Thursday, July 7, 2016

With an "ERP for the CIO" product, uGovernIT challenges the "startups only pursue the consumer market" stereotype

A lot of the glamor in the technology world shines on the fabled Silicon Valley startups. You know, brilliant young people, huddling over their laptops coding night and day, and coming up with Snapchat. Or Instagram. Or Angry Birds. What is the common denominator for that startup world? It's directed at the consumer market, and most likely, to the goal of being acquired by a bigger company for a LOT of money.

What do they have in common with the enterprise CIO, and the needs he or she faces every day? And why does it seems as though most of that precocious startup talent is focused on the consumer space?

That is a story in itself, and I'll tell it through the example of an exception to the "startups are only interested in consumers" idea.

 uGovernIT is an ingenious startup, based in greater Los Angeles.  It challenges that conventional startup thinking by aiming directly at the pain points faced by C-level executives in the enterprise. Even more specifically, they are going after the midmarket segment of the SMB space.

uGovernIT is "ERP for the CIO," an integrated suite of IT management functions delivered through a web browser. Founder Subbu Murthy sees an opportunity to bring the same kind of disruption to enterprise applications that consumerization of the enterprise has brought to the workplace.
uGovernIT founder Subbu Murthy

Although uGovernIT works with larger enterprise deployments, the focus is on the mid-market--a standalone product that is completely functional in a smaller enterprise even without back-end systems in place for functions like project management, portfolio management, and resource allocation.  In common with consumerization of the enterprise products, uGovernIT is quick to deploy and does not require extensive configuration or infrastructure investment.  Another powerful lesson uGovernIT takes from consumerization: you can drive quicker time-to-value in business IT by simplifying and standardizing processes while allowing some customization at the user level.

I can bring personal experience to bear on this commentary, too. As I've written in previous posts, since moving to the bay area in 2013, I have worked in the retail space at both a national chain of about 100 stores and at a much smaller lifestyle operation with a website, a couple of retail locations, and 2 restaurants. In my stealth retail analyst role in each of them, I was astonished to see the difference in the IT approach compared with a Fortune 500 company. Specific expertise is rare, ability to innovate is almost nil because so many resources are devoted to keeping legacy tech going, and purchase decisions are made by people with almost no knowledge of the bigger technology world.

If any marketplace is ripe for disruption, it's the midmarket and its beleaguered CIO. Surely a web-delivered app that gives smaller companies low-cost access to enterprise-grade services like workflow, analytics, and project/resource management would be a huge draw.  But it's not as simple as "build it and they will come." 

I was introduced to Murthy by a colleague at a major research firm; the uGovernIT startup is not itself large enough, or the recipient of enough analyst coverage, to warrant coverage yet by IDC, Gartner, or Forrester. But my analyst colleague still saw the value in Murthy's work, and suggested that he and I talk.  I've spent several hours in conversation with with Murthy and his CIO John Grunzweig.  uGovernIT is a fine offering with a clearly defined market.  It's definitely a sound business model.  And as detailed in part 2 of this report, it reflects some important emerging technology ideas you've read about on for several years.

In e-mail exchanges, I had the following conversation with Murthy:

Infrics: Tell me about your decision to develop uGovernIT. Why this product? Why this market?

"As a CIO, I felt that CIOs did not walk the talk. On one hand, they would be recommending analytics and business intelligence, but they were not practicing it. The reason was not that they were not smart, but they did not have the tools that they could afford. The mid market could not afford the kind of tools their big brother could. So uGovernIT was formed to provide a one stop for all tools needed to manage IT."

--Your product is live and your team is dealing with sales and with clients in the field. What lessons have you learned about the decision to develop for SMBs instead of, say, a potentially lucrative mobile app for the consumer space?
"Perhaps, my motivation was driven by my experience as a CIO in mid-market firms. Money is a by-product and not a goal in itself. So when I saw a need and most product firms were only focused on the big companies, I decide to invest and develop a tool that was easy to use but with great utility."

--Are clients revealing new markets to you based on the way they respond to the uGovernIT "ERP for CIOs" concept?
"That is a starting to happen. Our entry into the construction vertical is derived from the need for dynamic resource management that connected the resource supply to demands."

--You mentioned to me once that it's not just developers who seem fixated on the consumer market, but that the venture capital community has been challenging for enterprise-directed startups. What message would you like the V.C. world to hear about enterprise products?
"Great question. My message to VCs is consumer products have pizzazz and the lure, but enterprise products are critical. The shift from just being an Analog enterprise to Digital is well on the way. The case study shared by CIO Magazine (November 1, 2015 Issue) provides insights into how IOT (Internet of Things), analytics and the mobile platform have enabled Michael Nilles to embark on a journey where technology and core business of Schindler (elevators) are inseparable. The existing enterprise systems need to be disrupted with totally different systems. For example, action centric systems will replace data centric ERP. I feel what we are doing to IT management, there will be disruptive technologies that will render SAP, Oracle expensive and irrelevant."

--After I spent a couple of hours in a product demo, it seemed to me that the sweet spot for you in the market is a firm big enough to need ERP-like functions, but not so large that they have already invested in spot solutions. As a former CIO yourself, will you talk a little about the integrated approach you've chosen? Do you see your offering as more of a "one integrated solution" or as an integrated front end for systems or business processes that companies may already have in place?
You are right on the money. While our tool is marketed as a one-stop complete solution, we can be the front end tying things together for firms that do not want to change transactional systems. For mid-market with a solution, the one integrated solution probably applies, but for larger firms they want to probably retain the point solutions, therefore, the integrated platform which can tie things together is a good metaphor.

--Talk to me about the architecture of uGovernIT. I'm specifically thinking about the use of a well-liked backend in Microsoft's SharePoint as a starting point. What are the implications for you as a startup, and for your customers as a "you already trust this program" sales point. 

While our platform supports multi-tenant models, we felt that most mid-market companies are tied into Office 365 and SharePoint. This is why decided on the SharePoint approach. That said, we only use SharePoint for content management and access, but we have our own workflow and analytics engine.

--I asked earlier about your message to V.C.s What insights do you have for those considering developing for the enterprise market?
My advice to entrepreneurs considering the Enterprise market is three fold:

1. Know your market. I was a CIO for several years before I could embark on this product.

2. Have a target customer. I had three adopters even before I wrote a single line of code.

3. Have good mentors. I had over 20 CIOs who guided me.

In part 2 of this report, we'll examine what uGovernIT does, and how it aligns with classic themes like stateless computing and complexity management.

IT management as a service: the disruptive offering from uGovernIT

In part 1 of this report, we looked at the startup world, and uGovernIT's role as an exception to the consumer-focused world of Silicon Valley

Startup uGovernIT makes an “ERP for the CIO” product of four interrelated modules for the management of IT. It is aimed at the SMB enterprise CIO, and specifically midmarket firms--not the Global 2000/Fortune 500 market world of SAP and Oracle. Described below, the modules interrelate strategy, resource planning and execution, the management of projects and service delivery.


There are several reasons for coverage of this company. In many ways the uGovernIT business model, sales, and service delivery approach mirrors trends you’ve seen in Infrics reports since 2011.

  • Stateless
    There is no local app installation of uGovernIT. It is all delivered through a web browser. That means that out of the box, it’s enabled for virtually any enterprise laptop, desktop, tablet, or mobile device. The heart of the stateless computing idea is that the processing power lives in the cloud, while the result is consumed by a device that provides connectivity, display, and user interface, nothing more. This can be incredibly attractive for the enterprise CIO: quick, low cost deployment with predictable lifetime TCO.
  • Simplicity as a design choice
    One of the main characteristics of enterprise software that inhibits innovation is complexity. While each of uGovernIT’s functionality modules can be customized, the workflows, forms, charts, and interfaces are streamlined versions of their very expensive big enterprise counterparts, and can be used by a small or midsize company to begin adding value from day one. By design, one of the disruptive ideas this company puts forth is “good to go” without months of IT division customization and planning.

    This graphic illustrates the range of prebuilt services in uGovernIT:

  • Consumer software-modeled cost structure
    Founder Subbu Murthy believes uGovernIT is disruptive. With a cloud delivery model and per-seat pricing, it’s IT as an expense item, not a capitalized cost. And as Murthy points out, the pricing model is “like Quickbooks.”

The company sells a service, not a product. On the one hand, they defy the expectation that a tech startup is staffed by fresh-out-of-college high achievers with designs on the consumer space. On the other, they challenge the legacy of the big software and hardware companies that rely on pre-digital (and fading) models of the enterprise IT department.

Now that’s disruptive.