Rise of the Cloud Software Platforms
Over the past few years “moving to the cloud” has been a key objective for many companies. With full cloud adoption in SME’s expected to reach 60% by 2020, the next challenge comes through the integration and standardisation of business processes across the various cloud software systems, driven largely by the accelerating advancement in machine learning and predictive analytics.
The strategy to move to the cloud was a gradual one for many businesses, over time one business function after the other would be migrated to cloud based SaaS (software) solutions. However, as cloud technologies matured, many companies were left with an expanding stack of cloud software applications that became increasingly misaligned as business and user requirements changed. In fact it takes an average of 15 Cloud Software applications to enable an SME to be 100% cloud.
For many companies the shift to the cloud moved them away from unified ERP style systems (Platforms), where most of the business functions were accessible within one interface. This was replaced by multiple cloud applications operating within a browser and connected via API’s. Software Vendors have done a great job of marketing the utopian concept of integrated business systems connected by API’s, and for a while it worked well. This marketing approach was driven by software vendors such as Xero and Google who built eco-systems of integrated apps to plug functionality gaps and offer a viable alternative to legacy ERP systems.
The past couple of years has seen many cloud software products reach maturity and market verticals reach saturation, which has meant growth had to come from catabolising features of the apps they previously integrated with, I wrote about this in a previous post . This consolidation has caused a fracturing of the cloud eco system, leading to API's becoming tightly controlled and many smaller software vendors struggling to remain viable without the support from their larger app partners through co-marketing or integration.
The constant shift in the SaaS market has left many SME’s with Frankenstein app stacks, that have become increasingly difficult to manage from a user adoption, process alignment and security perspective. The other consequence is that many businesses commenced their move to the cloud in the pursuit of “Business Intelligence” the dream of real time dashboards and a unified perspective of their company. However, this was rarely achieved due to their business data being spread over many cloud apps with no single source of truth.
In today's connected world, the systems supporting our businesses have had to become increasingly data driven. However many businesses have struggled to consolidate their data into a unified model for use in automating aspects of their customer experience, reporting or business administration. Whilst data warehouse solutions like Amazon Redshift can fix the disparate data issues, the cost and complexity of implementation is beyond many SME’s.
Over the years ERP style platforms such as Salesforce, Microsoft Dynamics and Zoho were increasingly referred to as “legacy” software. We perceived these software offerings as the incumbent who had failed to adopt a range of emerging cloud technologies and modern user interface design. These systems were often clunky, expensive and labor intensive to administer. But they are back, with an armoury of new tech from acquisitions, pretty user interfaces and powerful machine learning capabilities to unleash on your data.
Many of these cloud platforms, such as Salesforce have received ground up rebuilds in recent times, creating a foundation to enable the next wave of business system innovation in areas such mobility, user experience and predictive analytics. The new generation platform architecture creates a framework for low cost, easy to deploy apps to be built on.
By using these platform building blocks many SaaS vendors can reduce development costs associated with building from the ground up, increasing the rate of product innovation and enabling them to focus their limited resources in areas such as marketing and customer success.
Market places such as the Salesforce App exchange have grown significantly in the past two years, with more than 4000 software solutions available and over 5 Million App downloads. It's estimated that this has generated over $1.5 Billion in revenue in the last year for the vendors on the Salesforce App Exchange.
Whilst platforms such as Salesforce are not suitable for every business they do present a viable option for many SME's to consolidate their exisiting app stacks, whilst achieving an ROI through process alignment, increased user adoption and centralised data.
There is still a lot of debate in this space with many companies referring to there product as a "platform" as it matures, in my next blog i'll be detailing the charateristics of a platform and which one's are best for a variety of businesses.