Beautiful enterprise software is not the oxymoron it once seemed. While tools such as SharePoint hold market share despite being clunky and obtuse, a startling shift has occurred in the last two years. We are beginning to see the rise of truly usable—and increasingly, beautiful—enterprise software. Nascent startups see a new opportunity to disrupt the goliaths of enterprise tech simply by offering a better user experience.

Raw capitalism lies at the core of enterprise software’s traditional clunk. Enterprise software companies are accustomed to building software for CIOs, who are traditionally removed from the actual use of the software. As 37 Signal’s Jason Fried writes in Why Enterprise Software Sucks, “…the user experience is split from the buying experience so severely that the software vendors are building for the buyers, not the users. The experience takes a back seat to the feature list, future promises, and buzz words.” Why should a software company build software that is usable for someone who doesn’t drive purchases? For a long time, the answer to this question remained the same: they shouldn’t.

A changing demographic

In the last few years, everything started changing. As the millennial generation entered the workforce, they came with a set of expectations on design and usability carried over from their heavy use of the consumer web. If Twitter can be so elegant and simple, why can’t our knowledge management software be equally elegant?

Andrew Toy, CEO of Enterpoid, puts it this way: “While baby-boomer employees have long used technology to get the job done, new employees entering the job market are wired differently. They expect the same aesthetics and ease of use that they get when using applications and services in their personal life now at work.” Enterpoid is a prescient example. The young software company gives enterprises the ability to let their employees use their personal phone for business by creating a second “workspace” within the phone.

To build something with good usability for the enterprise, Enterpoid had to create an elegant and familiar experience on the end-user’s mobile device. Andrew says that “the look and feel between consumer and enterprise apps has blurred.  While design and usability has traditionally taken a backseat to the practical for business app development, the design team now is key to building a winning business app.” This need to consumerize IT also stems from another source: the weakening voice of the CIO in corporate purchasing decisions.

The rise of socialization

Social enterprise goliath Yammer rose to prominence with a relentless focus on usability, but also a relentless focus to drive adoption through the end-user. Under this sales method, Yammer drove engagement by appealing directly to individual users. These users then “socialized” the product within their organization, organically driving up adoption. To sign contracts, or get bigger contracts, many enterprise software startups understand they need to build an enjoyable product. This is the Socialization Model of Enterprise Sales: If employees are already using a tool such as Yammer, purchasing is relatively easy—and may even be inevitable.

Kevin Spain, a partner with Emergence Capital (a Yammer investor), explained that “The shift from CIOs making all technology decisions to end users having more influence over which technology is used means that more usable solutions are gaining greater preference in business.” As end-users become more important in justifying purchase decisions, software companies have to hone in on providing familiar experiences.

In addition to socialization, startups have started selling directly to end-users as well. While an enterprise can buy Box for its entire company, individuals or individual teams can also purchase Box accounts and start using it immediately. Lawrence Coburn, CEO of mobile CRM breakout DoubleDutch, circled this back to self-service SaaS, “The rise of SaaS-based buying patterns has moved some of the purchase decisions out of IT to more design friendly groups.” As individual managers increasingly make purchase decisions, product features and priorities get rearranged.

On deck

Startups are taking notice. Whether it’s Yammer, Box, or UserVoice, we’ve seen the first wave of companies that caused disruption through design. More startups are now cropping up specifically to compete on usability. For example, ZenPayroll, a Y Combinator startup that is in private alpha, describes itself as providing both “delightful” and “beautiful, modern payroll.” Or there is MicroEval, another Y Combinator company, that is building the “modern performance review” platform. Their co-founder Ryan Jackson explained to me that “MicroEval has made design and usability a core focus of the company. The reason is simple—good design leads to enjoyment…Startups can capitalize on this and quickly become a noted player in enterprise by providing a product that people actually enjoy using.”

The future

Enterprise software now faces a disruption crisis. Small teams can now unseat giants by competing on design, something the entrenched players still don’t fully understand. DoubleDutch co-founder Lawrence Coburn said, “It’s the great equalizer. One brilliant designer and a handful of engineers can put you on a level playing field with the biggest, baddest enterprise software companies in the world.” Consequently, legacy enterprise tech companies are at risk of giving up market share by not keeping pace with the consumerization trend.

However, these large players still have a chance at redemption. They can hire designers and focus on user experience, or they can acquire companies that understand this new paradigm. The game is not over. For example, LogMeIn, a public company that builds remote access software, launched an elegant free screensharing tool called Join.me that focuses on providing a high-quality user experience. While they had to create a separate brand to do it, LogMeIn proves that entrenched enterprise players can innovate and compete in a consumerized IT market.

Entrepreneurs should see an opening. With the falling fortunes of consumer web, enterprise tech startups are increasingly interesting to investors. At the same time, the usability gap means that billion dollar companies can be formed on the backs of an enjoyable experience.

The beautification of enterprise software marks a turning point. No longer is it acceptable to build clunky software. Entrenched players need to be looking over their shoulders. No enterprise software segment is excluded from the threat of usable, beautiful innovation.

Image Credit: Alexandra Crosby