System Selection Isn't About Features Anymore

I recently explored rebuilding the CDP Institute’s venerable RFP Generator with a vibe coding platform. The project was a success – Replit* took about one hour** to build and deploy an attractive, bug-free system that is significantly more capable than the original.***

But looking closely at the RFP Generator – which has been running with virtually no maintenance for six years – also raised the obvious question of how it should be updated. The current focus of the system is features: users specify their target use cases and the system returns a list of the features those cases require; it then suggests vendors based on how many of those features the vendors provide. That made sense when most systems were largely self-contained bundles of capabilities. Features were the main differentiators and collecting information on each system’s features was the main task of a vendor selection project. Even hands-on evaluation tools like pilot projects and bake-offs, which have to some extent replaced or at least supplemented the traditional Request for Proposal, are still largely aimed at understanding system features more clearly.

But systems today are anything but self-contained. They are components of a larger architecture, more-or-less-fluidly exchanging data and participating in workflows that span different systems, departments and even companies. Any new software has to fit into this larger ecosystem.  

This shifts the focus of the purchase process to integration and compatibility. Understanding those is important because different systems are built to play different roles: some are designed to be a company’s primary platform (such as a data warehouse or marketing suite), some are designed to supplement a specific other platform (such as applications on a vendor’s app exchange or an optional module in a platform system), and still others are designed to work with any system that supports the same integration methods.

This means that delivering the right features is no longer enough. Systems must deliver the right features in a way that fits with the company’s larger system architecture. Compatibility with that architecture is the first screen that must be applied to any potential vendor list. In fact, since new tools often make it practical for users to add their own features to a purchased system, finding exactly the right set of features is considerably less important than it used to be.

The CDP Institute’s existing tools already accommodate this change to some extent. We capture whether a particular CDP works with its own database or connects to an external warehouse, which is one of the key architectural differentiators. We also ask whether a system can be installed on-premises, which is an important consideration for some buyers. The vendor selection portion of the new RFP Generator allows users to filter systems on those options. But we could surely do more to understand the different architectural options and the markers that indicate which systems are compatible with which options, and to collect and expose that information.

It's also important to recognize that new architectural options will continue to emerge. The AI-powered transformation of marketing technology is still in that early stage where the industry is trying many alternatives before settling on a standard approach. (Or several standards.) Once the industry coalesces around a few standards, it will be much easier for buyers to identify systems that match their company standard.  But it will be at least several years before the winners are clear.  This means buyers will struggle for some time to figure out which systems are compatible with their company's chosen approach.

Of course, technology isn’t the only factor that matters when selecting a system. Pricing, industry experience, professional services, typical client size, and local presence are all important considerations. The CDP Institute already captures those in its vendor data and the old RFP Generator already asks the user about them. But it would be helpful to find a way to identify some of the less concrete variables, such as cultural fit, ease of use, and skill requirements.

Ideally, a vendor selection tool would also include a user readiness assessment, to help buyers understand what types of systems are best for them, what kinds of problems they are likely to face, and maybe even what they should do avoid those problems. This is important because -- as I’ve pointed out many times in the past -- by far the most common causes of failure with new systems lie within the purchasing organization, not in the systems themselves.****

In short, finding the right system today is less about finding features and more about architectural and organizational fit. The buying process needs to adjust.  Vendor selection tools should – and I’m confident will – adjust along with it.

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* Lovable also worked very well. Botpress, not so much.

** This was after I spent a day and half prepping the data and writing detailed design instructions. It would have taken much longer if I wasn’t working with materials already assembled for the old system. Still, it would have a taken a conventional developer weeks if not months to deliver a system after they were handed those inputs. Replit cost me $20 in processing credits; conventional developer costs would surely have been in the thousands.

*** You’ll have to trust me that the system is ready to go. There’s no point to releasing it until we make additional changes in the data collected. The same goes for our Vendor Comparison report, which uses the same vendor information as the RFP Generator. Replit built an interactive version of that in just a few minutes. Woot!

****The CDP Institute does have an existing Readiness Assessment tool, although it's limited and not connected with the RFP Generator. 

Rokt Buys mParticle

 

mParticle announced yesterday it is being acquired by ecommerce offer personalization vendor Rokt for $300 million.  It’s the third acquisition of a leading CDP in a little over one month, following ActionIQ/Uniphore and Lytics/ContentStack. It’s also the first to announce the deal price.

I’ve already written in this blog about the other two deals and this one is similar enough that most of what I said before still applies. It’s clearly tough to be an independent CDP these days. ActionIQ, Lytics, and mParticle are all technically advanced products, with a particular stress on delivering real-time data – something that’s hard for cloud data warehouses like Snowflake and Google BigQuery. This is probably what made them attractive to their buyers, which are all in different businesses (conversation management, digital experience management, and ecommerce, respectively) but share the need to manage real-time customer interactions.

The buyers' businesses themselves increasingly overlap, so part of their motivation is likely to differentiate themselves from competitors.  Probably more compelling, a CDPlets them position their product as the foundation platform in their clients’ customer management architecture. The platform is a powerful position because it’s tough to change platforms; applications that read data from a platform are precarious because switching applications is relatively easy. (And I do mean relatively: it’s still a lot of work in most cases.) On a more practical level, adding a real-time CDP makes it easier to do personalization, which offers a concrete advantage to potential buyers of these products.  (And, yes, the data is essential for Artificial Intelligence as well.)

It’s interesting that all three buyers are relatively small firms (Uniphore has 851 employees, down 3% in the past two years; ContentStack has 609 employees, up 27% in the past two years; Rokt has 614 employees, up 21% in the past two years) and none are the biggest in their space. While they’re not struggling to survive, they do need a way to distinguish themselves from their many competitors. This is provided by the comprehensive data assembled by a CDP and the superior personalization it makes possible.

From the CDP vendors’ viewpoint, becoming part of a customer-facing system lets them reverse the trend of selling to IT and data departments and move back to the original CDP position of selling to business users. This is a more comfortable environment, since IT and data teams are much more likely than business users to want to build their own solution based on a cloud data warehouse. It also removes some competition from the giant enterprise cloud vendors like Salesforce, Adobe, and Oracle. Those companies are most appealing to central IT and data teams, although they certainly sell to business users as well.

There’s nothing radical about a CDP being embedded in a customer-facing system. In fact, statistics in our Industry Update report have long shown that what we call “campaign” and “delivery” CDPs comprise more than two-thirds of the industry. The truth is, the market long ago decided it preferred a CDP that was part of a larger product. So the latest round of acquisitions reflect a continuation of that situation, not a radical departure.

The obvious question is whether more acquisitions will follow. Likely candidates are firms that, like ActionQI, Lytics, and mParticle, have particularly advanced real-time technologies. This isn’t everyone, since many CDPs rely on standard database technology and differentiate in other ways such as industry expertise or regional presence. The biggest remaining independents (Tealium at 599 employees*, Optimove at 504 employees, and Treasure Data at 484 employees) might all be large enough to continue going it alone or at least might be too big for companies similar to Uniphore, ContentStack and Rokt to swallow. The next level down would be firms including Twilio Segment (a perpetual acquisition candidate as a spin-off from the rest of Twilio), Resulticks (293 employees), and Cordial (245 employees). Note they are still larger than mParticle (237 employees), ActionIQ (152 employees) and Lytics (49 employees).

More likely candidates are firms including BlueConic (177 employees), Redpoint Global (157 employees), and FirstHive (114 employees), as well as a variety of still-smaller firms including Blueshift, Simon Data, Lemnisk, Lexer, Commanders Act, Meiro, NGDATA, and Relay42. Several of this latter group are based outside the U.S., which may reduce their appeal, and of course every company has a unique situation.  So it’s not clear which would actually be open to being acquired or be technically interesting to a potential buyer. But it wouldn’t at all be surprising to see one or more of these join the list of CDPs embedded in customer-facing system.

________________________________________________________________________________________________________________________- *all data from LinkedIn, as captured in the CDP Institute’s latest Industry Update, available here.