Most product teams view their SaaS products as freestanding systems to be sold to customers. Product roadmaps are constructed based on features that add the most value (and drive the most usage) at the lowest cost. In this model, integrations to other software products are often viewed as product features added and maintained tactically to satisfy customer demand.
However, the explosion of SaaS offerings and the need for end-to-end solutions is rendering the traditional product-centric mindset obsolete. With the average enterprise using 609 SaaS products (and the average business using 110 applications), customers are demanding complete solutions powered by ‘embedded co-innovation,’ out-of-the-box integration, and true interoperability.
Companies report that poorly integrated systems drive considerable costs and 90 percent of organizations say data silos and lack of integration block their digital transformation. In MarTech, for example, organizations report that the ability to integrate is the single most important factor in selecting a SaaS vendor, even more so than price. In almost all SaaS categories, interoperability is a key criterion in the decision process and lack of a high-quality integration to a keystone software, like Salesforce or Zendesk, is frequently a dealbreaker or cause of churn.
As the story above depicts, the SaaS market’s continued growth and the success of individual SaaS players relies on an effective integration approach, which depends on a product organization’s adoption of an Ecosystem-centric Mindset. This requires companies to reframe the traditional Product Roadmap as an Ecosystem Roadmap, including platforming key product features (to drive ecosystem development and create network effects). Evolving from a Product-centric to an Ecosystem-centric Mindset is a key success factor for continued SaaS company and industry growth.
The GoToEcosystem Framework offers the first comprehensive approach to unlocking the potential of partnership and community ecosystems to drive sustainable competitive advantage and long-term growth. Fundamental to GoToEcosystems is a product organization's adoption of an Ecosystem-centric Mindset.
An ecosystem roadmap requires thinking, from day one, about how your product ideally interrelates to the software ecosystem that directly surrounds your ICP and how a coherent integration strategy makes that vision a reality and drives interoperability.
An Ecosystem Roadmap depicts different classes of technology (and even services) partners as the set of ecosystem solutions around which make, buy, partner and GoToEcosystem decisions are made to drive company objectives. The roadmap helps product and ecosystem teams better understand the whole solution opportunity and monetize different integration strategies - allowing integrations to other systems that do not simply “move” data but do so in the way that meets the objectives of the business and the surrounding ecosystem.
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In addition to product and ecosystem roadmaps, GoToEcosystem best practices also require companies to take an ecosystem-first approach to product development. Short of requiring companies to pursue a pure platform business model, SaaS companies should view their product as part of a tech ecosystem that includes shared, or “platformed” capabilities that enable and motivate joint innovation. These entails shaping both external APIs and product features with a vision of how the product ties into IP within the greater tech ecosystem.
Some ecosystem-first products were built entirely on top of another product. Multi-billion dollar valuation companies, like Veeva and Zuora, were built on top of Salesforce, while companies such as Appfire raised $150 million in venture capital building apps on Atlassian. Many of these companies, like Zuora, have gone on to build integrations to other systems and expand out from their initial ecosystem to work with other environments, like NetSuite’s Ecosystem.
Focusing on interoperability from the start impacts product and technical design. Talkdesk, for example, is a cloud-based call center platform that invested heavily in a deep Salesforce integration with its initial product. Talkdesk leveraged this deep integration not only to acquire customers, but also to provide a more sophisticated product experience out-of-the-box. Customers favor SaaS companies who lead with this ecosystem-first development experience.
They don’t care who built what as long as solutions they depend upon meet their business objectives efficiently and effectively. Talkdesk, for example, continued to expand its APIs and integrations to other software, and disrupted a product category that was dominated by legacy tech. It is now valued at $10 billion and has many SaaS companies building on top of its product.
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The first step in ecosystem product development is assessing target customers’ technical landscape and figuring out where one’s product fits in. Customers want their systems to be out-of-the-box interoperable. Let’s consider the example of a best-in-breed data enrichment tool for sales teams. An ecosystem-first product development approach would start by determining what tools sales teams are currently using and how the enrichment tool can be interoperable with those tools. Most likely, sales teams would want to access a data enrichment tool from within their CRM or sales engagement tool, not log in to a separate UI regularly.
By studying leading CRMs and sales engagement tools’ products and APIs before building, the data enrichment tool can be built from the ground up to work seamlessly within those other tools. From the sales teams’ perspectives, this true interoperability saves them time and improves outcomes as it drives higher usage.
The data enrichment team can design their APIs to work seamlessly with the other APIs in the space, and hone in on product features that the other tools are lacking. This is a win-win-win as the sales team has a better experience of the data enrichment tool and a better experience with the CRM.
The following table shows how companies who lead with an Ecosystem product development mindset make different decisions from product orgs that approach product development more traditionally.
There are many challenges for SaaS companies and product teams in adopting the GoToEcosystem approach and the Ecosystem Mindset: internal and partner organizational buy-in, technical challenges, conventional product roadmap and GTM thinking, and the fear of depending on an ecosystem vs going it alone.
Without executive buy-in within organizations and across partner teams, it can be difficult to get the resources and access needed to successfully deploy this approach. Many organizations require a vested stakeholder to persuade executives both internally and externally.
As more ecosystem-first companies dominate product categories and executives become better attuned to the fact that the vast majority of successful SaaS companies are ecosystem-first, this will become less of a problem.
The second challenge is technical. Traditionally, integration and interoperability has been an afterthought and a task most engineers didn’t want to engage in. This was exacerbated by the fact that the only off-the-shelf tools to help SaaS companies build integrations (iPaaS’s) were designed and built with an emphasis on integrating an individual business’s systems.
As a result, there is a dearth of both talent and tools enabling SaaS companies to provide customers with true interoperability. However, new tools (like iMaaS’s) are cropping up that can help power integrated ecosystems and facilitate direct relationships between product and partner teams at different SaaS companies. And encouragingly, in the last 5 years, more developers have become skilled in building and working with REST APIs, the dominant API protocol supporting SaaS product integrations. Organizations that leverage new ecosystem-specific technology and create an ecosystem culture will be able to attract and retain developers who are skilled in designing interoperability and platformed products.
With a unified ecosystem approach, the product team can build (or support the partner to build) the right integrations to the right systems, and GTM teams can leverage this newly created value to market to prospects and customers.
This motion leads to new customers and drives customer product adoption that reduces churn and expands contracts. It creates network effects by bringing on board other companies with the same motivation. As software is increasingly designed from the ground up to work as part of a set of systems rather than in a silo, customers will gain the benefit of better outcomes: customer workflows will be more efficient, manual tasks will be reduced, and systems will offer more powerful functionality based on higher quality data.
To manifest Product +Ecosystem Roadmaps and an Ecosystem-first Product Development approach, Product teams must work arm-in-arm with Partnership and Ecosystem Leaders to align ecosystem roadmaps and development with commercial models, go-to-market motions and partner programs. This Line of Business alignment process is a cornerstone of the GoToEcosystem model and the key to unlocking the power of the ecosystem for Product teams and SaaS companies as a whole.
Article co-authored with Allan Adler and Kelly Sarabyn, originally published here. You can also watch the accompanying webinar.
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