The Journey from Traditional to Cloud-Driven Enterprise Sales Model
Is there an entrepreneur out there who is not motivated to make millions of users love his product?
In the enterprise or consumer world, we all share the same dream. But making this dream come true is a long journey that will not end well for most of us.
I would like to share eXo’s experience to help new companies grow faster by avoiding the mistakes we made and leveraging our successes.
1. The early days
From 2003 to 2010 we bootstrapped the company thanks to large customers that built complex solutions on top of eXo Platform. Most projects took a year to reach production and required many professional services.
To attract those customers we worked with a couple of experienced enterprise sales reps and SI partners. The sales cycle was long (about 12 months), unpredictable, and most of the time involved a proof of concept.
If you do the math, it simply means that 24 months passed between first customer contact and the production phase. If all went well, the projects brought in millions of $ and we learned how to create a product, document, maintain and support it.
However, it is a model that requires a lot of energy and a lot of capital to scale quickly and globally. In other words, it was not the best way to fulfill our goal of reaching a million users. In this video, Peter Fenton summarizes the key question in one sentence: “Do you hire sales to drive growth or do you make the product frictionless so that the growth occurs natively?”
2. We had to change something!
People perceived us as a high end solution targeting big accounts. We asked ourselves: What can we do to reach the large client base that we dream about without losing our existing customers? Do we have to change our product? Our marketing? Our sales model?
We ended up improving all three!
First, we needed an out of the box solution built on top of our platform that people would understand, love, talk about and be able to easily use from the start. If your product needs a manual, you probably missed the point. It still had to remain extensible and customizable to please our existing customers.
Then, we needed a way to reach our potential customersquickly and tell them about our incredible product. Being open source in 2010, as eXo Platform has always been, was not enough, fewer and fewer people were downloading software. In order to reach out to this potential client base, we also needed an online cloud offering so that people could register and try the product with one click.
Finally, we needed a sales model that would allow us to offer this product to a large number of people at a low price but still enable sufficient profitability for continued innovation.
3. Easier said than done!
We decided to create an out of the box Social Business solution for several reasons:
People understand and spend time using consumer social networks that become the glue of their digital lives. These social networks will perform a similar role for the enterprise and hence will be the IT entry door.
Most social software involves applications with poor extensibility and customizability. People spend time in those silos but do not interact with the IT where the work is done. An open platform play in an app world was obvious.
The existence of a well-identified mindshare leader, Jive, with poor extensibility, no freemium offering, and an expensive traditional enterprise sales force, all of which made them vulnerable to open source and cloud freemium platform alternatives.
It took us 3 years and a Spin Off to add the social functionality, with amazing design and UX, and to re-architecture the platform to make it truly cloud-ready.
Our R&D investments to add elasticity and multi-tenancy paid off. We are now able to handle a large number of non-paying companies on a couple of servers that scale up and down depending on usage requirements. This results in huge cost savings that we can pass on to our customers by offering very competitive pricing.
eXo still has a long way to go but we have now validated the new positioning, the new sales model is predictable and users love our product, which is the only thing that really matters… and our 2014 Q1 results are amazing!
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I'm Chief Executive Officer of eXo (The Open Source Digital workplace), a company I founded just out of university to serve its first customer, the U.S. Department of Defense. I'm also board Member at Meeds.io, an association of software vendors that provides its members with employee recognition software.