In this post, I demystify enterprise software by giving you a holistic understanding of what it is, what it is not, and how to think about enterprise customers.
Here are the three questions I’ll answer in this primer for B2B Product Managers:
- What is enterprise software?
- What is an enterprise customer?
- What are the three categories of people involved in the enterprise product lifecycle?
Note: If you are new to enterprise software or B2B Product Management, I recommend my article: Understanding the Innovation Journey – A Map for B2B Product Managers.
What is Enterprise Software?
Enterprise software is an umbrella term for many applications that solve the pains of an organization—as opposed to a single person. By definition, enterprise software uses a Business to Business model (B2B) instead of a Business to Consumer model (B2C).
By the way, in addition to the term enterprise software, you may be familiar with terms such as B2B product, digital product, and B2B solution. These all refer to products built to address the needs of a company and are often used interchangeably.
Enterprise software is not one size fits all. Some B2B solutions support organization-wide processes, such as email or other communication tools managed by the Information Technology (IT) department. Others support the business processes of a particular department, including CRM solutions for Sales, lead generation tools for Marketing, human capital management solutions for HR, etc.
Enterprise software also covers specialized applications, such as electronic medical records systems in Healthcare, eCommerce and payment solutions for Retail, logistics solutions for Supply Chain, monitoring solutions for Manufacturing, control solutions for the Energy industry, network management tools, and other Operational Technology (OT) applications.
Grouping so many categories under the umbrella of enterprise software might seem counterproductive, but all B2B software applications share characteristics such as:
- The complexity of dealing with buyers and a large ecosystem of users.
- The need to iterate and test assumptions.
- The importance of internal alignment with your leadership team.
- and the difficulty of working through pilot programs.
Understanding these attributes can help you demystify enterprise software and build successful solutions, regardless of your industry, market category, or customer size.
What is an Enterprise Customer?
Another term I want to define is “customer.” In a B2B context, a customer is a company, not a user. For example, if you sell products to the retail industry, then Walmart and Target are your customers. Depending on their size, each customer might have dozens, or even hundreds, of users across many locations.
The word “enterprise” is sometimes used exclusively for describing a large company. That’s why you see B2B vendors divvying their Sales team between small and medium businesses (SMB) and enterprise businesses. Although this distinction might be useful for some, I find it misleading.
When I talk about enterprise software, I’m referring to solutions built for enterprises regardless of their size. So, whether you are building products for startups or Fortune 500 companies, you are building enterprise software.
What Are the Three Categories of People Involved in the Enterprise Product Lifecycle?
For Business to Consumer (B2C) products, the “customer” is simultaneously the person with the pain, the person who buys the product, and the person who uses it to solve their needs. Therefore, learning the needs of B2C customers is a relatively straightforward effort, since you only need to understand the needs of that one user.
Understanding enterprise customers is much more complicated. In fact, from my enterprise experience and from coaching dozens of product teams, I can definitively say that understanding enterprise customers is the number one challenge facing B2B innovation teams.
Understanding your enterprise customers means understanding their desired business outcome, as well as the people, processes, and tools involved in achieving that outcome.
Your first step is identifying the three categories of people involved in achieving the business outcome:
- Champion: person accountable for achieving a business outcome.
- Users: people internal or external to your customer’s organization who use your product as a tool to support the Champion’s business outcome.
- Buying Committee: people involved in evaluating and purchasing your product
Enterprise Sales and Marketing teams use multiple names to refer to your customer’s Business Leader, the one who is accountable for achieving a business outcome. Some familiar names include Buyer, Executive Sponsor, Decision-Maker, and Champion. I prefer the term Champion because, in the early stages of the innovation journey, you need more than a Buyer or a Decision-Maker. You need someone who will actually champion your untested product, someone who will take a leap of faith that your application can solve their problem.
Although this person has the pain you could potentially solve, they might not be the ultimate decision-maker or might not have the budget or the authority to purchase your solution. Instead, the Champion knows how to navigate their organization, and they can get the support they need to bring your solution in-house.
Let’s explore these three categories with an example:
The Chief Operating Officer (COO) of a mid-size company is tasked with reducing the company’s travel expenses by 30%. To achieve this business outcome, she decides to purchase an enterprise expense tracking solution.
Achieving the business outcome depends on many people across the organization using the expense tracking solution. These people can be organized into our three categories:
- COO: Responsible for the business outcome of reducing travel expenses by 30%.
- COO: Serves as both the Champion AND a user of the solution.
- Employees: Tracks expenses and reimbursements.
- HR Manager: Sets travel policies in the system.
- Line Managers: Approve expense reports.
- Directors and VPs: Receives roll-up reports of expenses for their area.
- Assistants: Manage approvals and expense tracking for senior executives.
- IT Manager: Controls access and security.
- System Integrator: Develops integrations to other enterprise solutions.
- COO: Acts as the Champion, a user, and part of the buying committee.
- VP of IT: Possesses budget and purchasing authority (i.e., Buyer).
- Director of Compliance: Reviews and approves Service Level Agreements (SLAs) and any other legal documents involved in purchasing the software.
See? It’s complicated! For your B2B product to be successful, it needs to provide an effective way to support the workflows of all these users, and all workflows need to support the desired business outcome of your Champion.
The Bottom Line
To demystify enterprise software, start by creating a shared understanding with your peers and your leadership team on what enterprise software is, what enterprise customers are, and who is involved across the enterprise product lifecycle.
Once you have this shared understanding, you can then start tackling the innovation journey, including defining your target market and discovering the needs of your Champions and user ecosystem.
To get you started with the B2B innovation journey, I recommend reading my article: Understanding the Innovation Journey – A Map for B2B Product Managers. And if you want to dive deeper into this topic, including learning the techniques you’ll need at each stage of the innovation journey, I recommend my book: The B2B Innovator’s Map.