In this ProductTank Heidelberg talk, Thomas Otter, Founder at Otter Advisory, explains some of the differences between enterprise and consumer software, and shares some tips for success in enterprise product management.
His key points include:
- Enterprise buying behavior is different to that of consumer buying behavior — the buying decision is usually not made by the user
- Product managers at early-stage companies should focus on the function rather than features
- You will likely think you know all the requirements as a product manager, but, you should always expect the unexpected as you start to build
Watch the video to see his talk in full or read on for an overview of the key points.
Enterprise software buying behavior
In consumer software, the person using the software is usually the one making the buying decision. On the other hand, with enterprise software, the buying decision is usually not made by the user. When building software for the enterprise, you need to take these two personas into account.
Types of organization
The type of organization, is also important. Thomas uses different types of flower to describe them:
Most organizations fall under one of two categories. They either have a strong central IT function or a strong line of business function. Organizations with a strong line of business function usually build their IT systems around one core vendor. These organizations are similar to a sunflower with a large core and small edges. Unfortunately, it can be hard to get a product into these types of enterprise organizations, but once your product is there, it will likely be there for a while.
These organizations have a small focus on central systems, spending more money and effort on innovative systems and preferring a best-of-breed approach.
Outside of these types of organizations are also some antipatterns. The cactus organizations only buy things from one vendor. They rarely entertain others and tend not to innovate.
The dandelion antipattern refers to an organization that is always launching pilot projects. They seem to love a product, do a proof of concept but never end up buying.
One critical thing to do in enterprise software is to understand the ideal customer. Through cloud computing, it’s much easier to gather information as a product manager on these customers. The key is to know your customers and build relationships so that you can ask deep questions about your product.
Feature vs function
Thomas takes us back to 1927 to imagine what it would be like to travel. Typically as a consumer, he says, you would have all of the details about the ship and everything it offered, including an orchestra, food, and more. At this same time, he adds, planes were also functional, but not as featured equipped. Despite this, for the purpose of traveling, the function of a plane eventually beat out the function of a ship.
Thomas suggests that product managers at early-stage companies should treat their products in the same way as the early stages of the airplane — focusing on the function rather than features.
Niche is cool
Thomas adds that as a product manager, you should never assume that enterprise vendors own the market. In software, the opportunity is often between the gaps. Large vendors don’t have the time to fill every niche, and it is possible to own a small niche and be profitable.
The first question many enterprise companies ask about software is ‘how does this integrate?’.’ The key is to define what integration is required. Before integrating any software, you need to know why you’re doing the integration and which system is in charge.
Expect the unexpected
Finally, to really hammer home his point, Thomas provides one more example. This example, is of an augmented car test project. He tells us that while the car could detect animals that moved side to side, a trip to Australia as part of a pilot project saw sensors become confused after seeing a Kangaroo going up and down.
The key takeaway from this talk, and these examples, is that you will think you know all the requirements as a product manager. But, it’s only after you start building a product and speaking to customers that a kangaroo will jump out at you!
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