A sentiment taking over AR and VR worlds is that enterprise applications represent a nearer-term opportunity than consumer markets. That has a lot to do with clear ROI around things like streamlined manufacturing and assembly, and less stylistic barriers for AR glasses.
“For us there are clearer benefits in the enterprise,” Presence Capital’s Amitt Mahajan told us. “You can really model out what [AR & VR] mean for business, or how much it’s going to affect their bottom line and what that means in terms of a payback period for hardware investments.”
But along with enterprise benefits come challenges. For example, there can be risk for AR or VR tech providers that have non-diversified revenue (a few big clients). And there can be organizational barriers — typical for enterprise technology but heightened by AR/VR’s early stage.
“Selling to enterprises takes a long time,” said DigiCapital’s Tim Merel on stage at June’s AWE conference. “When you have an education element, it takes longer. So investors in enterprise AR need to have a long-term approach.”
Speak the Language
Building from Merel’s comments, Comcast Ventures’ Michael Yang believes navigating enterprise-buying cycles requires speaking the right language. This can mean putting aside technical minutiae and telling a more focused ROI story for bottom-line impact.
“Whiz-bang visualization in itself doesn’t derived value,” Yang said at a recent SVVR event. “[Enterprises] want to know how a knowledge worker is going to use it and why their job is now freed up, and how there’s bottom line result [for] the next time they have to report to Wall Street.”
To pull this off, Yang cautions that it’s critical to understand tech-buying patterns of target enterprises. And the most effective way to do that is to adapt to the customs and cadence of the enterprise software world, as well as intimately knowing a prospect’s business.
“To really understand how to create a software solution for them, you have to understand their underlying business process,” he said. “Talking amongst other VR people isn’t going to move the agenda in terms of getting an enterprise oriented app into corporate America.”
This is about understanding business processes and the types of software that has erstwhile supported them said Yang. It’s about CRM and ERP and other enterprise software. Knowledge of those processes, in addition to technical chops with VR, will be a winning combo.
“Many folks we meet aren’t thinking that way,” said Yang. “It’s because we haven’t cross-fertilized the DNA. If you haven’t spent time with enterprise software developers or systems integrators, you’re not really understanding the business problem you’re trying to apply VR to.”
Selling into enterprises is also about education. Whether it’s selling into an organization, or selling and executing new programs internally, the technology is still nascent. This can make the already long sales cycles for enterprise technologies even longer, and good sales tactics are critical.
“That tactical piece is important,” said Upload’s Enterprise Strategy Lead and EndeavorVR founder/CEO Amy Peck at AWE. “We all understand the technology, but how do we get something built? how do we get a POC? How do we get funding?”
In a lot of cases, it starts with developing a business case that will resonate with those who control or influence budget. Per Yang’s comment, this requires a strong narrative that directly addresses ROI more than product specs. And that can often zero in on a cost-savings formula.
“For a GE [aircraft] engine, a clutch replacement can cost millions of dollars,” said VR/AR advisor and Atheer VP of Strategy & BD, Rika Nakazawa at the same event. “So to be able to manipulate and use machine vision to service it brings the cost down by two-thirds in some cases.”
As for selling internal VR initiatives, it’s a specific set of tactics for things like executive buy-in accross divisions. This can get complicated when corralling several internal stakeholders, says Peck. To borrow from Nakazawa’s aircraft example, it’s about getting projects off the ground.
“Start by being very clear about budget and goals.” says VR Journey Creator & Host Cecile Eszenazi. “Are you trying to reduce cost, increase productivity, [improve] customer experience, limit risks or show innovation? Depending on goals, a solution will go in different directions.”
The Bright Side
Despite all these challenges, Enterprise AR implementations can still be opportune. For example, forced adaptation to enterprise software customs (per Yang’s comments) comes other benefits. Those includes the recurring revenue, scalability and unit economics of SaaS packaging.
“If it’s going to be an enterprise businesses that wants to be valued appropriately, it has to be a SAAS subscription-based software license model,” said Yang at SVVR. “Corporations are accustomed that. They’re buying CRM, they’re buying databases, they’re buying stuff in that way.”
Yang also points out that there’s a bright side in that enterprises will increasingly need VR integrations. And they’re not going to do it themselves, as immersive tech isn’t their competency. This will open up lots of opportunity to VR companies that can speak the right language.
“I would challenge VR folks to step right into that,” he said. “[Enterprise software] is a multi-billion dollar global business and they don’t know anything about VR. They’re scared about VR and AR and frankly need your help, so that’s where it can all come together.”
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Disclosure: ARtillry has no financial stake in the companies mentioned in this post, nor received payment for its production. Disclosure and ethics policy can be seen here.
Header image credit: Microsoft