The New System of Record

Over the last few months, I’ve been spending time learning about software built for the “product persona.” When I started digging into the space — it appeared incredibly saturated. If you heard the phrase, “product management software”, you would often think of solutions like Asana, Wrike, Basecamp, Trello, or Jira.

But which of these tools, if any, are the “system of record” for the product team?

Sales teams have Salesforce, Customer Support teams have Intercom and Zendesk, HR teams have Workday, and Finance teams have Netsuite or Intacct. Most would assume product teams operate largely in Jira — Atlassian’s infamous product delivery software that eases the handoff between product teams and engineers. In talking to several dozen product teams, Jira as the system of record for product, couldn’t be further from the truth. Product managers did not iterate or ruminate “within” Jira — it was only a delivery mechanism for them to pass on their findings to the engineer. Think of it as a “to do list” for the developer.

The tools where product teams spent time thinking about customer feedback, designing product changes, and sharing the product management process was done through multiple, disparate tools that didn’t talk to each other: unorganized google sheets, multiple powerpoint versions, messy e-mail threads, or worse, inefficient in-person meetings. One shocking interview revealed product managers would have to ask their customer support teams to print out Zendesk logs in order to discuss them item by item in an in-person meeting! Jira made “product delivery” more efficient, but “product discovery” was still a broken and inefficient process that software had not alleviated.

This realization becomes even more surprising when you look at the rise of product teams in Silicon Valley. Interestingly, the average PM salary in the US is $4–10k higher than that of a software engineer, which further suggests that we have no true “system of record” to help maximize the productivity of an enterprise’s most expensive human capital! Seems like a greenfield opportunity to me.

With this broad thesis in hand, I continued digging deeper in the space and learned a few additional truths:

  1. A Limited TAM?: The TAM (Total Addressable Market) for Product Management software is initially misleading. Research shows that there are ~1M product managers in the US and Canada. That number is very different from the number of developers worldwide, which was a whopping 22M as of early 2018. I believe the TAM for a “system of record“ ”for Product, goes beyond just the “Manager.” The TAM analysis should include Project Managers, Technical Customer Support Reps, Sales Ops, and others — which widens the TAM net. Additionally, the suite that will win will also monetize other segments in the organizations like customer support, sales, and engineering — because it aggregates product feedback across channels and functional areas — necessitating their involvement. More roles with paid access? More revenue…wider TAM.
  2. Art vs. Science: Some PMs I spoke to fundamentally believed that the product job would never fully be relegated to a software suite like other job functions did. For these PMs, the entire job function required you to work more like an artist than a scientist that depended on a single “system of record” for their day to day workflows. While that may be true for smaller organizations where in-person meetings can suffice and whiteboard sessions are doable — for larger organizations where roadmaps and customer insights are constantly shifting — a system of record feels like a necessity. PMs at larger organizations didn’t see this potential software suite as taking away from their day to day job — instead, they saw it as “freeing” — if there was one place where all the discovery and collaboration existed — they could spend more time truly “thinking.”
  3. Product Analytics Suites: The companies closest to achieving a system of record status for Product Teams are entering the space with an analytics wedge. These include the likes of Pendo and Amplitude which provide real-time analytics on products that are already launched. This is incredibly important feedback to measure for a company, but I suspect will not replace the tools where PMs are spending a majority of their time.
  4. Budget Allocation: Another interesting element my research made apparent was budget allocation within product teams. Product teams had growing budgets (as seen above in the salary data), but they opted to spend their budgets on more headcount vs. on software spend. I believe this is less an indication of where they wanted to spend money, and more an indication of the lack of good software.
  5. Workflow vs. Stored Data: Since a product manager is a nexus of all the learnings in an organization, will a system of record in product look more like a workflow tool vs. a traditional system of record (which is usually some sort of database.) If so, can workflow tools ever become systems of record? If better insight aggregation across roles in an organization is the answer, what is the fundamental “new” data that product suites would alone store? (i.e. pulling from intercom, zendesk, jira, email is simply aggregating data from other system of records — not creating net new data.) This is a question I haven’t yet answered.

I’m still refining my thesis in this space but if you’re building software for product teams and want to help them integrate customer insights from across the organization — I’m all ears!

Questions, thoughts, all welcome and wanted!

GP @CRV, Alum @HarvardHBS @Stanford. I like a bagel with attitude.