Elevate and Conquer with AI-Driven Composable Commerce
Watch this session replay to hear from IDC’s Heather Hershey at Outperform 2024 on how integrating advanced AI within composable frameworks not only enhances operational agility but also revolutionizes customer experience through personalized, real-time interactions and predictive insights. This presentation will arm you with the strategic knowledge to harness these technologies for competitive advantage, enabling your business to adapt swiftly and effectively to ever-evolving market demands and consumer expectations. Watch this session to future-proof your operations and lead the charge!
Full Transcript
Please note that this transcript was generated by AI and may contain errors. We apologize for any inaccuracies.
Heather Hershey: I hope you're all having a great time and outperform, we've had so many wonderful sessions so far about AI, and this is yet another one, but right now I'm going to try to meet the challenge head-on of merging these AI topics with compostable commerce themes. So I hope that you are ready for an intriguing and very complex conversation in a very short span of time. Looks like I'm not the only one clicker problems today, so I'm just gonna use the laptop. [laughter] This is my market. So you might be wondering, Who am I? What do I do? My name is Heather Hershey, and I'm the Research Director of Worldwide Digital Commerce Software and Services at IDC....
HH: I'm on the enterprise apps group, but my market actually goes from SMB all the way up through very, very large enterprise, it is both B2B and B2C, so I also cover B2B2C instances. So what I'm going to try to do throughout the course of this presentation is stick to mainly B2B talking points, but I will sprinkle in some for B2C just in case any of you are direct to consumer curious, and you can see that I don't just cover core commerce apps, I also cover CPQ, PIM, you name it, if it plugs into a commerce system to create a really robust environment for transactions, that is what I'm gonna focus on. I also, by the way, lead the digital commerce working group at IDC, so I work in collaboration with many, many other analysts in the firm to tell these narratives.
HH: I'm also tracking a bunch of stories in real time as part of my research, so I just wanna give you a little bit of a taste of that. So basically, I'm tracking over 200 stories right now, 38 are about investment rounds, 14 are about M&A, 15 arae about regulation, which is a pretty big deal. 24 are about CX, 10 are specifically for B2B which even though that seems like a really small number of these stories, you have to keep in mind, B2B tends to move a little bit more at a glacial pace compared to the frenetic pace of what goes on in B2C. So of course, the news is gonna be dominated by that primarily, and then also most of the news that I'm tracking relates to New Future roll-outs and pr.
HH: I'm gonna result to my very high tech notes here to tell you about some of the news that might be compelling to that happened in just this last week, the S&P 500 hit a record high, OpenAI launched a ChatGPT 4 Omni, also called GPT-4o. Shopify is suing a Singapore firm shop line for allegedly stealing their Dawn theme. If you're familiar with the Dawn theme, you'll realize that it looks basically like a generic templated theme, so it'd be really interesting to see what goes down there. Team Moon Amazon are accused of dark patterns by the EU Commission. And so those are considered manipulative CX UX practices, and they think that they are not being truly transparents with their consumers around recommendation feeds, which is driving a lot of that.
HH: And so with Amazon, they're getting hit even harder because they're getting hit by The Digital Markets Act, so they make it too hard to cancel their Prime subscriptions, which is why they're being sued by the EU Commission, and they're being sued not once, but twice in Arizona right now, because Amazon pricing power over the third-party sellers, which has been an ongoing issue, and the second lawsuit is because of the buy-box still gives preference to fulfilled by Amazon. Slack is in hot water because Salesforce is using Slack chats to train their AI models. Remember this, if you use Slack and the only way you can opt out is via email, which is a problem because that means by the time you send that email, they've already got that data, they've already scraped it, it's already in the model, and all they can really do is change the outputs to not reflect the data you requested they removed, they can't really fully scrub it out.
HH: And then Google is being influenced by global regulation yet again, to offer SERPs, so the search engine results pages that are free from AI results and ADs. Think about how revolutionary that is, so it'll be basically taking us right back to the early audies version of Google, should you choose to opt out of those features, Amazon laid off more than 100 customer service reps, Walmart laid off hundreds of people from their corporate team, Gopuff laid off 6% and Indeed laid off 8%. So those last points about people getting laid off, I have every reason to believe that that's all very much directly tied to AI because some of these companies are reaping record profits right now. So it's not due strictly to those reasons. So I wanted to really give you a little bit of a taste of that.
HH: I'm also tracking some very big broad trends with all these data stories, these are all of them transcendent commerce, B2B hits its stride, AI everywhere, hyperextensibility and CX Customer Experience, SaaS Software as a Service convergence. And I will go into a little bit more depth and detail about all of these throughout this entire presentation, so if you don't catch these right now, it's okay, we will go into more detail in a moment, but before I do, I wanna address the elephant in the room. And that that there's a lot of magical thinking that goes on in strategy, and that is with commerce, we have a triple challenge that seems virtually impossible, we have to achieve cost reductions, drive efficiency yet increased profitability, achieve better margins while sustaining growth. Continue to expand in a highly competitive saturated market, and if you are in a position where you have to make these sort of strategic choices, you realize that it's not as easy as it sounds, it's a striving for equilibrium, there's a balancing act involved you have to be very cautious and conscientious about how you go about doing this, and I have to really make sure I get this point home. Retention is not a replacement for growth strategy, it's part of growth strategy.
HH: Don't get me wrong, you cannot grow without retention, so it's really important, but if you have it in your head that you're gonna be able to take your foot off the gas and just coast on the customers you already have, you will not grow indefinitely. That will stall out at some point, particularly if you're in a very competitive field where your customers, whether those are business buyers or and consumers have a lot of options, a lot of access to information online about those options, and you're not doing the same thing, that's just a double whammy. I'm doing a lot of market scapes, I've been told that I'm doing more market scapes at IDC than anyone else in the firm right now, I'm working on three that will release before the end of the quarter, all of which are about Headless and Composable Commerce, and I ask the participants in those exercises, which by the way, again, we're B2B and B2C, if you had to choose your favorite child, and you can only pick one between sustainable profit and growth, which would you choose?
HH: Well, you can see the proof is in the pudding, the majority chose... 63.8% chose growth still. Now, I highlighted who was the majority of the respondents, they were IT personas, though they were line of business personas in here, and most of them were B2C, so it will skew this a little bit more towards growth. But still, I feel like this is a really important talking point. Now, with all this in mind and that impossible ask of trying to grow without actually spending on growth and only really focusing on retention efforts, you can see that this just is sort of the coup to grow. When we asked Over 800 CX professionals, and this is both B2B and B2C as part of our future of customer experience survey, we asked what are the biggest problems? What's going on with your budgets? There are so many different reasons, and most of these should probably look fairly familiar to you, but the thing I really wanna call out is that very, very, very last little tiny bit of a bump that isn't even a full percentage of respondents who said that they were not having any challenges to their budgets, so it's fairly easy to assume from something of this nature that CX budgets are being heavily scrutinized in favor of operational efficiencies and retention, and I'm here to again reiterate you need to do both.
HH: It's a balancing act. If you don't invest in CX, how are you gonna get that retention in the first place, unless you have a really sticky product and you're the only one that sells it. How are you going to get around this issue? So let's get into these trends a little bit more, the first one is something I call transcendent commerce, where we go from Omnichannel, Multi channels siloed, B2B and B2C, towards the situation where potentially all commerce models can merge. And the reason why I mentioned this is that IDC has been doing polling for years about which business models are you using for your commerce operations, B2B or B2C, and the majority of respondents, the last three cycles said B2B2C. So this is an ongoing thing where B2B entities are getting much more interested in opening up direct-to-consumer channels, opens up a whole can of worms about vertical channel conflict that we could talk about in another day if you're ever interested, but that is also a delicate balancing act that I see companies mess up all the time.
HH: But the reason why I call it Transcendent Commerce is because Omnichannel has been around for a while, and it's literally just the merging of physical and online retail in most cases, multi channel is siloed by design, so Omnichannel was supposed to be like the evolutionary next step of that a synergistic process, the problem is, is that that's very seldom actualized. And then, of course, we all know B2B and B2C tend to be fairly siloed even among commerce vendors. There are plenty of commerce technology vendors that still have dedicated separate platforms for B2B and B2C, though that is shifting. And what I really wanna focus in on here is a centralized data model, it's very important that you center everything that you're doing and your commerce operations on data.
HH: Now, this is something that should not be that new to any of you, but at the same time it's so much easier than it sounds, particularly in B2B. I take consulting calls with B2B buyers on a regular basis, and it always sort of shocks me how many of their processes are literally on paper or stuck in spreadsheets or on a mainframe that someone bought and like the early 90s, and they're not ready to leverage AI. So part of the reason why I try to incorporate this as sort of like a high level holistic narrative is because you should view the attempt to re-platform commerce, even if you're doing so via incremental decoupling of the monolith, which is often called the strangler pattern among developers, if you do that sort of thing, you still need to consider what's going on with your data, what systems are actually the systems of record for that data, what are the pipes the conduits for that data to flow?
HH: How well is it managed and organized? What of it is structured versus unstructured, and then what can you do with that in response? So it's very important that you realize that this is not an easy thing to achieve. And the ultimate goal is empathy at scale, what does this look like to your buyers, whether they're business buyers or and consumers? Instead of framing this as... And it's almost cynical, if you think about it. This always takes me a little bit off guard too, because as much as we talk about CX, it's often from a very business-centric point of view, it's like a pulley and lever system. Quid pro quo. If I give you this environment and a coupon, you're gonna be loyal, right? No, customers don't owe it to anyone to be loyal, even business buyers, loyalty isn't magical or transactional. In our IDC future of customer experience survey last year, 27% of CX professionals indicated that they struggle to evolve their practices because their organization is incapable of practicing what it preaches about how customer-centric they are. So there's a lot of misconception out there in the ether about what the purpose of CX actually is?
HH: Yes, it's retention, yes. It's stickiness. Yes, it's good vibes. All these things are true, but at the same time, you're not going to be able to do these things and then get an immediate payoff for them, it's almost like putting money away in a savings account, and you may never get a return on that investment that makes certain personas in the C-SWEEP particularly the CFO and CEO uncomfortable, they wanna know if you spend a certain amount of money on your marketing, etcetera, that you're gonna get a certain amount in return, and unfortunately these days, it's like a big black box. Anyone's guess. The true nature of loyalty is that it is the result of consistent positive interactions that build over time, and trust is the glue that makes that happen. So if you use CX in a quid pro quo fashion that is poorly designed, poorly implemented, that is going to erode trust, it is not going to engender loyalty.
HH: And you've probably heard this earlier today because I heard it mentioned a couple of times, but CX and EX, the customer experience and employee experience are sort of intertwined, for one thing, you never know when your employees are going to be magically upgraded to customers, so it's always good to keep them on your side, even if they don't stick around in your company indefinitely, but then there's this other elephant in the room, and that's that with the influence of AI, your customers are going to get inundated with messaging about alternatives to what you're selling or the services that you're doing, they're going to get hit with a lot of that information in a personally targeted fashion, very personalized. And your employees, particularly the ones you wanna keep after this AI revolution, and when we're in the Prime time of AI, like you're gonna need Hyper-competent generalists, not specialists, and our education system is not equipped for that.
HH: People put themselves in silos and then they go up through high school and college in these same little niches, to specialize in a certain lucrative trade that may not be as lucrative five years from now and may not even be desirable if the AI can do it completely. So what you want are hyper-competent generalists who know how to work through the AI and work with it, as opposed to folks who were doing the job that the AI is going to ultimately take over. And those employees will become more precious because frankly, people who are capable of being a jack of all trades and a master of many are rare. CX SaaS convergence is another trend. I'm tracking again, due to the influence of AI, and a huge part of this is if you imagine what most CX technology actually looks like, it could be your CRM, it could be marketing technology, it could be AD Tech, it could be commerce technology, all these things apply, anything that deals with content even, and so you have to imagine that these are the things that generative AI in particular, anything driven with an LLM were exquisitely well-tailored to take over.
HH: And so again, you're going to be needing people who can work through and with the AI as opposed to doing the jobs that the AI is going to ultimately do, this is also being driven by some macro economic conditions that I think we're all aware of. So I don't need to keep beating a dead horse, but I do see the generative AI is going to push a lot of these categories to merge, and frankly, I see evidence of this every single day while I'm on the job, because I talk to, as you saw on that second slide, a very, very broad variety of different software categories, and they're all trying to encroach outside of their swim lanes and into other categories, like this is a moment where this is actually happening. So just to give you some feel about this last year in our future of customer experience survey, I was one of the participants and we had some really great predictions on there, but I'm gonna focus on the middle one shamelessly because it's mine.
HH: By 2027, 65% of G2000 firms will re-allocate 40% of CX spend on emerging products and skills as improved GenAI renders entire software categories obsolete. Obsolete. So the way that things are structured now are not the way that they're going to continue to be structured, and I mean... Hold on, before I we even get to this next point, can I see a show hands who knows about Conway's law? How many of you heard this term before? Know about it. Okay, cool. So Conway's law is essentially an organizational design principle, so I'll go on with this little tangent for a moment 'cause I hope that you'll see the bigger picture of what I'm driving at in just a second. So the whole point of Conway's law is, is that however you communicate or don't communicate within an organization, basically leads you to hire a bunch of people, and then you have to buy a software that all those people can then use to try to help them communicate better work together, better, etcetera.
HH: So the gist of this 'cause I'm grossly over-simplifying it, is that if you have a big bloated organization, you're gonna have a big bloated tech stack to go along with it in most cases, and if AI is going to reduce the number of applications you need, it's pretty much the inverse of that law to recognize that you're going to offload some folks and particularly folks that are too rigid mentally to learn new skills, so folks who are set in their ways don't respond well, change management, those people will not be in those rules five years from now. So hyper-extensibility, here's where we start to get into the composable part, this is where things get really intriguing from my perspective. So...
HH: Okay, let's try another show of hands really quick and don't be shy. How many of you are really familiar with the concepts of composability? Okay, cool. Let me go into that too. Composability hasn't been... It's not that new. It's probably something your organization is already doing with your tech stack and you may just not even realize it. In full disclosure, I believe that this is a terminology that Gartner came up with, giving credit where credit is due right around maybe 2019-ish, I want to say. But the thing is, they were just putting a name to something that had been going on for over a decade prior. And that's that you buy a tech stack. Now I'm gonna center this on commerce for a second. You buy a commerce product, it could be your big commerce, your Shopify, Salesforce, Commerce Cloud, you name it, right? And you hit a technical ceiling where you cannot advance without doing a heavy amount of customization to that product. And in some cases you can't because that vendor may not give you access to the application in a manner that would allow you to naturally extend that product. So what do you do? You use this thing called an Application Programmable Interface or API. It acts like a Rosetta Stone between those two pieces of software, the one that you've got that's the center of your tech stack and the stuff you're trying to augment into it, right? That API allows that to happen without those two databases having to expose themselves entirely.
HH: And so even if each of those databases for each of those pieces of software is written in a different language, they still talk to each other. So that's why I consider it a Rosetta Stone, even though it's a little bit simplistic. The assumption around this though is that investments in composable, modular, headless commerce, that is a lot of buzzwords I will unpack in a moment, technology is essential for business adaptation in a rapidly changing macroeconomic landscape. So okay. Now that you know what Composable is, you're basically just augmenting your stack incrementally with new best in breed, best in class point solutions to help you overcome the technical constraints and limitations of the products you're already using in your tech stack. Headless is a flavor of composability.
HH: It's specifically the flavor of composability where the front end presentation layer of a website. So when you go to any website you find via Google and you're playing around on your laptop, that is the front end, the glass, the presentation layer, the head, anything you wanna call it. It's got a ton of synonyms out there in the wild, but that is decoupled. Off with its head. We use a lot of very gruesome terminology in commerce, if you probably noticed. So they take that head and they remove it like that the code base is completely stripped away from the back end operational business logic and everything that goes on, on the administrative and operational side of the business. So when you're doing this, it gives you the ability to add some terra firma.
HH: You can keep a consistent public appearance with your head, your website, while you're changing things in the background. That the changes in your operational stack will not negatively impact what's going on in the front end. The customers won't know. They might just notice faster performance. Or, wow, you just rolled out a new feature. This is awesome. So it allows you to do that a little bit in isolation. So that way you're not accidentally exposing mistakes and betas and things that you don't want your customers to see. So if you want more information about that, I study this all the time. And three of the market scapes I'm working on right now are for this in particular. So I'd be happy to talk about this a little bit more after this particular conversation. But I feel that this is very, very important for business because what this ultimately allows you to do is what I just explained about the headlessness situation where it gives you the flexibility to sort of play around on the back end without it negatively affecting the front end. You can do that with your entire stack should you choose to do so. Because many products, including pros, sell themselves in a modularized fashion, which means that their core products can be sold as a bigger platform offering or you can buy them individually. So you can either buy pricing optimization or CPQ or that could be an inclusive or. Okay, we'll put that aside for now.
HH: The next trend is B2B hits its stride. So one of the things that you are probably very much already aware of is that there's this desire among business buyers, so the second being B2B, to have a more B2C-like experience. And they frequently don't get that. The typical customer journey when it comes to selling B2B anything, but I'm just gonna pick on software for a second 'cause this is a pretty normal thing in software in particular. You already have a high intent. You know you've hit a technical constraint. You know you want a new feature. So you're shopping around online and you find something that sounds really compelling, but you don't know what they're actually saying on the website.
HH: So you wanna talk to somebody. But before you can even get that far, you have to fill out this entire Lead Gen Form. So the first B2B is getting all of this data on you while you still don't have any of the information that you need. And then you have to wait for them to get in touch with you after the fact. And then this could take weeks where you're just negotiating back and forth about the price. The price is a big deal, right? It's a big deal whether we're talking B2B or B2C, but in B2B, I would argue it's so much more sensitive because it's being experienced from multiple angles. Like with that second B, the business buyer, they're feeling it from their buyers, which may be end consumers, and the pressure to get good pricing on their side of things. And that's usually the information they get last in the process.
HH: So I don't know about you, but that's a very friction-filled, very frustrating sort of experience model because it is incredibly time consuming. And as B2B modernizes, this will not be the norm. It can't be the norm because it is too clunky. It is too slow. And frankly, buyers don't like it that much. This shows you that the buyer shift is permanent. We poll people, and we're doing this again this year, but between 2019 and 2023, we asked, would you prefer to buy via an e-commerce website of sorts for B2B? So this is from our B2B buyer survey, and you can see during the pandemic, yes, right? Huge, huge, 71% said yes. But then that peeled back ever so slightly once we return to in-person encounters and these sorts of events. But it didn't peel back to its pre-pandemic trajectory. So that gives us the impression that this is a sticky trend. But how do you do this if you lack the digital maturity to make it happen?
HH: I mentioned this just a little bit earlier, where if your data is a mess, how are you going to center your entire business on that? It's just going to be garbage in, garbage out. And so what you can see here is that, to what extent do you think your organization is a digital business? This is literally B2B professionals basically ratting themselves out. This is them reading their own report cards. And even when they're giving themselves, I would imagine, credit for things like Excel and email and things that are technically digital, but not that bleeding edge, they're still behind, right? So again, this really shows that there's some urgency to get up to speed with that whole digital transformation package. I love this quote, and sorry if it hits a little too close to home, but if your technology function is not leading and shaping, the business will not wait.
HH: You will become obsolete, and it's not the business's fault. As a CIO, it's your fault if you are not helping to drive and shape your company's future through technology. And there's even more about this self-service B2B transformation driving things. You can see that we see this potentially happening very soon. These predictions are 2026, 2025, 2027, so not even that far on the time horizon. We see that demand forecasting will get better, will reduce waste, that most multinationals in B2B will experiment with delivery of live or AI-guided shopping. I mean, this is something that's happening. Right now, I don't know how many vendor conferences you attend, but virtually all of them in digital commerce that touch on B2B talk about this very specifically.
HH: And then in 2027, 60% of first touch sales activities will be handled by AI. Okay, so I agree with that, but I want to make a little caveat here that I don't believe that at this stage in the game or even by the time this prediction hits that the AI, particularly generative AI as we're familiar with it now, I don't think it will be in a position to handle the more complex elements of the sales process, including that really intense negotiation phase. But it can handle a lot of the front end querying about what do you sell, what does this do, you know, but then you have to figure out how you want to design that. How soon in the process do you want to give access to pricing? How soon in that process do you actually want to start to get a human being engaged with that prospect? B2B buyers engage and transact more digitally, reducing reliance on salespeople. So this just backs up what I was just talking about, that when asked how they would like to buy, most of them agree that they would like to do this in a self-service environment.
HH: And I suspect that a lot of it has to do with what I mentioned just a few moments ago, that they're not getting the information they need early enough in the process. And I don't know about you, but I really resent having to talk to salespeople for hours of my day for multiple kinds of software. I mean, it basically forces them to work through systems integrators and consultancy firms because those firms will know what's going on without all that exploration. But the buyers want to be empowered to do this themselves. So I wanted to just put that out there. And you can see even more evidence of that here, about two-thirds of B2B buyers that we were asking about this in 2023, two-thirds of the process, they would like to be handled by some digital means, and they only really want to talk to a person in about a third of that process. So again, they don't even wanna take all the human out of the loop entirely. They just want more of that upfront experience to be self-service.
HH: It would mirror B2C in that regard a little bit. And let's get down to this, AI everywhere. Literally here at PROS AI, AI is literally everywhere right now. It's on all of our badges, it's been in all the top tracks. So I don't feel like I need to dwell too much on introducing this topic 'cause I think at this point we're all pretty much aware. But we like to ask some really, really biting questions. And in this case, this is part of our CEO survey from this year. So this came out in March. And we were asking, which of the following are the main drivers for you pursuing Gen AI initiatives? And 63.3% of CEOs sense that there's a window of opportunity here. The minority are doing nothing at all. There's a firm element of FOMO and competitive pressure sort of nudging them in this direction. And just to add even more to that, they sense that their own proprietary business information is the secret sauce. It's what's going to unlock their competitive advantage, particularly if they can find a way to isolate it, keep it secure, and then leverage it with this AI in a manner where competitors and third parties may not get access to it.
HH: To what extent do you believe broad access to GenAI foundation models, platforms, and application technologies will disrupt your organization's competitive position or business operating model in the next 18 months? So this is isolated to B2B from our future enterprise resiliency survey. This came out in January of this year. And so you'll see that about a third of respondents, and this is all isolated to B2B by the way, said that GenAI is already disrupting their businesses. And 37.8% said that they think it will, right? They can sense that this is going to be disruptive. Whether or not they're doing anything about it right now is a different story. The interesting thing about the AI that we have today is oftentimes I hear about the promise, but I don't really hear much about...
HH: The nuts and bolts of what's actually going on under the hood. I've been very, very pleasantly surprised here at this event to hear that they just go right into that and try to unpack some of that. But just know that Gen AI, as we know it today, is autoregressive in nature, which means that it's going to be slightly derivative of anything that you feed into it. It's not really going to drive the innovation in and of itself. It is not capable of reason. And so if you lean on it too heavily, and I wanna say this caveat here, even though it's only tangentially related to this particular talking point. Like if you lean on GenAI too much for your content, for your knowledge management, for this, that, and the other, particularly for anything related to social outreach, etcetera. Your results are gonna be very generic. Very, very generic. And you wanna make sure that there's somebody there that knows how to properly prompt these systems to advance the model, advance the conversation, because that still needs to be human-driven in 2024.
HH: So let's go into some more future-proofing recommendations. I highly recommend that you recognize that not all AI is created equal, not all uses of generative AI are created equal, or predictive analytics are created equal, and you need to focus on AI that will minimize your risk. Which again is much easier said than done. You may need an expert from your company's security team to be part of this conversation to talk about what's going to keep that magic special sauce, that proprietary business data yours and not feed it into these models? And I just read a talking point on my super high-tech piece of paper that let you know that this is happening, whether you recognize it or not, because I just mentioned that Slack is doing this and they didn't really tell anyone that they were scraping data out of all of those chat logs. So does that minimize your risk or does that open you up to more? I'll let you be the judge, but it has to be something you scrutinize for all of your decisioning about your technology stack from here on. Because if they've got Gen AI embedded into it, you may be the unwilling guinea pig that is offering up business intelligence to that model.
HH: So beyond that, you should look for products and vendors that can do the following. For example, that transcendent commerce I mentioned earlier, whether that's B2B, B2C, Omnichannel, whatever your go-to market is. You wanna make sure that you are providing yourself that nice springboard and a flexible data model to be able to experiment in a radical fashion. Because whether or not you like Elon Musk, he has a really great quote that I like to use once in a while, and that's that It's gonna get weird. It's gonna get weird. Things are gonna get weird. If you think things are uncertain now, they're not compared to where they're going to go. And you want to make sure that the real keystone, the most important part, the foundation of your future proofing strategy is a stack that is agile enough to pivot. So that way you don't get swept away in the tide. You want healthy and growing networks of partners in both systems integration, because frankly, you may need some help with that depending on how digitally mature your stack is or is not in B2B, and ISP partners, so independent software vendors.
HH: Do they have a marketplace adjacent to their technology where you can easily find plug-and-play solutions with pre-built integrations 'cause that's awesome, or will everything have to be custom? Well, you need to contract developers or companies to create APIs for you so that these different kinds of programs can actually communicate with each other. That's something that you should know and figure out that that's part of the total cost of ownership of your tech stack. It needs to have a modern architecture. I keep mentioning APIs. It needs to be API first and based on microservices for the highest level of flexibility. Now, I'm gonna unpack that just for a second. By API first, it means that the API in and of itself is the core. It is the primary focus of that software. It is literally designed and in some cases built before any of the rest of the software is built around it. Which is very different from how most software is actually constructed, where they build the software and they're like, oh, we should probably build on an API. And then they do that. There's a huge difference in performance depending on which model they're using.
HH: So you want to lean into API first because it's made to be flexible and agile. And I mentioned modularity. Another way to say that, you could say packaged business capabilities, you could say microservices. There are tons of synonyms for this word. But I'm going to use mainly microservices and modules. In this case with microservices, these are like individual domain point solutions that are either part of the internal stack or they are add-on features. But again, that gives you lots of options to experiment and play around. That is the point of that future-proofing exercise. You wanna avoid applications that are very monolithic in nature, meaning that when you buy this software, sure, it wants to be a light OM... I'm talking about commerce products again, a light OMS or a light CMS, so it'll handle your orders or your content. Sure, it might be able to syndicate into meta or something like that. But what if you wanted to scale and then add something like Amplience CMS or more sophisticated MarTech like Bloomreach or something like that into your stack, you would be left with what we call technical debt, which is where you have that code that is stuck like a zombie inside your monolithic tech stack that you still have to manually update while you're updating the rest of the system.
HH: And there's I'm being very overly simplistic here and trying to explain this, but it's a lot. That's why it's so important that you look for companies that provide accelerators and tooling for rapid stand-up, because those will help you circumnavigate some of those really heavy technical issues that I just mentioned a moment ago. Of course, you wanna vet them to make sure they've got happy customers and a good reputation. Part of what I do for all of my MarketScape research is I literally interview customers. When I'm at events like this, I interview folks like you because I wanna know your real perspective when the vendors aren't, standing there trying to monitor what it is that you're actually saying to me. I find this to be really illuminating because your pain points are pain points that I need to be aware of from my research. But if you're happy, oh awesome. That makes me feel more inclined to want to recommend the things that make you happy.
HH: So if you have any feedback like that for me when I'm done talking, please look for me. I would love to hear it. Then finally, modern Cloud-native deployment. You should all be pretty much familiar with that. PROS is one such product, that it is built for the Cloud and that it is meant to integrate via API with other Cloud-based solutions. Because when we have a clear sense of where we're going, we can be more flexible in how we get there. And this is really the take-home of this whole presentation. You need to lead with strategy, minimize risk, and don't let the technology dictate either of those two things for you. You need to take the reins, know where you're going first, and then find the technology that will help you get there faster. So this is where you can find me if you would like to email me or have a conversation about this in a follow up. And thank you so much for your time. We do have a little bit of time, by the way, for Q&A if any of you are interested. Does anybody have any questions? All right, cool. Well, stay tuned. We've got another excellent presentation right after this one, so please stick around. Thank you.