End-to-end vs. point solutions: How to determine what’s best for your company
Is it better to buy software that serves many needs or just one?
Software is a major investment for companies - in terms of both money and time spent choosing the right solution. That’s why finding the best fit for your company’s needs is crucial.
A common tension point that I’ve noticed in my 15-year career in the tech industry is choosing between software that serves one purpose and software that serves multiple purposes. I’m sharing what I’ve learned from my own experience and from my colleagues about selecting software so that you can make the best decision between point solutions and end-to-end software solutions for your company.
3 questions to ask before purchasing software
There are major losses associated with selecting the wrong software for your business needs - including money wasted and productivity lost. I wasn’t too surprised to learn that there are firms dedicated solely to helping organizations choose the right software.
Ryan Neu is the founder of Vendr.co, a Boston-based company that does just that. Neu says that you have to ask yourself these key questions before investing in new software for your company:
- Does the software add more value to your business than the time and money you invest into it?
- Does the software fill a gap that cannot be met by a product you already have in your tech stack?
- Does the software integrate with your current tech stack, thereby making it more effective and valuable?
Even when you find software that fits this criteria, you may still need to decide between an end-to-end solution and a point solution. Here’s how to make that decision.
When to use end-to-end solutions
An end-to-end solution can fulfill every operational need for a specific department or function of your company. Choose end-to-end software when there is a best-in-class solution that fits your business need or process.
Neu says that he notices companies with 200+ SaaS tools in their tech stack choose end-to-end solutions over point solutions. Why? “At this quantity of tools, adding another tool to the belt may actually slow… team[s] down [instead of] speed[ing them] up,” Neu explains.
Companies that choose end-to-end solutions should pay attention to overlap in what the full service solution offers compared to the point solutions they already use. Companies like these tend to be, “willing to add net new products [to their tach stacks] if they can quantify the value add above the cost of adding another tool,” says Neu.
For example, a tool like HubSpot is a best-in-class platform that integrates customer lifecycle data across different functional areas like marketing, sales, and customer success. The integration across teams gives employees visibility into the entire customer journey to ensure all interactions with customers are beneficial to the customer. With a tool like this, all interactions with customers, made across different departments, can be saved in one place so that customers don’t have to explain a concern they brought up to a sales executive to a customer success manager.
To summarize, end-to-end software solutions should be used when there is an obvious best-in-class solution that can streamline processes. And end-to-end solution can also be useful even when there is functionality overlap with existing point solutions when the end-to-end software adds more value than the point solutions.
When to use point solutions
If there isn’t a best-in-class platform for the problem you are trying to solve, and you have a business need or process that is easy to break into separate parts, then point solutions can help you hack your own software suite that can serve multiple functions.
Finance departments can easily break down their processes into simple steps, which make point solutions a good fit for finance needs. Read my series on the CFO tech stack to learn which tools you should use at different stages in your business.
Neu says that, “when choosing a point solution… the main drivers [are] the flexibility and integration capabilities.” You have to make sure that a point solution can make your current tech stack more effective.
Look for best-in-class point solutions to build a DIY software suite with tools that integrate with each other so that they can share data and insights to empower functionalities. For example, you could combine the leading software point solutions for accounting, billing, payment processing, and expensing to build a powerful tech stack for your finance team.
When point solutions are more powerful than software suites, break down processes and look for best-in-class point solutions to create a DIY suite to fulfill your business needs.
Shopping for new software? Make sure that it adds value, fills a need your existing tech stack can’t meet, and makes your stack more powerful. When those basics are met, you must decide between an end-to-end solution and point solutions. If there is a best-in-class end-to-end software for your needs, invest in it. If there isn’t then break down the process you are trying to fulfill into steps and find best-in-class point solutions to meet those needs.