We read and discussed a great article from Business Insider yesterday. As the newest member of WizeHive, I wanted to share my thoughts on why WizeHive is focused on business, not consumer apps. In the article, Jim Goetz, VC with Sequoia capital, is ‘shocked’ more tech related startups aren’t going after the enterprise space.
“At Sequoia, upwards of a hundred entrepreneurs a week present and if we’re lucky, maybe a dozen of them are focusing on the enterprise,” he told Disrupt attendees at TechCrunch’s recent conference in San Francisco. “In the last 10 years, there have been 56 IPOs in the enterprise space that have gotten north of a billion [dollars in market capitalization] and just 23 in consumer.”
With $500 billion being spent annually on legacy enterprise systems from the likes of Oracle, Cisco, and SAP, why aren’t more entrepreneurs going after a slice of this pie?
Enterprise-level, legacy systems have brought with them a host of problems. They are often expensive, inflexible, and the technology lags behind the faster, more agile consumer apps. With the emergence of the cloud and an increasingly tech savvy workforce, employees expect their enterprise tools to change as quickly as personal tools.
Many people are ditching traditional enterprise system solutions, in favor of SaaS and other cloud based options for everyday work. Whether it’s Google Apps, Dropbox, Salesforce, Skype or Twitter,these easy to use, cheap, yet powerful tools are tackling business process problems from CRM to support to expense reports to file sharing.
This consumerization of IT presents tremendous opportunity. Gartner Inc., in a 2011 industry report cites that by 2014 over 25% of business web apps will have been built by citizen developers — a user operating outside of the scope of enterprise IT and its governance that creates new business applications for consumption by others either from scratch or by composition. In other words, the days of Oracle, Cisco and SAP exclusively supplying workers with business apps is long gone. A large, scattered and wild west like environment (primarily on the cloud) is on the rise with security a prime concern.
Which direction will these web apps take? Will it be a one-stop-shop offering a secure, online database of apps for everyday workers (with no coding experience)? Or will scattered, niche, cloud-based & SaaS solutions remain the norm?