I agree. A few years ago our consulting group developed a web service that manages and explains all the environmental laws and regulations in canada to companies. However, it has been a pain selling it directly to companies. The sales cycle is so long that it ends up running up expenses and forcing us to price it out of the reach of Small and Medium sized businesses who need it most.

Our plan is to go web 2.0 with this product, adding comments, article rating and building a community around the job of environmental management. I would love to see examples of this in other industries.

How do you compete with the giant, unwieldy distributed Java application that's been in development for ten years? Though it's expensive and terrible to maintain and nonintuitive, how do you catch up to it's feature list?

"how do you catch up to it's feature list?"

You don't. You redefine the problem. It's fire and motion from the big corporations side. See Joel's classic post here: http://www.joelonsoftware.com/articles/fog0000000339.html

When you look throught the clutter it is obvious that the large companies don't really need all those shiny features - they need better software. And what they have now sucks.

Take a totally different perspective, start attacking IBM for being too expensive, attack Lotus notes for their horrible user interface that takes employees years to learn. Write about how crazy it is to have an email client that is XML compliant. Set your own agenda. People will notice.

Exactly! That's what we're doing in our own niche right now (launching in 1.5 months). Our first phase is targeting businesses exclusively, although for now not the larger ones because those take mega time and $$$ to sell to (which is why software they buy always costs so much...).

Look at Basecamp and Highrise and you'll see plenty of proof that this strategy is totally viable.

The other huge advantage a web-based app can offer over the traditional corporate apps, which those apps can't easily compete with once you start rolling, is that there's no hardware + license fees, only a monthly service subscription. You take the headache and high initial cost out of it, and you open these types of apps to a much wider class of businesses too.

Any hints as to what you're launching?

you ignore it. you target small and medium size companies who have no need for clunky java app. Work with them, play to your strengths (fast response time, quick customer service), and earn money to build features and kick clunky software in its ass.

You don't. Lower the price and focus on top priority features. Also, focus on small-medium business.

Microsoft does this against IBM. Most Enterprise Business Units at Microsoft starts at the small-medium size business and work their way up toward IBM's level.