For B2B Cloud SaaS apps, the Enterprise Chasm separates small early-adopter users from larger enterprise customers, adapted from Geoffrey Moore’s bestselling Crossing the Chasm. Crossing this chasm quickly and efficiently is key to winning your product category across the market.
In this blog post, we’d like to share why you should cross the enterprise chasm, what makes this leap so difficult, and how you can make your app enterprise-ready.
The benefits of crossing the enterprise chasm are many, but here are some of the ones that stand out:
Waiting to cross this enterprise chasm is a big risk. While you work to innovate your product and educate the market, a competitor can piggy-back off your existing work and capture the lucrative enterprise segment first. This is an extremely difficult territory to recover. In fact, Box probably wouldn’t exist today if Dropbox had crossed the enterprise chasm quickly and efficiently. We’re seeing the same battle play out now with Slack and Microsoft Teams fighting for the enterprise market share.
Crossing the enterprise chasm increases your product defensibility, decreases customer churn, and expands your market size. With these benefits, it’s easy to understand why companies would want to cross the enterprise chasm. The next section of this post will cover why companies struggle to make this leap.
There are many Go-To-Market changes you’ll need to make in order to become enterprise-ready: positioning, pricing, packaging, sales strategies, security, compliance, partnerships. For the sake of keeping this blog post digestible, we’ll talk about product changes you need to make.
To determine these enterprise-ready product changes, we interviewed many enterprise IT managers. From our research, Enterprise IT Managers ask the following three questions when determining if an app is enterprise-ready:
The easiest way to provide visibility into what’s going on in your app is via Audit Logging. Audit logs serve as an activity stream of every event that’s happened in your app. To successfully instrument audit logs:
Enforce Single Sign On(SSO)/SAML. SSO allows end users to login with their company’s Identity Provider (IDP). This is often required to enforce enterprise IT security policies. Because authentication is handled through a third-party IDP, IT doesn’t have to deal with a growing complexity of password management - and they have more control over user access.
The important thing to note here is that there is no single standard for which Identity Provider an enterprise needs to use, so you could be looking at eventually building and maintaining integrations for these common Identity Providers and more:
In addition to SSO, consider also building Directory Sync. Directory Sync allows support for automatic user provisioning/de-provisioning based on the directory service your customer uses. The SCIM protocol and services like Azure AD are most common. Companies with upwards of 500 employees aren’t going to go into your app to add or remove a user manually - you have to meet them at their source of (user)truth with integrations like SCIM and Directory Sync.
To earn the trust of enterprise IT managers, fill out Vendor Security Questionnaires (VSQ). These codify your security policies on how you deal with data, ship code, and basically express what you do operationally. Common examples of questionnaires you might have to fill out include:
To verify that your security practices are compliant and airtight, enterprise customers will ask for compliance verification. Depending on your industry and service area - these can vary widely. Some common ones include:
Another often-asked policy is a Service Level Agreement (SLA), which usually covers guarantees around your app’s uptime, support, and pricing adjustments should you not meet those standards.
In this blog post, we discussed the benefits and difficulties of becoming enterprise-ready, as well as exploring key product changes you can make in order to begin crossing the enterprise chasm.
In summary, crossing the enterprise chasm allows you to differentiate your product and unlock more revenue and a bigger market size, but it’s difficult because it's a complicated, ongoing, difficult-to-balance commitment. It's also risky to wait to integrate these changes. If a competitor gets to the enterprise segment first, you'll have a tough time recovering that lost ground.
Enterprise IT managers determine if your app is enterprise-ready by measuring the amount of visibility, control, and trust they have in your app. These decisions are often made by considering the availability and quality of features like SSO, audit logging, and security policies.
Sound like a lot to tackle? It is, and this is just the tip of the iceberg. We would know - we help B2B cloud SaaS apps cross this enterprise chasm every day.