The enterprise sales model is dead
It's perhaps no secret that the enterprise sales model is broken. Software-as-a-Service (SaaS) and open source have picked the lock on the enterprise, enabling CIOs to try before they buy, disrupting the old model of paying far too much for demoware and roadmap dreams.
It's a welcome shift of risk from the buyer to the vendor, as Geva Perry highlights:
We're now witnessing an increasing trend of bottom-up sales. A casual decision made by developers on a day-to-day basis, not a grand strategy laid out by the CIO. Try-and-buy is the norm, and so are subscription payments and other models that take off the financial burden from the customer and places it on the vendor.
But it's not only a matter of a shift to subscriptions, as CMS Watch's Kas Thomas details: CIOs want pricing greatly simplified:
These days, buyers of enterprise software are looking for simplicity -- simplicity in licensing, simplicity in accounting, simple APIs, uncomplicated UIs. If IT experts have learned anything in the past five years (years that have seen fast/simple technologies like Ruby on Rails, REST, and AJAX overturn a lot of apple carts), it's that complexity is costly. And in the current economic environment, there's no room for excess costs.
Open source provides that simplicity. It enables enterprises to pay for only the value they need, something which Red Hat has been highlighting lately. SaaS also provides this simplicity, though it leaves out the customer freedom that open source affords.
In either case, however, they demonstrate where software sales are going: smaller, incremental deals rather than big upfront commitments based on little more than slides and vague promises.
Follow me on Twitter at mjasay.
Matt Asay brings a decade of in-the-trenches open-source business and legal experience to The Open Road, with an emphasis on emerging open-source business strategies and opportunities. Matt is vice president of business development at Alfresco, a company that develops open-source software for content management. He is a member of the CNET Blog Network and is not an employee of CNET. Disclosure. You can follow Matt on Twitter @mjasay. 
You mean... there were no 180 days trial versions of Windows, Office and other enterprise software?
Great point. When I was working for Microsoft I saw not only hundred/thousands of corporations take advantage of the 180-day trials, they also got access to the software through the Select and MSDN subscriptions which allowed for trial use. And many enterprise sales relationships were built on proof-of-concept trials. Clearly Matt doesn't know what he's talking about.
Matt, like many Open Source fans unfortunately, likes to tout the "advantages" of Open Source over commercial software by making assumptions that aren't always true about either. I'll sum up the most common ones:
1) There is no try-before-you-buy concept in commercial enterprise software (fact: many companies, including Microsoft, have trial periods available).
2) Data is locked in the system and can't be shared easily with closed-source systems (fact: almsot all proprietary enterprise systems have standard interfaces and languages in which to get information into or out of their system - it's just common sense as most enterprise software doesn't live in its own bubble).
3) Vendor lock-in doesn't happen with Open Source software (fact: vendor lock-in happens everywhere that software becomes mission-critical, and where the cost to switch out software is high. Most of this cost comes from implementation planning, data cleaning and conversion, user re-training, and post-implementation support, none of which are any cheaper with Open Source than with closed-source systems. Since the switching costs are still high, so is the propensity for lock-in.)
4) Open Source software is cheaper and lower risk (fact: while licensing costs are lower, Open Source systems must usually be customized more than proprietary systems, increasing both the cost of implementation planning and the risk of implementation failure).
- by wleewillard April 11, 2009 7:39 PM PDT
- Wow I had no idea that Microsoft was paying people to push their message. But then again considering they have billions of dollars to lose why not.. Hopefully people realize the truth of Open Source. It is freedom plain and simple. And it is a better method period. I have used Windows for 10 years, and have never had a day go by that my machine hasn't frozen up, and had to restart. I started using Linux a year ago, and have not frozen one single time, THINK ABOUT THAT. It is better software and it is free. Ballmer you better keep paying people to crap on Open Source, cause the more people that try it, the people will no it works better.
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