SaaS and The Integration Economy

Best in breed is replacing integrated solutions as the paradigm for B2B software. SaaS products need to solve one problem well. Good enough for lots of things is...

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Best in breed is replacing integrated solutions as the paradigm for B2B software. SaaS products need to solve one problem well. Good enough for lots of things is no longer accepted. APIs and open software allow niche products to link to the whole ecosystem. Becoming part of this Integration Economy is now a core SaaS principle.

SaaS for SMEs needs to solve problems using best in class software. The days of ‘good enough’ solutions are over. Your customers can afford the best so make sure that is what you offer. Build something users love and you will create a great business.

The integrated suite of business solutions model is on the way out. Software must meet a specific, well defined customer need. Customer discovery is about identifying and defining a clear problem or desire. Good products are designed with a clear focus driven by users. Even where the problem is wide, the product has boundaries. Slack for example covers a lot of ground but it only does one thing. Team communication. The same principle applies to Evernote or Dropbox.

More often the software is much narrower. SaaS products which address industry verticals. Or individual business processes. Or reporting on one business function. This applies to giants as well as startups. Apple & IBM’s enterprise mobile partnership is releasing apps which target one industry sector at a time. Look at the Salesforce App Exchange or the Xero Add-On Marketplace. Here are whole forests of beautiful apps with a niche focus on limited real world problems.

How do users cope with all this variety? Look up any past IT textbook or report and you will see that integration is one of the biggest challenges. Seamless integration has been the selling point of big ticket software providers for many years. SAP, Oracle, Microsoft and others have thrived on this offering.

One of the biggest achievements of SaaS is to put all this into the history books. Applications Programming Interfaces – APIs – are now standard, open, simple tools. In plain english this means apps can be linked to each other with ease. There is no need for complex bespoke programming. Often the API can be activated any user in a couple of clicks. Mailchimp for example can pick up customer details from a bewildering range of systems. With no IT skills needed.

Loon into any popular business or consumer app and there will be an array of such integrations as standard. Slack for example offers 67 at the date of writing. Likely to increase by the time you read this.

Everything from Airbrake to Zenefits, from Twitter to Github is right there. And this is typical.

Building a list like this does not need complex negotiation. Or long partnership discussions. Or special alliance terms. More and more big companies are opening up APIs. A competent developer can just grab the code and implement it. The ‘customer’ just clicks a user agreement on screen and goes ahead. Uber announced an API open to all developers in August 2014. In recent weeks Mattermark has opened up its data API. And AirBnB now offers its pricing data to help hosts set the right price.

Creating a complex nest of APIs for your software could be a time consuming exercise. But there is another option. Tools like Zapier and IFTTT act as interpreters. Learn to use these and you can configure all your connections from one source.

Put all this together and you have what I call the Integration Economy. A SaaS startup needs to be part of this world. You have to persuade users to use your software and customers to buy it. The Integration Economy helps you in two important ways:

It minimises the change users need to make. Your software just slots alongside everything else. Change the way you take bookings with Appointedd for example. But it is not necessary to change Mailchimp, Evernote, Slack or Gmail.

It allows narrow niche software products to be part of a whole product solution. Build clever software that solves a specific problem. Link it with others to offer customers an end to end business solution.

The future of enterprise software will be networks of integrated best in breed products. Customers will expect any quality SaaS to be part of this Integration Economy. Getting on board with this idea is easy. You need to treat it as a core part of your SaaS product design.

by Kenny Fraser @sunstonecomms Sunstone Communications provides small business consulting for startups focusing on the SaaS business model

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