For a buyer of business software, the dilemma of “suites/bundles vs. best-of-breed point solutions” is never going to go away. There will always be a supplier who does X better than another supplier that does W, X, Y, Z but with a crappier X.

The good news is that almost *every* B2B SaaS software bundle started out as narrower solutions that grew over time. Salesforce started as sales automation and now does almost everything else. Oracle started as just a database and now competes with SAP and Salesforce in many areas. And so on. So this is not an unusual way to grow a business. My own company, Cantaloupe Systems, built a point solution for logistics optimization, and over time grew that into a full-featured industry-specific SaaS ERP.

Here’s some suggestions for how to go down this well-trodden path:

• Be a *great* point solution. It’s not enough to be a little bit better than your full-spectrum competitor. You have to be much better. Ideally 5x better. Maybe 10x+. But you need to be such a good fit for your potential customers that, once they see your product, it should be inconceivable to them that they could ever be satisfied by the status quo piece of the bundle they’re using now. Sometimes being 5x better means that you address a critical blocker that their current solution can’t overcome, like scalability or usability. Sometimes it’s moving into a new platform like cloud or mobile that the existing vendor is failing or absent in. But you need to be *much* better before you’ll get a chance.
• Integrate with existing bundles. The main reason that customers don’t like point solutions is because it’s a pain to integrate technology from multiple suppliers. Often the customer has to do the integration themselves, and when there’s a problem the suppliers waste time blaming the other for the problem. So… instead of this mess, make it easy for the customer! If you’re making a super-customized invoicing solution and most of your customers use QuickBooks for accounting, then make sure that you can export and import invoices from Quickbooks. If you’re building a data-visualization solution that’s better than Tableau, better make sure you can port existing Tableau visualizations into your app. And so on. Make it easy for your solution to co-exist with minimal hassle for your users. Ideally the integration should be 100% automated. And when the integration breaks, *you* need to fix the problem— don’t point fingers at the big fish or the customer will start remembering why they don’t like point solutions.
• Expect, and plan for, a competitive response. As you start to get traction, especially if your product has a premium cost, your bundle competitors will eventually notice. You should have a plan for what to do when that happens.

1. The ideal case is when the bundled competitor doesn’t see you as a threat because you build on top of them— so if you win, then they win too. Salesforce and Intuit and Splunk and many other large SaaS companies invest heavily into their developer platforms for a reason— they want point solutions to be built on top, not “instead of”. If there are multiple bundled competitors and you build on top of all of them, this is the best case. Then you can try to get bundlers competing with each other as the best “host” for your premium solution.
2. Often the big fish will mostly ignore you and hope you go away on your own. Their salespeople will claim that they already do what you do, but more integrated into the mother ship. They will belittle you and lie about your product, and claim that your company is about to go bankrupt. Be ready, with potential customers, to refute that BS and make your customers feel comfortable not just with your product, but also the suckiness of your competitor’s as well as the stability of your company.
3. The worst case is when your competitor actively locks you out of integrating with their solution. Sometimes they’ll try to block you through tech. Sometimes with lawyers. Your goal should be to postpone this day of reckoning as long as possible, either by pretending that you’re really a win/win partner like (a) above, or that you’re so small and irrelevant like (b) above that it’s not worth their bother. The reason why delay is important: if you land enough customers quickly enough, and if you’re really 5x better, then your customers will push back so hard on the big fish if they try to block you that they’ll get the big fish to back off. I’ve seen this happen many times— mutual customers who like you are the best way to keep competitors from actively screwing you.

• Have a “widening” plan… You probably can’t stay a point solution forever. Your customers, if they like your 5x-better product, will start begging you (with promises of money, threats of long-term churn, or both!) to replace more parts of the 5x-worse bundle they don’t like. Meanwhile, your 5x-worse competitor is probably beefing up the part of their bundle that competes with you… often by blatantly ripping off your best product ideas and your marketing messages. Or they’ll try to acquire you. So if you want to stay independent, you’ll have to grow your surface area. Instead of being surprised by this, it’s helpful to have a plan in your back pocket about how you’d widen your solution to truly compete with bigger fish’s bundles.
• …But don’t underestimate the difficulty of “widening”. When competing with lamer bundles, you might assume that building your own bundle is easy. It’s not. There’s likely many centuries of person-time put into that bundle. There are hundreds or even thousands of features and quirks buried in that bundle, often built up over years or decades of customer usage. Customers are used to how the bundle does things. And your team’s product advantage in the point solution may not translate to other parts of the bundle that you haven’t been working on for years. Having been down this road before, here’s some suggestions:
• Estimate R&D costs realistically high and long. It will take years to match a bundle. Set your team’s and investors’ expectations accordingly.
• Estimate low bundle revenue. Your competitor has already recouped the R&D costs for the bundle so they can easily drop prices and still make money. Assume that they *will* do this. Your point solution can still command a high price—it’s still 5x better—but you probably won’t quickly (if ever) recoup R&D costs for the bundle because by the time you bring it to market, your competitor will probably drop the price. So… don’t count on the bundle to raise your revenue per customer. Instead, think of it as a way to raise your TAM because you can target “bundle-preferring” customers as well as the brave customers who are willing to go with point solutions.
• Build the minimum. Don’t assume you need to match every feature. Instead, try to lay down a minimal set of features— enough to land your first few bundle customers— and then add features based on customer demand. If you get lucky, a large number of features in the bundle will not be needed. Recognize that this approach will slow down new sales, because every time you go sell to a larger or more sophisticated customer, they’ll demand that you fill more feature gaps.
• Consider acquiring another bundle. Instead of building it all yourself, can you buy a “good enough” bundle somewhere else? Yeah, the integration will be annoying but it’ll be better than wasting your next 5 years building a better version of a low-margin bundle.
• Don’t stop investing in your point solution. The main reason why your customers buy your crappy new bundle is because your point solution is 5x better. Make sure to invest enough to keep it 5x+ better, because if you lose your competitive advantage there then you’re doomed.