Do B2B customers choose to buy Integrated offers or š Best-of-breed products?
Let's find out who wins in this ongoing tug-of-war and how to help your customers make a choice.
The tech product world grows increasingly complex, especially with the explosion of AI. Thus, enterprises now face a critical buying decision:
Opt for best-of-breed products in every category
Or choose an integrated offering for greater convenience.
š McKinsey asked 3000 B2B buyers how they prefer to buy
Insights from >3,000 leaders across 11 industries collected in Q4ā23 in McKinsey & Company Tech and Telecom B2B Pulse Survey, show that:
ā The integrated solutions are winning, but with a thin margin.
In the Cloud, 53% of respondents chose integrated solutions over best-of-breed.
In Business applications (think Salesforce or Atlassian), integrated solutions still win, but the margin is even thinner (51 vs 49%).
Integrated products are preferred across all categories.
The only exception where this rule breaks - cybersecurity.
Because cybersecurity is the biggest concern for enterprises, slightly more companies will opt for best-of-breed product vs integration there.
šCloud marketplaces - the best of both worlds
However, customers can now bypass this difficult choice altogether, because cloud marketplaces offer:
The ability to buy best-of-breed from one place, integrated into their tech stack,
High confidence that products are vetted and secure,
A simplified buying and billing process.
Thatās one of the key reasons why customers continue to invest heavily in cloud commitments, which now exceed a third of a trillion dollars among the top three hyperscalers alone.
Still, the first question that software and services companies ask when considering cloud marketplaces is why they would go there if there are other competitive products?
š¤ Why Competition Should NOT be your #1 concern in Cloud GTM
Most often, this is the wrong question to ask, for 3 reasons:
1. A large portion of customers (nearly half) still prefer a best-of-breed solution (see image).
This is especially true if these products are integrated and available to buy in the same place.
2. Co-opetition is the new rule of the game.
Look at Microsoft, the most valuable company today. They strategically partner and compete simultaneously with almost everyone, including OpenAI.
3. Even if youāre best-o-breed, you still need to integrate
Otherwise you will miss out on the multi-billion dollar market.
More often than not, companies choose the simplicity of a bundle from one provider over the highest-quality products from a number of different vendors.
But if they can effectively blend the best of both worlds, getting simplicity without compromising on quality, they will absolutely go for it.
This is why cloud marketplaces are experiencing rapid growth.
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