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Enterprise 3.0 = (SaaS + EE + SME + TWS)

Posted on Tuesday, Sep 11th 2007

So the variable I talked about adding to the Enterprise 3.0 formula is Small Medium Enterprise (SME).

Why is SME important? You’ve heard me say this before. But let me reiterate.

For one thing, there are 25 Million of them, with an enormous spending power. To give you an example of a software company that successfully penetrated SME, I would point you to Intuit (Nasdaq: INTU). Intuit has a market cap of about $10 Billion, on a 2006 revenue of $2.3 Billion. Microsoft has unsuccessfully attempted to buy this company in the past, with the single objective of entering the SME segment via a killer app (small business accounting software).

Few other companies have managed to penetrate SME through other killer apps / niches, Autodesk (ADSK) being one that I mentioned earlier. ADP and Paychex in payroll processing are very successful companies that cater to SME in form of killer app “services”, as is Salesforce.com in Customer Relationship Managent (CRM).

Now, adding SME to our framework brings us to the sales model question, which is the fourth variable I propose to add to our formula.

Typically, since SME sales have small Average Sale Price (ASP), the viability of the model depends entirely on being able to “close” these deals on the phone. The deal sizes do not support actually going in person to close a deal. If the solution is simple enough, and the value proposition obvious enough to convey, such that deals CAN be closed on the phone, they can scale as SME-leveraged businesses. Thus, the 25 Million SME customers can be reached through an efficient Telesales channel that is both high reach, as well as profitable.

Another point to note is that before the advent of desktop sharing / web conferencing technologies like Webex or GoToMeeting from Citrix, it was not easy to give demos of the products while on the phone. That has changed. Today, software is readily and rampantly demo’ed online, while the sales person is on the phone with the prospect.

So, the combination of TeleSales and WebDemos, I propose to call TeleWebSales (TWS), and is the fourth variable that we include in our Enterprise 3.0 framework.

In fact, experienced sales executives use TWS to sell even higher priced software, except, they use it earlier in the lead qualification process. This ensures that those accounts that get higher touch, in-person sales visits are truly qualified, and warrant such investment.

That brings us to our current definition, Enterprise 3.0 = (SaaS + EE + SME + TWS).

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