What do these seemingly disparate tech startup business problems have in common?
a) Enterprise SaaS and Web 2.0 adoption is slow
b) Consumer Web 2.0 applications can’t monetize
Answer: They both only go half the distance
Most enterprise SaaS offerings are commodity plays that duplicate internal legacy system capabilities at a lower cost without productivity gains. While enterprise Web 2.0 offerings offer modest productivity gains, but still must displace and integrate to powerful substitutes, e.g., your Wiki is cool, but Email and our Intranet seem to get the job done. Web 2.0 consumer applications hit the wall, because consumers just don’t pay for software anymore. Most startup exits are based on building usage, and then blasting users with advertising.
What is missing from this equation is the magic combination of a disruptive business process improvement backed by an equally disruptive change in business model enabled by these so-called disruptive technologies. I’m old enough to remember the client-server re-engineering craze of the early nineties and the Web 1.0 revolution in the late nineties, but I don’t see the same drive for out-of-the-box thinking in Enterprise 2.0. Where is the creativity?
Here is one for the record. What happens when you combine B2B SaaS with B2C Web 2.0 into a B2B2C platform?
a) You unleash enormous potential for productivity and service gains in marketing, sales, support, and product development by re-engineering end-to-end processes that connect employees directly to the customers they serve. Most companies, even all the cool new Web 2.0 ones, limp along with incredibly weak integration between their internal systems and their external Web presence. Yet, few see the irony in the fact that their customers don’t interact with their CRM system.
b) You create built-in monetization, because you are selling your product to businesses. Businesses will spend money on your software, even while the core value-added of your offering is likely to be customer facing. In fact, your monetization options extend far beyond simple employee-user based licensing, because you are now directly servicing your customer’s customers, e.g., advertising, cross-network benchmarking, complimentary content and web services, and revenue-sharing or performance-based affiliate programs.