Zero One: What’s the Scoop on Enterprise Software?

For a decade, Michael Fauscette, as group vice president of software business solutions at IDC, sought to learn the truth about the shifting enterprise software market. As an industry analyst, though, he could only view the market from afar, mainly through interviews with vendors and customers.

Fauscette didn’t have access to data showing what was really happening, what software buyers were really talking about – that is, until two years ago when he joined G2 Crowd, a crowdsourcing enterprise software review site, as chief research officer.

“Having access to this kind of data is really exciting,” Fauscette says. “At a base level, we understand different categories, different markets, and how products are really usable. We see that people don’t think this or are dissatisfied with that or are trying to aggregate things.”

Zero One sat down with Fauscette to get the scoop. Topics ranged from hot technology trends in enterprise software – namely, artificial intelligence and marketing tech – to the emergence of the line-of-business tech buyer to predictions for 2018.

(G2 Crowd introduced reviews of channel companies this year, and Fauscette riffs on his company’s role as matchmaker.)

There have been reports about a slowdown in digital transformation. Your alma mater, IDC, says 60 percent of companies are at a “digital impasse.” What are you seeing?

Fauscette: We talk “digital transformation” to death sometimes. I could ask 40 people and get 40 definitions. We did 1,028 buyer inquiries last month in October, and nobody said, “Can you help me with my digital transformation?” What they said was that they’re having a problem with lead scoring or closing deals or closing the books. They come in with business problems, and we help them figure them out.

Related: Zero One: Can Companies Get Back on Track with Digital Transformation?

I’ve thought about it a lot and have tried to build a maturity model – how mature is this business based on certain benchmarks? But you have to look at each case, and I’m convinced that what digital transformation is really about is the business doing the things they need to do at the stage of their life cycle.

With smaller businesses, especially, I’ve seen really fast adoption because they’re nimble and need the technology to be an equalizer with larger competitors.

Artificial intelligence made G2 Crowd’s list of most popular software and services. Does this mean AI adoption is real?

Fauscette: Yeah, that’s my belief. What’s exciting about AI now is that you’re starting to see AI show up inside of applications. Reviewers talk about the fact that this function is saving them time or helping them close the deal. At first, I was a little worried people wouldn’t adopt AI, or maybe they wouldn’t understand it, but it seems they’re excited about the idea of using some sort of machine learning or artificial intelligence or chatbot.

You see it embedded in all kinds of things. The expense app we use, for instance, will make my expense report for me. It does a really good job, too. I did an experiment with a meeting schedule bot, and the bot got it right. At first, I’m really checking it out – did it get all three people in this meeting? Is it really running? But it worked fantastically.

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You’re starting to see it turn up in things that are just really usable and relevant: filing expenses, scheduling meetings, improving lead scoring, delivering data from insights that you weren’t able to get before. When results make your life a little easier, it’s easy for people to get excited about something.

In some ways, I think it’s moved beyond the hype to more mainstream. It’s not mainstream now, but more than it was.

Lots of promises around AI delivering game-changing business outcomes. Is it really going to deliver on those?

Fauscette: I hate those colossal, mountain climbing claims. Maybe all you’ll need is for AI to give the right insight about the customer at the right time. It might not be flashy, but it would be a huge win. AI becomes more valuable as it becomes more invisible and part of everything we do. I think that’s what you’re going to see more.

Are you seeing the same things with the Internet of Things?

Fauscette: We’re starting to see IoT show up a little more now, too. It’s one of those things people talk about quite a lot. But I don’t have a lot of good review data on it. While IoT has a big impact on some applications, I don’t think it impacts users enough yet for us to get a lot of comments.

Marketing tech has been exploding over the last few years and now boasts more than 5,000 vendors. But it has to consolidate sometime, right? What is G2 Crowd’s data showing?

Fauscette: Yeah, it’s still one of our highest traffic areas. But it’s perhaps a little different than it used to be for the reason you hit on: consolidation of vendors or consolidation of features, which may actually be more accurate. A lot of the tools have gotten good enough to do a set of things. You don’t need to buy the best of every little piece.

If you look at the general things that a marketing department needs to run, more often than not the marketing automation solution is at the center of things. A lot of features have consolidated around it. Do you really need to worry about the social studio by itself, or is the one embedded in your marketing automation tools good enough?

Related: Zero One: B2B Marketers on Verge of Tech Buying Spree

Last summer, in our small business survey, one of the products that almost everyone had but was looking to replace was email marketing. As much as I hate that stuff in my inbox, it’s still the lifeblood of marketing. And there’s still a whole lot of ways to send better – more relevant emails at the right time to the right person.

Another interesting thing, there’s a bit of vanity play. Certain brands have the right cache to a marketing department in a big company. You feel like it’s better to have Adobe’s marketing suite or whatever. I think there’s a bit of that in the market.

We’ve heard a lot about the rise of the line-of-business executive as the new tech buyer, but is this true? Who’s buying enterprise software today?

Fauscette: It’s still business users, not IT. Smart companies, though, have forged a different level of partnership between the IT organization and the line-of-business.

The line-of-business, particularly marketing, picks out what they need and buys the technology. But it’s not done in the same way as five years ago when I started to see that happen. Now integration is a bigger issue. Because of that data backend problem, I think people are a little more aware that there has to be some IT involvement in the system selection. You have to make sure that you can fit it into your architecture.

Related: Zero One: 10 Line-of-Business Tech Buyers

Another big reason [for bringing in IT] is security. In a lot of businesses, the risk of a breach is great. If you don’t involve the IT organization in the conversation and have a breech, I don’t think the line-of-business executive is really into taking on that responsibility. The high-profile nature of the security problem drives things a little differently.

Does G2 Crowd include reviews on channel partners?

Fauscette: We added that section to the site this year, so I don’t have enough data right now that I can say I’ve seen a lot of trends. But I’m excited about that, because I think there is a ton of opportunity to help buyers find the best local reseller and get connected with them. Companies still buy a whole lot of stuff through VARs [value-added resellers]. Once we get the reviews, that’s going to be really interesting data.

Lots of channel companies are used to selling to CIOs and going through RFPs. Lots of business people think “channel” means omnichannel or social channel. Do they even know each other?

Fauscette: Yeah, they don’t. Once we get enough reviews, I think that’s a natural place for us to do matchmaking. We would be a really logical place if you’re looking for a solution.

You could be talking to one of my buying advisors or one of my research specialists and, at the end of the conversation, they would be able to say, “Are you planning on buying? Do you want to see local resellers in your area?”

Since it’s the season of predictions, what are your thoughts for 2018?

Fauscette: The most obvious one is that AI embedded in applications is going to grow really fast. 

Then the whole IoT edge computing discussion, where it adds valu, is going to heat up. This is a time when you’ll start to see more clarity and more discussion around some additional IoT use cases that perhaps bring it into the broader population of companies.

The cloud platform wars are also going to continue to expand. We’re certainly seeing the ecosystems coalesce. Even this year at Dreamforce, I saw that they’re much more focused around ecosystem than they’ve ever been. That’s probably where you’ll see a lot of growth next year, the ecosystem to support those cloud platforms.

Tom Kaneshige writes the Zero One blog covering digital transformation, AI, marketing tech and the Internet of Things for line-of-business executives. He is based in Silicon Valley. You can reach him at [email protected].