I don’t remember the first time I actually heard the term platform stickiness, but it was probably around ’06 or ’07 while I was working as a developer evangelist at Microsoft. For anyone unfamiliar with the corporate buzzword, stickiness refers to the decreasing likelihood that a company will replace a piece of software as increasing amounts of time, money, and energy are invested into the platform. Put another way, a LOT of Microsoft’s revenue comes from people unwilling — or unable — to switch away from Windows and Exchange.
What’s misleading about the idea of stickiness is that, actually, the biggest reason companies were staying with a semi-defunct product was the prohibitive cost of change — switching to an alternative application meant incurring a great deal of organizational pain and expense. Furthermore, with enterprise software being dominated by a handful of monolithic vendors (looking at you, Oracle), companies rarely had other options that were much different from their existing tool. It was like escaping one web, only to immediately get entangled in another.
Makes sense, right? Put yourself in the shoes of a CIO, circa 2007: you’ve already sunk tens of thousands of dollars into the purchase and deployment of a piece of software—not to mention the hundreds of hours spent training staff and customizing it. Present me with a newer/better/faster/stronger option and no matter how attractive the new features are, it’s still tough to stomach the idea of repeating the entire process—especially when it feels like only yesterday that someone sold me the dream of the last CRM solution.
The reason stickiness was a great way to describe enterprise software was that, quite literally, organizations were stuck to the products they had chosen. The system was stacked against companies. The cons of a switch outweighed the pros that made an alternative attractive in the first place. Consider the drawbacks to switching:
- Data migration: Structured data has a tendency to butt heads from one system to another and those incompatibilities contributed to a process that could take months, cost hundreds of thousands of dollars, and even result in data loss.
- Backwards-compatibility: Like your fancy new tool? That’s nice, but don’t forget about mission-critical data permanently locked in the old store.
- Integrations and Customization: Remember all those great workflows you built integrating 15 tools and all the new fields you added to support your sales team? Get ready to start all over again.
- Training: Employees had already learned a system that often dictated the very process of its business function (e.g. consider how many ways a CRM can feed leads to sales rep and how that differs from vendor to vendor).
- User Provisioning: Single-sign-on providers are doing a lot to mitigate this pain, but traditionally, IT and users have had to create a new set of credentials for every piece of software.
- Bugs: A new tool inevitably contributes to a greater frequency of service interruptions. Typically, the larger the company and more critical the functionality, the bigger the impact that software downtime has on the bottom line.
Introducing… Platform Gravity
So, what’s changed? For starters, platform stickiness is an obsolete model. Like all things tech, circumstances change rapidly and in this case, the cloud is to blame. I’ve been using a phrase that better describes what the software market looks like today, platform gravity.
Let’s define platform gravity as a product’s ability to draw in and engage users, determined by its pricing, popularity, features, and integrated apps. Put in a non-Twitter way, it’s the measure of how strongly an end-user is drawn to a platform and necessarily understood as part of a larger system of competing products exerting their own gravity.
The dramatic reduction in the cost of change is fundamental to understanding how the cloud has upended the market. Suddenly, companies are both (A), unstuck from the restrictions that glued them to a tool and (B), highly attracted to alternatives with significantly differentiating benefits.
The purchasing model has shifted away from large, one-off, purchasing prices towards a SaaS market. In doing so, the burden now falls on vendors to incentivize for contractual lock-in. From a more general supply and demand perspective, the cloud’s effect on cutting development costs has been a boon to the number of software services suddenly competing for enterprise customers.
What matters more in this new environment is the attractive force that vendors are able to exert on potential customers. Factors like price, features, app ecosystems, design, and customer base are more important than ever because they are the biggest determinants of a platform’s gravity. Churn is the metric of the cloud, leaving companies wondering why their bookings are going up, but revenue is going down.
Aligning Incentives of Developers with Needs of End-Users
So what does this all mean to application developers and buyers? More choice, better applications, and fighting chance for up and coming developers. Consider the leaps and bounds made in software interface design. Before the explosion of the cloud, monolithic vendors could afford to be lazy on things like usability because there wasn’t the same pressure to prioritize. The iPhone is a great example because it set a new bar. The cloud has lit a fire in software that is now forcing traditional vendors to rethink their products.
Speaking of the iPhone and usability—this segues into my final point: the importance of end-user led adoption. There has been a lot of discussion lately surrounding BYOD (bring-your-own-device) and how enterprises have been forced to adapt to allow for mobile productivity and integration on employees’ personal devices. User preferences underpin it all. Today’s knowledge workers have an unprecedented amount of leeway to select the tools (hardware AND software) most optimal for their personal workflow.
Platform gravity is ultimately a healthy development because it aligns the incentives for the enterprise software market with users—not CIOs. The cloud is ushering in a new era of vendor accountability and competition that forces us as software developers to innovate faster, listen more, and generally just do right by users. When you put it that way, it’s almost funny how long it took things to change.
Patrick White is CEO of Synata.