Why is enterprise tech lagging behind consumer tech?

by Brian on March 27, 2012

In the last 10 years or so, the consumer technology sector has released one innovative technology after another: Facebook, Twitter, IPhone, mobile apps, cloud services, etc. During the same time, enterprise tech has been less noteworthy. Why has enterprise technology lagged behind?

I haven’t researched this topic extensively, but recently found a couple posts on the subject. One by Chris Dixon and one by Brian Manning. They argue that enterprise tech is lagging, in part, because of the sales process. In short, the B2B sales process requires that vendors only need to convince a few enterprise purchasing agents to buy their software. Enterprise software vendors dump lots of money into their sales force in order to convince enterprises to buy their products. In contrast, the B2C market has orders of magnitude more buyers, which makes it more difficult to win business through advertising and sales force.

In addition to Dixon and Manning’s argument, I’d like to add my perspective.

I would argue that many large enterprises are buying uninspiring enterprise software because that is what they want at the moment. Why don’t they want more innovative, cutting edge social technologies? First, let me start with some background points:

  1. Large Companies – the kind of companies that buy enterprise software – have hierarchical org structures.
  2. The Internet – the foundation for the excellent consumer tech – is all about decentralization.

See the problem?

Consumers are the perfect audience for new social tools because consumers are already decentralized and distributed. Large companies, on the other hand, have org structures that are incongruent with distributed tools.

It will take time for organizations to figure out how to come to terms with the Internet. And this is not a technological question, it’s an organizational one. The fact that the Internet changes organizations is not a new idea: The ClueTrain Manifesto made this point over a decade ago.

So when will the lag in enterprise technology disappear? When large companies begin to embrace the Internet in the same way that consumers have.

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