As technology continues to shape and change our lives, we experience an ever-changing market of software solutions. At times, the market swings towards platforms, which bundle all features together and make them available as a single offering. At other times, it swings towards best-in-class solutions, where each feature is available individually and provided by a company that specializes in that particular feature. In this blog post, we will explore the impact of this pendulum on the software market and how it affects the companies in the industry.
The first to coin the term bundling and unbundling were Jim Barksdale and Marc Andreseen. This concept applies to software, where bundling includes platforms, which bundle all the features of a solution together and sell them, whereas unbundling is where the features or parts of a platform get sold separately. When there is a cycle of unbundling, companies that specialize in providing “best-in-class” features for a specific part of the platform emerge. However, for the software to be fully functional, there must be sound integrations, which can lead to higher costs.
On the other hand, bundled or platform solutions generally go wide and shallow in terms of features of a product. They are not reliant on integrations, as they are running everything under the same cloud instance. The benefit of this method is that they usually offer the whole solution cheaper than if you were to break it up into parts.
Over the last ten years, best-in-class solutions have ruled the day. New software companies were made and adopted easily in a ZIRP (zero interest rate policy) environment. However, today, there is a prediction that platforms are going to make a big comeback. Budgets are getting cut, and people are going to want to consolidate their technology stack.
As consolidation and economy drive revitalization for platforms, the topic of a monolithic versus a modular approach towards software arises. The modular approach is where software solutions provide only a particular function and are built to function correctly while communicating with other software solutions. This approach allows the development of new features and components with fewer limitations. On the other hand, monolithic software development is where all features are built within the same program. This approach provides fewer connections and a less reliance on third-party programs. Developers choose which approach to adopt based on factors such as scalability and accessibility.
In conclusion, the software market sways between best-in-class and platform solutions, each with its advantages and disadvantages. The adoption rate of the bundling and unbundling approach towards software development and sales has an effect primarily on the consolidated ability of technology and the power of individual software solutions. As the industry looks towards the future, it is essential for software developers and those invested in software companies to keep track of the pendulum’s movement, and to adapt to new changes and opportunities that arise in the marketplace. I am predicting we are swinging back to platforms.
