The Lego-ization of Software, or the Rise of Snap-On SaaS

Here’s a bold proclamation: Internally-developed IT software is a decelerator to business.

When the need is specialized and you have a fully staffed IT team, there’s a natural temptation to put everyone to work on a custom development project. For today’s companies, however, this is often the slowest and most expensive path to the market.

The most nimble companies have discovered that building from scratch not only is not necessary, but also could leave your company months or years — and millions of dollars — behind.

Despite obvious SaaS benefits, such as reduced operational expenditures and speed of deployment, displacing traditional IT infrastructure is a big conversation, and the market has been slow to oblige.

Many companies remain mired in the misguided belief that they know their unique requirements and technology platforms better than anyone else, and no one else could “build it like they could.” In reality, however, companies’ similarities are greater than their differences.

DIY Gone Wrong

A case in point is the partner portal and partner relationship management, or PRM. Most companies address their partners through a portal, usually connected to their CRM, together with a set of technologies that serve their specialized functions — such as MDF (market development fund) distribution, lead distribution and deal registration.

While the specific modules used may vary, the process of wrapping functions together into a world-class partner portal is surprisingly scalable and repeatable. Providers in the category know the standard sets of technologies that need to be integrated and how to connect the data with existing systems. Specialized experience has taught them which features a great portal requires.

Indirect channels continue to increase in importance. However, when the time comes to take technology support for partners to another level, a number of companies still succumb to the siren song of building their own portal, in the belief the challenges they face in servicing their partners are theirs alone.

Time and again, they stumble after months of effort that puts them millions of dollars behind. They find that what passed for portals in the early 2000s (FTP sites, flat-file data repositories) are woefully lacking in 2015.

No Company Is an Island

In a growing number of cases, however, SaaS offers an answer. Imagine the delight of the weary IT practitioners when they realize the custom car they wanted to drive already is built. All they have to do is add their personal pinstripes to the sides of the vehicle and it is ready to go.

Here’s an interesting data point: The companies now taking SaaS to the highest levels are consistently among the fastest-growing firms in the world.

Thanks in part to SaaS’ ability to reach new bastions of IT that formerly were considered too sacred, SaaS revenues are expected to reach US$106 billion in 2016. This marks an increase of 21 percent over projected 2015 spending levels and a 30 percent compound annual growth rate, compared to a 5 percent growth for overall enterprise IT.

The conclusion is clear: It is time to stop believing your company’s IT challenges are unique and that its needs for scalability and interoperability are exclusive. Truth be told, there’s less that is unique and more that’s in common among the majority of companies today.

Thanks to the increasing “lego-ization” of IT, the modular SaaS model is replacing the last bastions of custom-developed IT infrastructure, as a better way to allow businesses to grow.