The enterprise version of the great re-bundling & vendor consolidation trends

One of the strongest trends I’ve seen over the past few years is the desire amongst enterprise buyers to have fewer vendors and to consolidate services. 

I’ve seen this for several years in my own experiences selling software. It is yet another reason why we made the leap from a point solution (Notarize) to a platform (Proof) and we will continue to add more services to Proof to take advantage of this trend. I feel strongly that we’re now on the other side and we’re now seen as a consolidator, evidenced by customers asking us to provide adjacent services to our core offerings. 

This ties into the discourse around the great unbundling and re-bundling that’s occurring, but I think most of that commentary focuses on how bundled super apps provide user experience benefits and economies of scale for consumers. There’s a larger trend in the enterprise focused on cost savings and risk mitigation.

This trend isn’t just buried in Proof’s and my own selling experience, broader market data reveals this plain as day. 

These were taken from the 2023 CIO survey conducted by Piper Sandler, essentially predictions to start 2023. 

As we enter 2024, the same report suggests these trends are dissipating. 

FWIW, I don’t agree with this at all. The 2023 report suggested that the primary motivation was Cost Savings. The 2024 report makes clear elsewhere that buyers plan to spend more money this year - perhaps the pressure to reduce costs is off or not top of mind.

BUT, risk and InfoSec are still HUGE drivers for vendor consolidation. We are seeing this everywhere. Sophisticated customers want less risk and using fewer vendors is a way to achieve this. Not only for its direct sake, but because each vendor relies on their own set of vendors so it is a geometric problem for the enterprise buyer. And let’s face it, startups don’t always pick the best vendors. We’re seeing this articulated by customers as “4th party risk,” which they very much want to control.

This is pushing us to consolidate our own vendor stack and to insource more of our own technology. This can be at odds with enterprise requirements for redundancy and disaster recovery - or it means when you insource, you really need to do it right so it is highly scalable and redundant. You can’t just hot swap from external vendor 1 to vendor 2.

So much for being in an era of micro-services and cheaper development costs. The reality is that if you want to play to win, you eventually have to just do the goddamn work.

At Proof, we are becoming the trust layer for critical commerce and we cannot win without the largest players on our platform. Being enterprise grade means much more than people appreciate - and costs much more too. I believe this trend will accelerate and the companies who solve for these issues will become the pillar platforms with the right to consolidate what’s around them.

PS - Shout out to Rob Owens at Piper Sandler. Big fan of their work.

9 months ago  /  1 note