G2 Crowd Shakes up Enterprise Software Buying with Peer Reviews

by Ann All

A startup called G2 Crowd wants to help enterprises streamline and improve their software buying processes by offering a service based on peer reviews and social data.

Godard Abel is gunning for Gartner.

Abel founded a startup called G2 Crowd, a company that grew out of his own experiences as both a buyer and seller of enterprise software. Gartner "had the perfect business model for the 1980s" with its research reports offering intelligence that helped corporate buyers select software, he said. But the firm has done a poor job of keeping up with changes in enterprise software buying habits.

For instance, he noted, line-of-business executives now make their own software decisions in many cases rather than relying on IT or procurement organizations to do so. "The marketing manager is often not going to the CIO. First he'll go to Google to look for SaaS apps."

Gartner has essentially "ignored the Internet," which offers consumer software purchasing experiences that affect how executives want to buy enterprise software. Most people have downloaded applications from consumer app stores, often after reading peer reviews, Abel said.

G2 Crowd provides a service that ranks software based on peer reviews and social data from sites such as Twitter, LinkedIn and Glassdoor, with the peer reviews given more weight than information aggregated from other sources. Abel said this provides a more nuanced view than reports from analysts like Gartner.

Just as on consumer sites such as TripAdvisor, which offers peer reviews of hotels and tourist attractions, Abel said buyers can look for peers with needs similar to their own. "What may be an issue for some customers may not be an issue for you at all," he said.

Despite the proliferation of SaaS apps and a growing focus on real-time data in every corner of the enterprise, he said Gartner continues to produce its "Magic Quadrants" and other research at a relatively infrequent pace – and charge a premium for the information.

"Gartner subscriptions start at $30,000 a year, so a lot of midmarket and small companies haven't used Gartner because it is out of their financial reach," he said.

Before founding G2 Crowd earlier this year, Abel spent a decade leading BigMachines, a provider of SaaS sales configuration and quoting software that he sold to Vista Equity Partners and JMI Equity in late 2010. BigMachines' customers included giant companies like General Electric and Symantec in addition to lots of smaller companies.

He was "always amazed at how they seemed to struggle when buying software," he said. "Bigger companies would have 50 people in a room watching vendor demonstrations and would take a year to make a decision – and they would still lack confidence they were making the right choice."

G2CrowdWhile Abel hopes to streamline and improve software buying processes with his service, he acknowledged it will likely never completely replace traditional processes. "If we do our job well, maybe instead of taking 12 months to buy software it will take three months -- and more importantly, companies will make better decisions and have more realistic expectations for their software going into projects," he said.

The beta version of the service launched in February, so G2 Crowd is still quite new. But early results show a strong demand for the service, Abel said. The site currently boasts more than 3,000 users and some 15,000 reviews, with Web traffic growing at more than 20 percent a month.

G2 Crowd employs a "freemium" model, in which users can read individual reviews for free. For a fee of $200 or so, the company will collect and aggregate all of its data related to software applications in designated categories like CRM and provide a comprehensive report, complete with a PowerPoint presentation that Abel said "will save you 40 hours of research and make you look good to your boss."

Ann All has been writing about technology and business for 15 years. She is the editor of Enterprise Apps Today and eSecurity Planet.

  This article was originally published on Monday May 20th 2013
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