will need some old-fashioned face to face relationship selling to get large enterprises to understand your solution, so that the "powers that be" encourage adoption and do not seek to block it. But the business will grow one subscriber at a time and users convert to subscribers one click at a time. Modeling becomes a core competency. Modeling the costs of all the SaaS components (R&D, hardware, infrastructure software, software maintenance, system and data maintenance). Modeling the cost of subscriber acquisition using SEO, SEM, social networking, conversion from free to paid and inside telephone sales in a highly efficient funnel process that delivers the right $ per subscriber. Modeling the revenue growth with multiple what if variable assumptions. Modeling the ROI for your clients at various levels of adoption.

  • Most external market size projections do not help your business plan. Forrester Research reports that Enterprise 2.0 will be a $4.6 billion market by 2013. That is not nearly granular enough for a real business plan. You are not really in the Enterprise 2.0 market. Saying "we will get 1% of the $4.6 billion Enterprise 2.0" market is totally meaningless and will simply get you shown the door in the VC office. You are in the market of solving a specific business problem, for a specific type of customer, competing against specific incumbents and startups. That is how you need to build a market size, from the bottom up. This is particularly true for "blue ocean" strategies where the market has not been defined by an incumbent. Building the real world, bottom up market size takes real hard work and detailed market knowledge. Look for a small enough market where you can get 20% and take that to 50% share and then leverage that market to get 10% in another market. Rinse and repeat. It is an old formula, but it works.

  • You need VC, they need you but there is a disconnect. Since 2000, most VC have sent any business plan with the word "enterprise" straight to the trash. With good reason. During the nuclear winter, the enterprise IT market was dead as a dodo. Then the big incumbents got into the consolidation game and it looked like you would count enterprise IT vendors on the fingers of one hand. The cost of entry was high, needing expensive sales teams upfront and the revenue was lumpy and unpredictable. Yech. Better to back a few inexpensive developers building a free service that some big vendor would buy and figure out how to monetize. That was a great game for a while. Most VC now view it as in its final innings at best. There is a shortage of buyers, no IPO market, we are in a cyclical downturn for advertising and in a major funk figuring out how social media can be funded by advertising. So VC need Enterprise 2.0. But they have missed the early winners. Very few of the current Enterprise 2.0 startups are venture backed. This is a disconnect. The early players always find it easier to bootstrap than later vendors. Today you need capital to fund the ramp-up and to build distance from competitors as the Enterprise 2.0 market moves from "below the radar" to "early hype" phase, thus dragging more entrants into every category.

  • Vertical is not the same as Horizontal. Classic Web 2.0 services such as Delicious, YouTube and Skype are geared at mass markets. Anything that is more niche has tended to be called "vertical". That is confusing. Vertical means a specific industry such as banking, healthcare or manufacturing and sub-sets of those industries. Horizontal (applying to any industry) should mean a set of common and linked features used by a specific type of person in the company (e.g. accounts payable by Finance, CRM by Sales and so on). The general rule of thumb has been for vertical ventures to be bootstrapped and eventually rolled up into larger entities. VC tend to view vertical as too limited. Horizontal on the other hand is big enough.

  • Know how to deal with secrecy, structure and control needs. Social Media is about being open, loose, unstructured, informal and fun; no ties allowed. Enterprises are about secrecy, structure and control. Ties show that you are serious and fun is for after work. The ties and fun bit is just style. But secrecy, structure and control is real. If you threaten those, many forces within the enterprise will shut you out. It will be like the red blood cells attacking the foreign virus. On the other hand, if you go along with all the secrecy, structure and control rules of the enterprise you will lose the social media benefits of extended enterprise collaboration and innovation. Many people within enterprises understand this and some of them are in a policy-making position of authority. In general, the trend is towards loose, unstructured, "emergent business networks". So "make the trend your friend", but beware of the very strong forces of opposition and deal positively with their legitimate needs.

    • Conclusion

    What is your position in the Enterprise 2.0 market. Do you work in IT in a large Enterprise? Do you work for a large incumbent Enterprise IT vendor? Do you work for a startup that is going to change the Enterprise world? Are you writing about this rapidly emerging market? Do you have unique insights or research to share? We would love to hear from you in the comments and maybe as a Guest Author. Email us if you're interested in writing for ReadWriteWeb's Enterprise Channel.

    You can subscribe now to our special RSS feed for the Enterprise channel.

    ]]>Discuss]]>     http://www.readwriteweb.com/archives/11_things_to_know_about_enterprise_20.php http://www.readwriteweb.com/archives/11_things_to_know_about_enterprise_20.php Enterprise Thu, 21 Aug 2008 01:40:00 -0800 Bernard Lunn     Roll Your Own Digg: Coming in Six Months digg-logo.pngAccording to various reports from the last Digg Townhall/meetup this week, Digg's CEO Jay Adelson announced that Digg will soon let its users create and manage their own 'sub-Diggs.' Digg's main competitors like reddit and Mixx have already given their users this ability, and Digg has been rumored to start adding this feature for a while.

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    ]]> According to Adelson, these sub-diggs will allow Digg to expand into new verticals and give niche publishers a chance to have their content featured on digg, even though they would never meet the threshold for promotion to the Digg homepage.

    Maybe one of the most interesting features of these sub-diggs will be that those users who manage them will be able to control how and when newly submitted stories will be promoted to the front page.

    For Digg's competitors like Reddit and Mixx, the sub-sites have definitely been a success. At reddit, which is arguable a lot smaller than Digg, the more popular sub-reddits can have between 3000 to 20,000 subscribers.

    As social news sites like Digg grow in popularity, a lot of their early, hardcore constituents can often feel pushed to the sidelines by the more mainstream users who start using the site over time. With these sub-sites, these users can still make the site their home and take control over their experience again.

    ]]>Discuss]]>     http://www.readwriteweb.com/archives/roll_your_own_digg_soon.php http://www.readwriteweb.com/archives/roll_your_own_digg_soon.php News Fri, 25 Jul 2008 11:39:41 -0800 Frederic Lardinois     Productivity, How-to and Advice Sites: Making Linkbait Useful Again In the early days of the web, going online was heralded as a great way to connect with other people who have had experiences similar to your own. The web was a place to get answers, advice and community no longer limited by the geographic location of the individuals you connected with.

    While all of that remains true today, the ubiquity of the internet, the ease of publishing and the rise of online advertising has lead to the emergence of new kinds of websites: productivity, how-to and advice/Q&A sites that broadcast, scale and monetize that kind of information.

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    ]]> Then there's people who make lists of those types of sites. Many readers love those lists, but how useful are they really? They could be a whole lot more useful than they are. One way for that to happen is to turn such lists into Custom Search Engines.

    Productivity Sites

    This post was inspired by a list I found on the very top of Del.icio.us Popular last week, titled The Top 100 Productivity and LIfehack Blogs. Posted to a site called CollegeDegree.com, it clearly took some work by someone to put together and will probably bring in a steady flow of traffic for some time.

    Making Productivity Productive

    Ironically, the list isn't very conducive to productive use once you've found it. Imagine all the time you could waste exploring all those sites! None the less, hundreds of people bookmarked the list and probably intended to come back to it later. It served the publisher well, but how well do such lists really serve readers?

    The first thing I think of when I see a list like this is: how much more useful would this be in a Custom Search Engine? A whole lot more useful.

    It's in that spirit that we offer you the first of three CSE in this post: the Productivity and Lifehack Multi-site Search. (Note that if you are reading this post in a feed reader, you won't be able to see the embedded search boxes below. You can click through to see the full post.)

    I've bookmarked that engine's page and will refer back to it whenever I find myself struggling with a productivity problem that I think someone else has probably solved before.

    Curious about how Google Custom Search Engines work? See our previous coverage, Google Custom Search: Setting The Bar For Vertical Search Engines.

    How-to Sites

    Sometimes we make lists of our own here at RWW. The most successful (and fun) so far has been Josh Catone's Big List of Sites to That Teach You How to do Stuff, a collection of the best How-to and Tutorial sites around the web. Readers loved that list and many contributed more high-quality suggestions in comments. Many of the sites are filled with video tutorials, including on some really obscure topics.

    Shortly after we published that list, I threw the URLs in the post and comments into a Google Custom Search Engine. It's proven really useful to me, so here it is for you to use as well.
    How-to Site Search.

    The How-to of the How-to

    Making custom search engines is pretty easy once you've got a list of good sites on a topic. If you've got a list that someone else has already posted somewhere, just run that page through a service like the link extractor from Webmaster-toolkit.com. Then you can copy and paste the relevant links into the very easy-to-use Google Custom Search Engine creation service.

    I make these all the time, the hardest part is to compile the list in the first place. The easiest way to make use of this tool is to keep your eyes peeled for lists that other people have already created. That's what I did for the Semantic Web search engine in the RWW toolkit for top issues of 2008, for example. If you're a link-baiting blogger, though, why not offer your readers the added value of putting your lists into a CSE?

    When I make one of these CSEs for publication, I try to give it a title and a description that refers back to our brand and URL too.

    Advice Sites

    Once you've got work (productivity) and weekends (how-to) taken care of, what's left? Love, of course! What better place online to answer your questions about live, love and other non-technical matters than advice and Q&A sites?

    If you're looking for a linkbaity list on almost anything, you'll probably find one at Mashable. You'll probably find it through Google, on Mashable, actually. Link list posts have served that site very well, they're undoubtedly one of the biggest contributing factors to Mashable's position as the 8th most linked-to blog on the web and recipipient of millions and millions of monthly pageviews.

    I found Mashable's list of advice sites on their list of list posts (sheesh!) and ran that puppy through the Link Extractor.

    Take out the internal links, check out the comments to see which links there are good and paste that list into a Google CSE. What have you got? An Advice and Q&A Site Search Engine.

    Some Advice

    Some lists of sites will make for a better search engine that others. Blogs are particularly good because there's lots of content and Google indexes almost all of it. Company sites aren't as good and application sites aren't much good at all to query. I ask myself whether I can see myself or others querying whatever collection I'm thinking about assembling; it's easy enough to set up that you may as well give it a try, I've set up some search engines that I use regularly, others that I never use anymore.

    Obviously this is just one of many ways to add value to a list. Other things we've done here include filtering the feeds in a list through AideRSS to create a "greatest hits" feed for top sources on a topic, we've displayed recent items from or search results regarding the resources in a list using FeedDigest and we've put together Google Presentation slideshows describing how we assembled collections of resources so that other people can repeat the same process.

    The point is that linkbait style lists are often not as useful as they might seem. Readers are growing increasingly cynical. They are much better served if you can put just a little extra time into offering them tangible value and demonstrating meaningful investment of energy on your part.

    For more on this subject, check out Del.icio.us Popular for the tag Linkbait and ask how you might be able to raise the bar on resource aggregation in the blogosphere.

    ]]>Discuss]]>     http://www.readwriteweb.com/archives/useful_linkbait.php http://www.readwriteweb.com/archives/useful_linkbait.php Blogging Mon, 17 Mar 2008 16:01:03 -0800 Marshall Kirkpatrick     Orglex: Semantic News, Blog and Job Search for Industry Verticals Orglex is a new semantic-web powered news, blog and job search engine with a social networking component and industry vertical focus. It's an interesting service that brings together a number of different approaches we've seen elsewhere to build something relatively new.

    Semantic analysis of content makes topic focused search smarter than otherwise possible, and wrapping it in other value adds like blog and job search is a smart, solid play.

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    ]]> The first step Orglex users take is to select from any of 30 industry "hubs," collections of news feeds and resources organized around topics ranging from pharmaceuticals to social networking to management consulting.

    The news section of each hub displays recent stories vetted by topical relevance via an industry specific ontology, combined with relative weighting of top sources according to how often they write about a particular sector (again determined by industry specific ontology). Its an interesting approach to news, a combination I don't think I've seen before.

    A news feed made up of all the hubs you select is then displayed on your Orglex page and is exportable in feed format. The company has a white-label version of its Venture News feed available on the leading blog VentureBeat, though this automated aggregation of links off-site doesn't get very prominent billing there. No surprise and no knock on either company for that.

    The feeds published by several of the hubs look like something worth subscribing to already. The most recent items in the "social networking" feed are on the left, judge for yourself.

    In addition to news, Orglex also aggregates industry specific job listings from sites around the web and pages for people in each industry. The people section of the site seems inoperable right now and for a job aggregation site to try and to wring cache out of big brand icons as "featured employers" seems questionable.

    One of the most interesting parts of the site is the leader board set up for each hub. Top sources are presumably indexed manually but ranked by the frequency with which they write about that hub's topic, according to the ontology. I'm always looking for new ways to discover top sources in new niches and Orglex could be a good tool to put in that toolbox.

    The whole site is a work in progress and that's probably why Orglex hasn't gotten any media coverage to date except for the Amazon Web Services blog post I discovered it through. None the less, it's an interesting service to watch.

    Readers interested in semantic web developments should check out the resources we've compiled on that and four other emerging key topics in the ReadWriteWeb Toolkit for 2008.

    ]]>Discuss]]>     http://www.readwriteweb.com/archives/orglex_semantic_search.php http://www.readwriteweb.com/archives/orglex_semantic_search.php Products Tue, 26 Feb 2008 13:42:17 -0800 Marshall Kirkpatrick