This article was originally published in The Startup.
If you are a business today you are faced with a dizzying array of SAAS tools across all your core business functions: accounting, marketing, sales, payroll, recordkeeping — the list goes on. While every tool that is adopted brings benefits (time saved, better visibility etc) each tool also comes with its own learning curve, upkeep needs and unique requirements.
Today if you are a business — of any size — you face what I call the ‘Death by a Thousand Cuts’ problem in SAAS. The learning curve and time required to manage and get the best out of each individual tool keeps adding up until you reach a point where — because of limited resources — you aren’t getting the best out of any of your tools.
To frame it another way the first 20% of SAAS tools you adopt as a business (say a CRM, payroll platform and marketing suite) are going to bring you 80% of the operational gains. As you start adding more and more tools though, there comes a tipping point where you no longer have the time as a business to manage and get the best out of any of them. Additional tools can even reverse some of the gains you make by creating new unforseen inefficiencies (everyone is familiar with CRMs where data accuracy is patchy at best).
Cycles in SAAS Philosophies
This hasn’t always been a problem. The way we use software goes through large cycles in style and business philosophy. For much of the history of business post the creation of the personal computer businesses had at most three paradigms through which they ran their business — a broad all-encompassing platform like Netsuite (or a mainframe), Excel and paper.
Each of these paradigms has their own learning curve (often dramatic because UX design was an afterthought), but once you completed it you as an employee were transferable across industries. You might lack industry knowledge when you transfer from the energy business to the yoghurt business, but you certainly were able to create cash flow models using the same tools — Excel — and send emails the same way and so on.
This changed with the explosion of SAAS and consumer apps in the 2000s. Problem after problem and niche after niche has been targeted by tech entrepreneurs as a place where SAAS can help — and it has had a dramatic impact.
But in about the last year I have noticed a distinct trend in companies being built trying to solve the ‘Death by a Thousand Cuts’ Problem. I have seen multiple SAAS tools that claim to be the all-in-one tool for SMBs to manage all their business functions. I have seen tools that hope to centralize a company’s entire hiring process into one place — from posting on large job aggregators to processing applications and accepting candidates. Or companies that seek to knit together the universe of SAAS tools in ecommerce and create business automation throughout the process.
Clearly businesses and entrepreneurs are both feeling the pain. But there is a fundamental and irreconcilable tension at the heart of software. Going for a broad, all-encompassing platform will always mean sacrificing best-in-class tools. A company like Salesforce is never going to have the best tools across all the parts of its software — emails, CRM, marketing automation, AI etc.
Business Decisions, SAAS Interoperability, and Go-to-Market
Choosing software thus becomes a tremendously important business decision. It involves a trade-off between best-in-class tooling and time-savings from a unified platform.
For the next-generation of entrepreneurs the ‘Death by a Thousand Cuts’ problem presents a justification to reflect on strategy as well as an opportunity. Is the company pursuing a broad or narrow strategy? Does it want to be the suite of tools that does it all? Or does it want to be the very best in one specific niche? There is of course options in between but a business will always lean in one of these two directions and that will directly affect its customers and how it sells to them.
Finally, interoperability is a must-have in today’s fragmented universe of SAAS tools. Integrations have been table stakes for a long time, but entrepreneurs have to be deeply strategic about the integrations they do choose to make. Integrations with tools like Zapier, Stamplay, Pipefy and more massively extend one’s platform and immediately increase its value to a business user. Custom integrations can go even farther (Quikbooks is a popular one).
How a company chooses its place in the universe of SAAS products is more important than ever. There will be a constant feedback loop between this choice and a company’s go-to-market, and metrics like sales, churn and costs will be very much dependent on it.