The Death of Software Modules (Kinda)

I originally wrote this article in 2018 and I stand behind this core premise...kinda. I've also come around to the idea that businesses/markets have varying needs and also that they transition over their lifespans. I would say that the following article was/is applicable to a ultra high growth business in the 5-10MM revenue ranges. As businesses mature (just like people) their needs change. More mature products, larger ERP platforms and fragmented markets might call for a more modular approach. when that time is right is a questions worth asking. I am 100% confident in the concepts below (b/c I lived them in a company that we took from 1MM to over 25MM in 4 years) but there are no absolutes in life. WHEN this approach works and WHERE this approach works matters. ENJOY!!!

Take a second and think about people who were wildly successful in their given field. I’ll give you a couple of names to jog your memory. Steve Jobs, Bill Gates, Michael Dell, Elon Musk, Emelia Earhart, JP Morgan and many more. These game changers did not succeed by doing what everyone else was doing, in fact they succeeded specifically because they did things their own way and their success changed the way that the world thought about their given field.

It is in the spirit of these mavericks that I am going to proclaim the death of ‘software modules’. Modules in software are the vestigial organ of a bygone era. Back in the ‘good old days’ customers were sold a specific module to solve a specific task. The software company would sell a product one-time and then charge a ‘maintenance fee’. That fee was then used to build MORE MODULES to ‘up-sell’ the customer and thus get another one-time payment and residual ‘maintenance fee’. As the customers’ needs grew, so did their bill. Imagine doing this in other industries, housing for instance. You’d buy a house one room at a time but never get to stop paying for the old rooms. No to mention, each room was built on its own, resulting in a house that looks like it was designed by twenty different people.

Enter the new world of SaaS (software as a subscription). These old-school companies found themselves in a situation where the market was pushing them to create a reoccurring revenue stream and do away with one-time payments for software purchases (mostly because private equity hates one-time sales and LOVES reoccurring revenue). But rather than rethink their businesses, these legacy companies mostly just applied a subscription to their existing method of ‘up-selling’ modules. Would you like fries with that has become the battle cry of most legacy software providers. Get them on one piece and then sell baby sell. Turn that $100/month customer into $500/month as fast as you can with ‘new feature’ up-sells.

“I come to bury [modules], not to praise [them]. The evil that men do lives after them; The good is oft interred with their bones; So, let it be with [modules].”

-William Shakespeare – annotated

If we are going to build new companies for a digital business world we need to re-think HOW we sell these systems to our markets. Rather than thinking about modules we should be focusing on selling an ever-evolving platform. When improvements or enhancements are made to your software system they should be for the benefit of ALL customers and not viewed as another way to extract a couple of extra bucks from customers. Not only does this aid in customer system adoption but it incentivizes both the customer to utilize the product (thus building loyalty) and also the company to continually innovate to keep up with their customers growing needs (or else face becoming stale in the market). In the end, you have a product that keeps up with the market and customers who are working to use more and more of the ‘platform’ and pushing its design through product requests and suggestions. An eco-system is able to be constructed that is self-sustaining and self-perpetuating.

Ask your software ‘partner’ if they sell old-school modules or an ever-improving platform of solutions that each customer can utilize as their needs grow and evolve? The answer will tell you a lot.

So, goodbye modules! I feel like we hardly knew/used you!