The Evolution of Function-Specific Software

The role of the knowledge worker has seen a rapid transformation in the past few months as companies look to prioritize the digital economy and structure their organizations to be more agile, effective, and prepared. While Covid-19 has accelerated and illuminated this shift, the digital workflows of late are part of a much larger and more permanent change long in the making; that is, intelligent solutions are becoming core to various specific enterprise functions.

Key enablers, which include the widespread adoption of mobile, the emergence of AI / ML, and the ubiquity of the cloud are equipping companies with actionable data and the ability to leverage intelligent automation, subsequently increasing the reach and effectiveness of employees and solutions alike. This is driven in part by the shifting preferences of enterprise users, who through the internet have become increasingly connected on a global scale whilst expecting a consumer-like experience, and in part by the macro-economic environment, where the necessity to rationalize spend and eliminate inefficiencies has been thrust into the spotlight because of Covid-19. As a result, we’re witnessing an evolution of the roles and responsibilities pertaining to a variety of enterprise functions — specifically ones that traditionally involved manual, repetitive, and time-consuming tasks. Customer-facing roles, such as sales, marketing, and customer experience, now leverage endless amounts of information on their users’ preferences, issues, and decisions to increase revenue opportunities and reduce churn risk. Historical cost center roles, such as HR, IT Support, and R&D, are now strategic advantages for companies looking to maximize innovation, eliminate redundancies, and increase employee happiness / productivity. While the nuances of each role are different, all of these enterprise functions involve knowledge workers leveraging data and intelligent solutions to automate workflows, enabling them to focus on cognitive-based, meaningful aspects of their jobs.

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As companies look to prioritize innovation in order to increase efficiency and collaboration, and create competitive advantages, we are seeing a new wave of startups aiming to capitalize by offering low cost, high-impact intelligent solutions that make it easier for workers to accomplish various day-to-day tasks. Specifically, many of these startups are concentrating on maximizing adoption rates through a bottoms-up sales motion known as product-led growth with the goal of increasing their likelihood of reaching virality and more importantly, gathering as much data as possible to optimize performance. This is done in three ways:

1) Providing a clear / immediate ROI that’s a step function improvement to their current offering and directly related to their respective OKRs — hooking the user and increasing the likelihood of upsell / cross-sell.

2) Avoiding the slow and complicated sales process by minimizing friction– as simple as downloading directly from the website, experiencing a seamless onboarding process, and having sufficient documentation to easily promote to / onboard others in the company.

3) Capitalizing on recent satisfaction by enabling visitors to sign up immediately after interacting with the product — helping existing users indirectly market through their daily workflows, increasing capital efficiency by avoiding unnecessary marketing spend and sales efforts.

The most common examples of this are cross-functional, department-agnostic applications that I like to refer to as augmentation tools. These types of tools fall under categories like documentation / knowledge management, communication (messaging and video), project management, and collaboration.Image for post

Startups in these categories have seen explosive growth, especially in the past few months with the combination of a rapid and structural workflow rearrangement to remote work and the immediate need for enterprises to digitally transform in order to survive. The popularity and background of these Future of Work ecosystems have been broadly covered in some fantastic posts done by Pietro Invernizzi and Merci Victoria Grace, so we will primarily focus on department-specific applications that are likely used by one or two functions / roles within a company. As we mentioned earlier, this consists of sales and marketing, customer success, support, HR, IT, and various back-office functions — the bottom right section of the market map in my last blog post. Because these roles consist of repetitive, data-centric workflows, solutions that implement and leverage AI to eliminate the redundant and manual aspects as well as extract valuable insights are the logical choice.

The Incumbent Solutions Paving the Way

Before we go into the new wave of intelligent software­, it’s worth taking a look at the incumbent providers who paved the way and made companies aware of the value that comes from being cloud-based, data-first, and customer-centric. Companies like Salesforce (SFDC), ServiceNow, Zendesk, Coupa Software, and Workday capitalized on the shift to the cloud and revolutionized how enterprises think about the tools they use on a daily basis — allowing them to see the advantages of gathering and using vast amounts of data to drive key decisions across the organization. Because of the recurring nature of SaaS and constant connectivity via the cloud, these companies were able to win their respective categories by understanding their customers at a much deeper level. As a result, these solutions have become the industry standard for almost every department and act as full-service platforms that teams build their entire workflows around. This is proven by the incredible ascension of each of their market caps over the past 5–10 years shown below.

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As these companies have grown, more customers have begun trusting them as stewards of their most critical digital assets, which is not just shown in the form of contractual revenue, but also by becoming integral components of their customer’s primary workflows. For example, Salesforce has become so entrenched in sales teams’ processes of cultivating and storing relevant customer information and interactions, that it’s near impossible to perform a certain task without triggering some component of an SFDC instance. While most of the components core to Salesforce are somewhat manual in nature, there is still clear value that the platform provides to its customers and partners, allowing it to be a central piece of most companies’ go-to-market strategy and one that brings along an entire ecosystem of partners with additional capabilities.

Intelligent Software Seizing an Opportunity

The incumbents above created ecosystems that enabled companies to take the first step of digital transformation. However, we are now in the next phase where new inefficiencies created from the move to the cloud need to be addressed — creating whitespace and opportunity for new startups to solve specific needs. As digital transformation continues to be a top priority, there are two main trends that are emerging pertaining to the way companies evaluate software solutions:

1) They are increasingly more open to trying and implementing new tools in hopes of delivering demonstrable ROI, whether it be revenue uplift, economic or cost efficiencies, or labor hours saved

2) Employees and business unit heads are given much more optionality and freedom in picking the solution of their preference

A new wave of founders are recognizing this opportunity and looking to capitalize, mainly with intelligent solutions that provide immediate ROI and are affordable, powerful, and easy to adopt. Given the nature of AI-enabled applications, it is logical that these solutions are primarily geared towards specific roles in the enterprise, and address critical workflows or components of the job. Below are some of the main functions that we believe are being significantly transformed as employees look to leverage these intelligent software tools, making their jobs more effective and easier.

Customer-Facing / Revenue-Generating Roles

Marketing, Sales, Customer Experience / Support, and Software Development are all roles directly responsible for driving top-line growth. Whether it be through adding new logos or managing existing accounts, these functions are critical to the overall health of a company. Because of this importance, they are likely to have more influence than other roles in determining the level of investment that goes into the various tools they use. Additionally, given the competitive dynamics present when working directly with customers, especially in established markets, these teams are more likely to try new tools to find every possible advantage they can get to win, increasing their readiness for self-service software discovery. This dynamic, combined with an increasing emphasis on better understanding the customer’s needs and motivations, makes it easy to understand why next-generation intelligent software tools have already gained significant traction in these particular categories and will continue to grow in mindshare for the foreseeable future.

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Internal Functions

While many internal roles do not get as much attention as sales and marketing do — primarily because they aren’t generating revenue — they still benefit significantly from leveraging intelligent tools to better utilize data and automate repetitive tasks. These internal roles are critical to maintaining a healthy, capital efficient business and just so happen to be filled with tedious, manual processes that require high levels of accuracy and precision. Additionally, these functions are only becoming more important as the amount of data that a company deals with on a day-to-day basis continues to increase, making workflows more complex and requiring attention that most companies often do not have to give.

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Functions within the enterprise organizations are changing. As different business units adopt next-generation intelligent tools, they are witnessing gains in productivity, capability, and value that directly correlate to both revenue and cost savings opportunities. This will only continue to be more common as intelligent products become more effective in terms of ROI and adoption as well as larger organizations continue to develop the necessary infrastructure to fully utilize them. In a series of posts over the next few months, we will cover each of these roles in-depth , and their evolution as a result of increased optionality and acceptance of function-specific intelligent software tools.

What’s Next — How AI is changing how teams interact with Customers