Reflections on Phorum Philly

A few weeks ago, Phorum Philly celebrated its second year, once again delivering on its goal to serve as “a technology conference for business and technology executives that focuses on how enterprises can maximize the business value of specific disruptive technologies.”  Overall the conference offered a strong demonstration of the wealth of assets Philadelphia offers to foster a robust ecosystem around enterprise software.  The crowd was an equal mix of enterprise IT leaders from across a broad range of industries, representatives of established enterprise software vendors like salesforce.com and SAP, entrepreneurs showing off their latest innovations in the demo pit, and investors from angels to growth stage VC funds.  The energy and excitement for the impending disruption about to strike the enterprise from new technologies around social, mobile, and Big Data reinforced our belief that enterprise software in the Mid-Atlantic will offer a wealth of compelling investment opportunities in the near and medium term.

Among the various speakers and panels at the conference, a number of themes emerged, including:

• A mobile, social, or Big Data “strategy” or “initiative” on its own is bound to fail: the new technologies should be considered tools to execute on an overall business strategy – a means to the end, rather than an end in and of themselves
• Technology innovations broaden the scope of what is possible by lowering transaction and collaboration costs: this new reality should prompt frequent revision of how an enterprise delivers value to its customers
• Purchasing power for technology is shifting from IT to the business: as a result vendors should stop selling based on technology and focus on the business value, as the business user wants a solution that works, and isn’t as much concerned in how
• Timing matters: launching a new technology too early before the market has appropriately matured can prove equally costly as waiting too long to find yourself displaced by faster moving competitors

These last two themes, when considered together, presented a bit of a paradox, particularly in light of the experience of the Osage Venture Partners portfolio.  The underlying message of aligning the sales process around business value – and in effect disaggregating the technology from how that value is delivered – makes intuitive sense.  Several recent trends that show a shift in the control of IT budgets (including the consumerization of the enterprise, where employees or small divisions choose to deploy a SaaS solution such as Dropbox without consulting the IT department, and an increasing concentration of budget responsibility for technology investments with the CFO or CMO) suggest this disaggregation may in fact be coming.  However, our portfolio CEOs will quickly tell you that IT remains deeply involved in the decision making process and continues to care very much about how a technology works.  We have seen this countless times across our portfolio, such as when Pneuron challenges the existing paradigm of the need for centralized data warehouses or CMC faces financial services customers with objections to utilizing the cloud due to concerns about security or data control.

My observation is that customers (and venture capitalists, for that matter) will forever be skeptical of a black box solution; for entrepreneurs to convince someone they can in fact deliver business value in a faster, cheaper, or better way than the alternative necessitates a multi-faceted sale that allows the other party to not only look at the results, but also peek behind the curtain of how those results were delivered.  As the last theme highlights, pushing too far beyond what people are comfortable with will result in the inevitable “too good to be true” skepticism that can prolong sales cycles and require significant capital and time to educate the market.  Thankfully, the crowd at Phorum has accepted that challenge by pushing the envelope of innovation to ensure technology continues to evolve to deliver ever greater business value, and we look forward to participating in that ongoing disruption.