If you’re familiar with the SaaS space you’ve likely heard the phrase source of truth more than a few times. It comes from a simple idea: business leaders need a clear, reliable source of data to base decisions on.
Seems intuitive enough, right? Businesses want to make good decisions, and they need a clear picture of what’s going on to do that.
The tricky thing is actually implementing that.
The days of the single SaaS provider
If you were running a business 15 years ago and wanted to use a SaaS platform to manage your accounting, billing, or sales you would choose one provider (such as Oracle, SAP, or Microsoft), and use their suite of products.
For example, if you use Microsoft Dynamics you can leverage their whole range of products for your business:
An explosion of SaaS apps
Today, leveraging just one major SaaS provider for all your needs is far less common. In fact, the average business now uses over 100 unique SaaS apps (studies say 137, to be exact). Even small businesses with less than 50 employees manage to use 16 SaaS apps on average.
Why?
The SaaS industry has moved towards more specialized SaaS products. Instead of several vendors providing similar suites of general-purpose products to handle things like accounting or sales, the SaaS products today are far more tailored to specific types of businesses.
Here are a few examples:
- billing — Chargebee, RevenueCat. While Chargebee’s focus is on online subscription billing, RevenueCat is entirely focused on mobile in-app subscription billing.
- sales — Pipedrive, HubSpot. While Pipedrive focuses exclusively on managing sales pipelines and leads, HubSpot offers marketing software on top of their CRM to create custom landing pages, forms, email marketing campaigns, and more to attract leads.
- accounting — Freshbooks, Xero. While Freshbooks is focused on service-based businesses (such as contractors), Xero is designed for the accounting needs of product- and sales-based businesses.
- analytics — Heap, Amplitude. While Amplitude is focused on teams that want fine-tuned control over what product analytics they track, Heap has a more automated setup process to track general analytics out of the box.
For businesses, this is terrific — if you’re building a SaaS product that:
- needs to charge customers a subscription, and
- sells mainly via cold email campaigns
you could use Chargebee, HubSpot, Xero, and Amplitude to manage all the items above. This gives business leaders more choices and gives them a better experience overall.
Reduced visibility
One of the advantages with using a single suite of products was that your business data is relatively easy to manage — since it was all in one place, you could get a clear picture of how your company was doing (how many new deals did we close this month? what’s our MRR?) from one system.
Once you introduce these specialized SaaS platforms, viewing all these metrics is harder. Imagine if every morning you had to open 20 tabs to check each relevant metric individually — one tab for your sales data (Pipedrive, HubSpot), one tab for your product analytics data (Heap, Amplitude), one tab for your accounting data (Freshbooks, Xero), one tab for your billing data (Chargebee, RevenueCat)… you get it.
Another layer of complexity arises when the data between these systems overlap. Take a simple question: what’s your monthly recurring revenue (MRR)? What system would you check? Is the number in Chargebee correct? What about the number in Xero? Or maybe the total of the closed deal value in HubSpot?
This makes it very hard for a business leader to understand which number to use — in other words, what’s the source of truth? After all, for any of this data to be useful the business has to be aligned — so how do they choose?
Creating a source of truth
There are two main ways businesses tackle this problem, so they can leverage specialized SaaS apps and have a clear understanding of the business metrics.
Option 1: Data warehousing
The first option is to actually build a source of truth by consolidating the data from each SaaS platform into a data warehouse like Snowflake or BigQuery. Since this warehouse now contains all the business data, it becomes the source of truth for how their business is doing.
In practice
Accomplishing this involves several steps:
- connect to the SaaS platforms the business uses and pull the raw data into data warehouses like Snowflake and BigQuery. This can be accomplished with tools like Fivetran and Stitch.
- clean the data in the data warehouse to ensure everything is correct. This can be done with tools like dbt, and is typically handled by a company’s data team.
- build queries and dashboards that use the data warehouse to pull metrics and answer questions about how the business is doing. This can be done with reporting and analysis tools like Secoda and PopSQL.
Using this type of advanced data infrastructure can solve the issues in data visibility, and create a reliable source of truth for business leaders. However, this comes with a lot of work — often entire data teams are created just to manage these data pipelines. Aside from the costs of using all these intermediary tools, it requires a strong understanding of how each of the SaaS platforms work and what the raw data means.
Option 2: The SaaS of truth
For organizations with limited resources, option 1 can be pretty intimidating — that’s why a new wave of SaaS apps are aiming to solve this problem for data teams (or even replace the need for them).
Products like Pry, Baremetrics, and Aleph are central hubs for your financial and billing data. They directly hook into the SaaS platforms you already use, aggregate the data for you, and derive the insights you need as a business leader.
For example, Pry integrates directly into your accounting system (like Xero), payroll system (like Gusto), and bank account to provide a clear picture of a startup’s revenue, burn, and runway.
Although these solutions are newer, they make life much easier for businesses — they no longer need to stand up complex data infrastructure to see simple metrics. In fact, even the SaaS products that are offering theses sources of truth use tools like hotglue to handle pulling data from the individual SaaS vendors businesses use.
Looking forward
With so many unique business needs and new ways to serve customers, there is no doubt that the trend of specialized SaaS platforms is here to stay.
It’s hard to say if data warehousing will continue to be the norm as the newer SaaS of truth products will grow in popularity. For now at least, it seems that consumers expect these SaaS products to be more interconnected than ever, despite being more tailored to each consumer’s use-case.
Thanks for reading! Feel free to reach out with questions or comments.
