It is a sign of the times. The convergence of social, cloud, mobile and information (Big Data analytics, communications between devices on the Internet of Things and content management) is dramatically changing the needs of big corporates, creating new opportunities for ambitious young start-ups. Indeed, according to Gartner, the enterprise software market is now the fastest-growing segment of global IT spending.
Research by London-based venture capital firm Atomico to identify and locate the world’s $1 billion software companies shows enterprise to be the largest category. Of the 134 billion-dollar upstarts identified, 23 were in enterprise software applications. The next largest category was e-commerce with 20.
So it should come as no surprise that Box CEO Aaron Levie will get top billing alongside executives from big tech companies including Amazon CTO Werner Vogels and Salesforce’s JP Rangaswami at Web Summit in Dublin. The entrepreneur has built a cloud content management start-up with an estimated valuation of $2.4 billion.
Box has raised more than $500 million since launching in 2005 and B2B software companies in EMEA are also attracting investor interest. “The combination of innovation and agility gives start-ups a competitive edge over established players,” says Gartner Research Vice President Mick MacComascaigh. “The nexus of cloud, mobile, social and information is changing the paradigm. The larger IT players are seeing their profits under pressure and the risk of contraction in areas where they were once kings. The younger companies who are disrupting the [B2B software] markets are innovative and can turn on a dime.”
Convergence Of Social, Mobile, Information And Cloud
Box, and rival Huddle, an enterprise content collaboration software company which was founded in London in 2006, “can be more agile and innovative than the EMCs and the IBMs of the world when it comes to content collaboration and social collaboration.”
Big corporate clients apparently agree. Box, which competes with the likes of Google, IBM, Oracle and Microsoft, has snagged blue-chip clients such as General Electric, Eli Lilly and Gap while Huddle’s clients include Johnson & Johnson, Comcast and KPMG as well as the U.S. Department of Homeland Security and the European Commission.
Web content management is another area where young companies are challenging established players.
Take the case of Jahia, a Swiss open-source software vendor which is emerging as a significant challenger to traditional vendors in the Java-based User Experience Platform (UXP) market. UXP is an integrated set of technologies that includes portals, mash-up tools, content management, search, rich Internet application (RIA) tools, analytics, collaboration, and social and mobile tools.
“With the convergence of social, mobile, information and cloud, businesses today need an integrated software approach to their digital initiatives,” says Elie Auvray, CEO of Jahia.
Jahia’s clients include Europcar, Nationwide, Ben & Jerry’s, Abercrombie & Fitch and Samsung Galaxy resellers in the U.S. as well as many Fortune 500 companies.
“Emerging open-source players such as Liferay [an enterprise portal company] and now Jahia are experiencing a tremendous traction on the market, challenging the dominant vendors such as Adobe, Oracle or IBM,” says Grégoire Revenu, a managing partner at Bryan, Garnier & Co., a pan-European independent investment bank focusing on European growth companies.
“We believe the ECM [enterprise content management] market is now experiencing what other segments of the enterprise software market have recently gone through with the rise of players such as Tableau Software, Workday or ServiceNow.”
Corporate Communications Are Also Being Disrupted
“Web content management is showing strong growth,” says Gartner’s MacComascaigh. “Every company has to use all channels available to build up relations with target audiences. Even if it is B2B, an additional presence is needed on social and mobile channels. Companies need to know what content to deliver across different devices and get the context right. Their issue is, ‘how do I know what works and what doesn’t and still maintain brand strength across all of these devices?’ The challenge is to bring multiple systems together in an agile way.”
Corporates will also increasingly need to measure the effectiveness of their multi-channel communications. That’s where start-ups like SimilarWeb, which offers web measurement and competitive intelligence, come in.
“A few years ago the emphasis was on efficiency but what happens if you are being efficient but what you are doing is wrong?” asks MacComascaigh. “There is a clear shift of corporates trying to measure the impact of what they are doing over multiple channels.”
Corporate communications are also being disrupted. Real-time email and messaging to improve teamwork offered by early-stage British start-ups Mailcloud and Spatch are two examples of fresh approaches.
And, enterprise content management software from a variety of start-ups is helping corporates to manage their document storage both in the cloud and on-premises, and across mobile, PC and other devices. Europe’s Alfresco is one of the sector’s stars.
Big Money In Helping Small Businesses
Alfresco’s software “is the most prominent open-source offering in the enterprise content management market and that in itself is a disruption,” says MacComascaigh. “Entrusting internal communications to open-source software was largely unheard of until Alfresco came along, he says. “It has disrupted the overall thinking in this market and made open source much more acceptable and trusted at the enterprise level.”
There can be big money in helping small businesses as well. Berlin-based NumberFour raised $38 million. If it can achieve its goal of designing software for SMEs that is extremely low cost and can scale, helping young companies to afford the same kind of IT capabilities as large corporates, it will have a winning solution, says MacComascaigh.
As collaborative communications get more complex it become crucial for companies to offer continued availability of Web-scale IT operations. Enter start-ups like Moogsoft, which is developing collaborative event management based on machine learning.
While established IT companies are saddled with legacy systems, new players have no baggage, says Moogsoft Chief Marketing Officer Rob Markovich, who has worked for seven start-ups. “It is a great time to be in B2B software.”