The venture capital firm DFJ wrote in a recent blog post:
“Savvy entrepreneurs and venture investors tend to ‘think big,’ meaning…they build companies that go after big markets and especially those with incumbents that are ripe for disruption. As a venture capital investor, [what’s] on the top of my list for 2014? Enterprise software—a $120-billion-dollar market dominated by a small handful of very large and 20-plus-year-old vendors. Due to the profound technological shifts of SaaS and mobile, these giants are incredibly vulnerable to disruption and are starting to come under siege by a new generation of scrappy, forward-thinking challengers. The stakes in this war are enormous. To underscore the scale, consider that four of the largest players (Microsoft, IBM, Oracle and SAP) account for more than $750 billion dollars of market capitalization.”
I agree with much of this. All told, the next wave of enterprise software will be even greater and likely become a trillion-dollar market. Why such a large market? Because the four big vendors do not even account for the numerous vertical industries that have their own unique platforms or even lack any software platform to begin with.
The other factor is: the current wave of SaaS vendors will soon buckle under the weight of overwrought platforms that have been built out over the course of a decade. They have done a remarkable job taking market share from the previous generation of enterprise vendors. With mobile apps taking over the enterprise, however, the newer mobile-first/mobile-only software providers will quickly eat into the Web SaaS companies.
They are all in the castle together, and the mobile crusaders are coming to bring down the enterprise empire to establish a new order. This will be fun to watch.
This article was originally published on Strong Opinions, a blog by Birch Ventures for the NYC tech startup community.
Image credit: Inside DFJ