Written by Mert Yucesoy
Today a top performing company uses an average of 37 tools in its tech stack. I personally have used 30+ solutions at work in the past 2–3 years and am not sure if I increased my efficiency or made things worse. Go ahead and count the tools you use daily — the number may surprise you!
But how did we get here, and how do we ensure our future is not dominated by more time spent app-switching than doing ‘real’ work?
In the late nineties and early 2000’s the rise of the cloud created a huge opportunity for horizontal SaaS companies. The enterprise giants of today, like Salesforce (for customer data management) and ServiceNow (for workflow automation) were born.
But that first wave of SaaS offerings wasn’t particularly good at catering to the nuanced needs of customers in specific sectors. This, coupled with a developing desire from companies to build more automation into their workflows led to the evolution of a whole host of industry-specific software that has incredible product market fit with a targeted audience. Think about the likes of Jobber* for home services businesses, Mindbody for health and fitness, Hubspot for marketing and Clio for lawyers.
While these vertical-focused applications are orders of magnitude more effective and efficient than their horizontal predecessors (as evidenced by the fact that public vertical software companies 10x’ed their market cap in the past 10 years according to Bessemer), it has created another issue — software tool overload and the ability (or inability) for all of these best-in-class tools to work together.
What’s the problem? I love the 57 apps on my computer.
Despite the increase in efficiency and domain expertise brought by the rise of vertical SaaS products, it also created three significant issues:
- Cross-tool performance is compromised: many best-of- breed products don’t speak to each other natively. This means legacy platforms are being stitched together and as a result often perform poorly, not to mention the lack of insights created by data silos
- Knock-on effects of switching products are significant: if you want to switch out a single solution, you’ll likely have to modify your related business process and may also replace other tools to save money (think about cross-sell discounts). Add to this the developer time and effort in building new integrations and suddenly the benefits of switching don’t look so appealing, even if you KNOW there’s a more appropriate tool out there to meet your needs
- Inflated subscription costs: because every issue in a company now has its own potential software solution, a company quickly gets to the point where it can find itself ‘over-tooled’ with all the subscription costs that go along with it. The efficiency gains by using the right tools can quickly be drained simply by using too many tools that don’t work efficiently together.
So, what’s the solution?
We believe a new wave of SaaS businesses are addressing the key challenges outlined above by focusing on what they call ‘orchestration’. Apart from being the latest SaaS market buzzword, orchestration refers to the process of integrating two or more applications and/or services together to automate a process or synchronize data across platforms or tools.
Basically, it means the latest generation of SaaS builders recognize that app overload is real, and they want to win in a niche market. They will focus on allowing seamless and effective integration of any other apps that their target customer persona can possibly use. The goal is that one SaaS product can act as the single point of entry for a business that may be using 30 apps, but makes the user feel like they are only using one. But the market will go further than that, and pure ‘orchestration’ apps will emerge too.
This concept of orchestration first arose in the early 2010s in markets where there is high transaction frequency, volume and already a lot of point solutions at play.
Giants like HubSpot, Marketo, and VTS took the first plunge in creating orchestration-specific personas. That means they understood who their user was, paid close attention to the other tools that the customer would likely be using, and provided the flexibility to integrate those tools into its own platform. Despite their early success, these platforms weren’t built with an AI-first and low code/no code approach (as these technologies were quite new/non-existent at the time) and as a result, still required customers to invest time and money to customize their own setup to meet their specific requirements.
In addition to SaaS solutions being more cognizant of integration needs, API-first players like Plaid, Stripe, and Zapier have also stepped up to the plate, offering drag & drop capabilities and exhaustive access to APIs in a business user’s world. They have been successful in addressing the orchestration needs of mid-market, SMB companies and consumers, so much so that they attracted $2B+ funding just in 2020 (yes, billion).
However, our own diligence suggests public APIs and API solution providers today are not necessarily perceived as robust. For the most part, these types of companies have few (or very basic) service level agreements (SLAs), and have trouble keeping pace with the new solutions that pop up every week.
If I had a nickel for every time I hear of a company doubling or tripling up on the APIs in a particular industry as their main APIs aren’t performing well… APIs rely on the vendor to maintain, update, and publish changes to their APIs; which is challenging at times. API providers do not focus on automating end user’s actions / workflow, they are only focused on making APIs work.
So here we are, well into the SaaS world, with amazing software tools created for almost every business challenge you can think of, a recognized need for the many tools to work seamlessly together, a strong desire for workflow automation and still every tech executive and knowledge worker I talk to complains about how they have to manually pull data and plug it into other platforms, toggle between 3–5 different solutions for a simple workflow, spend $10–100Ks a month in FTE hours and subscriptions to improve end-user productivity by an inch, and the list goes on. How do we finally move on?
I believe that we are now entering a third wave of orchestration software which will truly optimize our daily work while allowing us to leverage the best-of-breed tools in a dynamic way.
To be successful, these new solutions will look something like this:
- Exhaustive — it will cover the entire business process, so users do not leave the platform to do their jobs
- Tailor made — the experience will blow the socks off a specific persona. The product serves the workflow and the user perfectly, offers a great user experience, provides visibility and governance capabilities from day 1 (i.e. data mapping & audit capabilities for GDPR provided through a 3rd party partnership)
- Automation-first — Common user actions are increasingly automated at every step; enabled by machine learning algorithms and/or humans. Platform built on low code / no-code principles and will need little to no technical support to operationalize
- Alive and flexible — Built-in integrations with proprietary and opensource software relevant to the business process (i.e. new opensource library heats up in Github → a native integration is built in the next 24 hours and provided to customers, new NLP framework pops-up → chatbot at a specific step)
We are already seeing examples of orchestration players taking off in industries with high concentration of point solutions and high frequency of transactions such as food (Deliverect* — orders and POS), logistics (Bringg — fulfillment) and DevOps (Opsera — DevOps tools, pipeline and insights orchestration).
Even industries like healthcare (that typically have lower transaction frequency and volume) are following suit. League* is shifting its focus to orchestrating complete digital healthcare programs for enterprises and their employees or other populations, Dover is aiming to bring order to the point solution mania in recruitment and LogicGate is working to be the single pane of glass for risk, governance and compliance professionals.
This is just the beginning; next generation orchestration-focused companies will emerge and become the main screen we look at every day, improving our efficiency and minimizing friction in our jobs.
What do you think? Do you have a different opinion? Am I missing an amazing company here?
Are you building an orchestration platform/company, and you think we should talk? I would love to have a chat. Shoot me a message at firstname.lastname@example.org or get in touch with me on Linkedin or Twitter.
*OMERS Ventures portfolio company