Enterprise software providers love to talk up their platforms, but can they actually deliver on their promises? It may be time for a reality check.
It All Starts With a Sales Pitch
The purveyors of platform always have a compelling sales pitch. It typically goes something like this: “You have too many products powering your (marketing/finance/PR/HR) stack. Managing all these vendors equates to high costs and complexity. Wouldn’t one platform that does it all be nice?”
Top-down selling is another tactic from the pushers-of-platforms playbook. Over time, teams acquire various tools into what eventually becomes a patchwork architecture of software. Some may call this best-of-breed, others call it chaos. But platform sales teams see opportunity. They seek sales meetings with CMOs, CFOs, and chief people officers to “strategically” discuss marketing or finance or HR platforms, respectively. It’s important to note, however, that these economic buyers usually aren’t the day-to-day users of these tools. For top leadership, consolidating many tools down to one or two makes sense; at least in theory. However, executives making tool decisions is akin to a digital arranged marriage; a decision which must never be made unilaterally.
Products vs. Platforms
From Apple to Oprah Winfrey, many brands commenced their humble beginnings as a single product (or service) company. There’s certainly nothing wrong with products, and plenty of companies with one or two product offerings surged their revenues well into the $1billion+ club.
Although a single product may be easier to incubate into a viable solution, the threat of substitute products always looms on the horizon. From Facebook killing MySpace to Google surpassing Yahoo search, the trail of bones devoured by fast followers who were able to do something just a tad better is endless. Product companies know that to remain king of the hill forever is a fool’s errand, as every champion eventually has a successor. Moreover, constantly adding new innovations to a single product is exhausting. So how do product companies remain relevant?
Enter the platform. A platform is a virtual place which facilitates the exchange of value between buyers and sellers, or producers and consumers. Logically, platforms are nothing new. A city that allowed a farmer’s market to take place on public property is a great example how buyers of produce and farmers exchange value. (While the city takes a small cut of the profit, of course!) Put simply: rather than relying on internal engineering resources to build each-and-every feature to deliver value, the network effect essentially crowd-sources value through the contributions of its users. The more users on the platform, the more valuable it becomes. A textbook example is the Apple App Store. When Apple released the iPhone in 2007, it was pretty cool. It had a touch screen, an MP3 player, an email app, and a few utilities such as the tried-and-true digital calculator. But Apple fandom aside, so what? Palm had a GPS “smartphone” way back in 2008, and Blackberry was the defacto standard for mobile business as far back as 1999! Apple knew that its future success would lye in the power of numbers. That is to say, by levering its large user base to contribute to the (highly proprietary and walled-off garden) we refer to as the Apple ecosystem.
From Scalpels to Swiss Army Knives
When it comes to enterprise software, it’s not uncommon for a modern knowledge worker to log in to a dozen or more tools per day. A portion of those tools will be related to communication & collaboration– email, chat, and video conferencing– plus the authentication utilities that grant access to them such as Okta and Duo. Then there are purpose-built tools suited to a particular function. For software engineers, their go-to tool set could be PyCharm, Github, and Jira. For a financial analyst, it could be SAP Hana, Adaptive Insights, and Concur. The salient point here is that the list of daily-use applications is growing, and so too is the aggravation around poor user experience.
There’s a fine line between best-of-breed and an unruly bag of disjointed tools which clearly doesn’t scale. Consequently there comes a point in time where users will consider the trade off between many specialized tools and a suite of integrated tools which share data, business processes, and of course user identity. Perhaps the Swiss Army Knife analog is a bit unfair. Rather than one tool to do the job, it’s one set of integrated tools to do the job. But there’s a strong emphasis on the word integrated. Platform solutions really must be integrated; otherwise we’re right back to the cluttered bag-of-tools world.
Discerning Portfolios From Platforms
Yet another difference between products and platforms concerns the breadth of the target use cases. As noted earlier, Apple plays primarily in the B2C space, and their platform connects buyers and sellers on a massive scale. But what about B2B platforms? In the enterprise, internal systems typically aren’t exposed to consumers, so how does one define a “platform” in the enterprise software realm?
One way enterprise software companies market B2B platform solutions is by solving a broader set of problems to a broader set of internal users. While individual products typically solve a specific problem, platforms aim to satisfy broad enterprise processes and/or entire departmental functions. To give an example, Adaptive Insights may be used for just financial planning and analysis (FP&A) forecasting and nothing more. Oracle Financials on the other hand aims to manage accounts payable, accounts receivable, the end-to-end record to report (R2R) process, and many other functions.
One may assume that most platform offerings offer a multitude of modules. That is to say when you buy the platform, many different feature sets exist. ServiceNow’s IT Service Management (ITSM) package can provide incident management, request management, and vendor management capabilities on day-1. Likewise, if you buy Oracle Marketing Cloud, there is an ESP, DMP, and core marketing automation tool at your disposal. However, it’s imperative to understand whether your “platform” vendor is really providing an integrated platform, or (as you may have guessed by now) is just pushing another bag of tools.
As mentioned earlier, product companies can pivot into platform companies in order to crowd-source value from two sided markets. However, B2B platforms have smaller user bases than their B2C brethren. So how do B2B companies quickly provide lots of functionality in the shortest time possible? Often times, the answer is: acquisitions.
Here is a simplified, yet realistic look at Salesforce’s Cloud offerings. This hierarchy of vendor, tech stack, and application/service shows how some services are integrated, and others are not. If you look at the parent/child color-coding, you’ll see that the only two more children which share the same parent are Sales Cloud and Service Cloud. Beyond that, every product (especially on the marketing side of the house) are effectively standalone products; aka the bag of tools.
If not careful, going “all-in” with a big vendor can lead to a repertoire of tools that are both expensive, and non-integrated. In other words, you deal with the pain associated with a best-of-breed approach yet lack the best in class functionality associated with said approach. This is the worst of both worlds approach, and should be avoided at all costs.
Planets and Satellites
Having every solution in a platform offering be either fully integrated or completely disjointed are really two extreme ends of a spectrum. In the real world you want to have what I call a “planets and satellites strategy.” All that means is you effectively establish one or more core platform modules as your large planetary body (source of truth for business objects like employees, campaigns, leads, or financial records) then you can “bolt-on” satellites that orbit around the planet. These satellites are smaller apps that provide best-of-breed functionality. Put simply, this is a hybrid approach that keeps your data anchored with a well-known, well-supported enterprise platform yet gives you the ability to pop in or out new functionality as needed.
Decision Points to Keep in Mind
Moving ahead with an enterprise software platform can feel daunting, especially when vendors are pushing for multi-year deals. Take your time with the decision, methodically map out exactly what the platform module delivers, and determine how each of its modules integrated with each other. Some pointers to keep in mind include:
- Enterprise software companies want you to buy their platforms because the more features and functions you adopt, the harder it is to churn to an alliterative solution provider.
- When contemplating a B2B platform purchase, be sure to inquire on which modules are integrated. Specifically, ask if modules share a common login, do they share data objects, and do they run on the same tech stack.
- Platforms that provide non-integrated modules may create a “worst of both worlds” scenario. That means high cost and lack of native integration.
- If you do go down the enterprise software platform path, consider the planet-and-satellite strategy whereby core business objects live in a bare-bones platform, and faster-moving needs are fulfilled by best-of-breed bolt-ons.
Finally, start small with platforms. Focus on successfully deploying and scaling a core module as your “planet” before deploying a full suite of modules.