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Enterprise Software’s Trillion-Dollar Opportunity 

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Outside of the tech industry, an unmistakable trend is sweeping the business world.

Companies in industries as far ranging as transportation, pharmaceuticals and manufacturing are facing the pressures of digital disruption. As we move irreversibly into an economy defined by new competitive parameters, incumbents saddled with legacy cultures, business processes, and technology are stuck in the past. Others, like GE, Ford, Walmart and Deloitte, have realized that there’s no way to compete in the future if they don’t adapt now.

To do so, the way their organizations operate, the tools they run on, and the products these companies deliver will have to change. Workers are becoming more mobile, organizations are becoming more collaborative, firms are connecting with their partners and peers via digital networks, and traditionally analog products are being tied to the internet.

As enterprises begin to adapt to the digital economy, they need all new underlying technologies to get them there. And while today’s enterprise software market is massive — an estimated $330 billion spent annually — it’s predominantly made up of software categories that have been around for decades, like ERP and CRM. The far bigger opportunity for software startups will be building the technology that helps businesses in all sectors go digital.

This new software stack will dwarf that of the traditional landscape, creating a trillion-dollar enterprise software market in the process.

The Next Billion Information Workers

To many of us, mobility means that we’re now connected for even more hours of the day, never more than a couple seconds away from an email or task. But mobile has the profound effect of lighting up an entirely new part of the workforce that rarely used technology to do their jobs. Information workers are no longer defined as solely those sitting behind a desk, but instead include anyone who can leverage data to do his or her job better.

Just five years ago, we wouldn’t have imagined that a farmer or construction worker could be an information worker. But with products like Farmlogs, Planet Labs and Airware in farming and agriculture, and PlanGrid or Skycatch in construction, all new demographics of the workforce are being supported by information technology. And this is just the beginning. As every employee on the planet is enabled by a smartphone, the addressable market for enterprise software grows from about half a billion people to the billions of workers leveraging mobile devices to do their jobs.

Every Job is Software-enabled, Every Industry is Digitized

Just as early accounting software helped CFOs keep the books in the 70’s and 80’s, and CRM became the digital enabler of the sales team in the mid-90’s, every job function becomes software-enabled in the information economy. Zendesk did this for customer support, Zuora does this for the billing team, and GoodData, Tidemark, and Domo do this for business analysts. Killer apps, too, will emerge for roles traditionally outside the purview of Silicon Valley, like doctors, retail associates, police officers, pilots, and office managers.<

The age of analog is over, and this puts many businesses in the unavoidable position of having to redefine the very products they’ve built their companies around.

Of course digitized job functions won’t be the only way this disruption plays out. To connect every employee to critical information, hundreds of new startups are emerging to support companies across all sectors. Category-killing software will take over every industry, just as Veeva and athenahealth have dominated Life Sciences and Healthcare, respectively. We’ll see similar disruptors in financial services, manufacturing, oil and gas, supply chains, commercial real estate, retail, and more.

And while information technology swept through most enterprises in the 90s and 2000s aiming to automate the back-office, this decade will be all about extending the front-office: how customers are discovered, interacted with, supported, and sold to; how companies can exchange and collaborate with their vendors and partners; how researchers make discoveries and propagate them throughout their organization; and how products are designed, launched, and marketed.

All Products Become Information-based

Digital enterprises don’t just look different on the inside; they look different to their customers, too. Historically, information technology aided the development of goods and services behind the scenes, but going forward, a new set of technology will completely define them.<

Products are going from analog to digital, as Nest, Uber, and Netflix have demonstrated with thermostats, transportation, and media, respectively. And this means that competitive use of technology will determine the winners and losers of every legacy sector. The age of analog is over, and this puts many businesses in the unavoidable position of having to redefine the very products they’ve built their companies around (and the business models that go along with them).

Competitive use of technology will determine the winners and losers of every legacy sector.

Arming these disruptors’ attacks and incumbents’ responses will be a new set of underlying platforms and tools. Today, few modular components exist for building ‘smart’ devices, introducing predictive experiences into physical products or digital products, or making sense of the “internet of things.” For industrial companies to go digital, new startups like Samsara and Helium will emerge to prevent each industrial company from having to reinvent the wheel. As GE manages the data streams coming out of its jet engines, or Stanford Health Care delivers better virtual care beyond the hospital, new technologies will be required to support the effort, creating tremendous opportunities for startups that are building the platforms of tomorrow.

The technologies that will power a new set of information workers, digitize entire job functions and industries, and push products from analog to digital for the most part have yet to be built. There is a massive opportunity for startups to define a new era of work, and it’s not just the products and platforms they build that will look completely different, but in some cases, their business models as well. Zenefits is one of the fastest growing SaaS businesses of all time, and it’s achieved this without taking budget from the IT department, but instead finding a completely separate revenue source from insurance brokerage fees. And as more business models emerge, enterprise software spend won’t be constrained by IT budgets on its path to a trillion dollars.