I recently wrote about the difference between an application and a platform. As I wrote, “…most SaaS vendors are not platforms but merely providers of feature-rich applications”.
I’ve noticed first hand two of the biggest challenges most enterprise SaaS vendors face today: 1) making it easy to integrate with and to third party applications and 2) delivering application flexibility to support unique processes that are not supported by the design or configuration of the applications.
Open platforms have the potential to solve some of the biggest challenges in SaaS. So why aren’t more SaaS vendors becoming open platforms? In my last post, I shared some opinions why SaaS vendors struggle to become open platforms.
An open platform, also known as a “platform-as-a-service”, allows customers to develop, run, and manage applications without the complexity of building and maintaining the infrastructure typically associated with developing an application. Salesforce.com was first to market with an open platform when they launched Force.com in 2007. Today, Salesforce’s Lightning Platform (formerly Force.com) represents nearly $2B in revenue for the company. It has also contributed to Salesforce’s continued market share growth in the CRM market. Today, the ecosystem itself includes nearly 3,500 apps and has launched market leading companies like Veeva and Vlocity. The platform has also positively impacted the growth of category leaders including Docusign, Marketo, Apptus, Gainsight, and Zuora. In my opinion, Salesforce.com is still the only SaaS vendor with an open platform.
I believe there is a huge opportunity in human capital management (HCM) to become an open platform. Unfortunately, we have not yet see one emerge. What does it mean to be an open platform?
- Instant provisioning — the application and supporting platform can be instantly provisioned without human assistance and the application is immediately accessible and configured.
- Open APIs — RESTful APIs with the ability to read/write data to and from third party applications. A well-designed API strategy can make the application highly customizable without breaking the vendors’ multi-tenant architecture.
- Programming development environment — ability to deploy unique code that extends the platform capabilities and allow customers to modify data models, objects to manage data, workflow, and often a user interface model that handles forms and interactions.
- Friction-less integration —in addition to APIs, access to tools and workflow to connect third-party applications.
- Open marketplace — an open marketplace that makes it easy for partners to showcase their applications and even easier for customers to buy and configure the application on the platform.
- Developer portal community — an open, accessible community to access documentation, ask questions, get help, share code, etc.
We have seen some HCM vendors make steps towards becoming an open platform — notably Cornerstone OnDemand, iCIMS, SAP SuccessFactors, and SmartRecruiters — but we are yet to see an open platform emerge. Last year, Workday announced the Workday Cloud Platform and promised a future of openness but today it is still very much as closed platform. Workday certainly has the vision, resources and capital but what’s not apparent is if they have the urgency and architecture to grasp the market opportunity now.
I am optimistic an open platform will emerge in the next couple of years. We need it and customers want it. An open platform will energize an entire ecosystem to collaborate more effectively and drive new innovation.
So who is closest to being an open platform to serve the HCM market? Its probably not who you think but I think Slack is best positioned right now to be the platform of choice that connect, people, productivity and work. Why Slack?
- They get it. All you have to do is read about them in the press to understand the massive investments they are making in their platform including improving search, enabling deeper integration, expanding their ecosystem, and providing real-time updates to their platform tools and services.
- A focus on simplicity. While many SaaS companies get competitive envy and force themselves to add new application functionality to compete and grow, Slack has remained steadfast in their focus on enterprise messaging. This has enabled them to simplify workflow and automate processes, now even using voice and text to process transactions.
- Employees want to go there. They are becoming the “interaction layer” for many organizations and employees are increasingly dependent on Slack to get work done. The hockey-stick growth in DAUs (daily active users) showcases their stickiness and gives them an out-sized advantage to add and extend HCM functionality (most likely to come from partners instead of themselves).
Whoever emerges as the open platform for HCM has a great opportunity to not only build a competitive moat but re-accelerate growth long into the future. One just has to look at Salesforce.com to recognize the potential.
(Cross-posted @ Arcadian Insights - Jason Corsello)