I came to the realization this morning that committing to a SaaS platform not only binds you to the technology, but also binds you to the business strategy and target market of the platform provider. This is a HUGE deal!

Case Study:
In 2005, I wrote an integration piece for SomePlatformProvider.com that would help small teams manage their weekly catered lunches. The first thing I did was research SomePlatformProvider.com’s customer base. What I found was that the average customer size was 50-100 employees. Because I knew I would be selling to SomePlatFormProvider customers, I thought it would be wise to tailor my offering to fit the budget and needs to companies with 50-100 employees. Doing this paid off huge for me! Soon I was the #1 provider of catered lunch tracking and making a ton of money. Everything was great. But then, my sales started dropping off. I did a little research. Most of the new companies that signed on to SomePlatformProvider’s services didn’t do catered lunches, I found!! After more research, I discovered that instead of the average company size being 50-100 employees, it was now 400-800 employees. And what I found out was that companies that big never did catered lunches - They all hired in-house chefs to cook because it was cheaper. It was only the smaller, more entrepreneurial companies that did catered lunches. Slowly my sales dropped off to the point that I had to shut down my business.

I wonder how many people who sell platform bolt-ons have really considered this. What if the target market of the host changes to something that’s not compatible with what I’m selling?

When people talk about “platform”, they usually use the word ecosystem. This is actually a really good word - because the balance is just as delicate as an environmental ecosystem. The smallest change could cause hundreds of businesses to fail!