The Relationship Between Multi-Product Strategies, Compounding, and All-in-One

The type of multi-product strategy varies, and the right approach depends on the product type and target market, as we discussed in a previous article "Multi-Product Strategies in SaaS". There are also other similar concepts, such as compounding and All-in-One (End to End). You can see that they are discussed from various angles, which illustrates the importance of having multiple products when developing SaaS in Japan.

In this article, we challenge you to systematically organize multi-product strategies, compounding, and All-in-One, and provide a foundation for discussing how the strategies should be implemented.

Multi-product strategy

Let's first review the multi-product strategy: a multi-product strategy in SaaS is a strategy in which one SaaS company offers several different products. This approach allows a SaaS company to diversify its revenue by addressing the needs of different segments and user segments, deploying new products as new growth drivers, and combining multiple products to drive business growth rather than relying on a single core product.

Multi-product strategies can be implemented in both Horizontal and Vertical SaaS. They can be categorized based on two axes: the relationship between the main product and secondary products (whether they are peripheral or distinct) and the relationship between buyers (whether they are the same or different). The relationship between the main product and the second and third products (whether they are peripheral or completely different) and the relationship between the buyers of each product (whether they are the same buyer or different buyers) can be organized as follows.

As shown above, there are four typologies, which can be defined as add-on, target, category, and suite types. For exact definitions and specific examples, please refer to "Multi-product strategy in SaaS". This definition is more from a strategic viewpoint, rather than a product design or marketing perspective, as it focuses on key divergences in product-buyer relationships.

Compounding

Next is compounding. Multi-product, as the phrase implies, refers to offering multiple products. In this context, compounding involves developing integrated elements like UX, authentication, billing, data, and authorization all at once, and supplying them to applications by isolating and evolving common foundational components across multiple products. In other words, it refers to the state in which a common product infrastructure is established as a compound for multi-product development, and can be viewed as a type of multi-product as shown in the figure below.

The relationship between each product and the foundational infrastructure is shown in the figure below, where various products are launched and operated on the same core foundation.

Furthermore, there are two major patterns in how a compound is viewed: the first is when the emphasis is on the product, and the second is when the emphasis is on the product foundation. In the former case, the core product is deployed, and a suitable multi-product model is adopted to expand the scope of the product. In this process, common parts are cut out from the core product, recognized as the foundation, and evolved.

Conversely, in the latter case, the core of the product is in the aggregation of APIs and data, such as iPaaS and management infrastructure. In this case, the fact that the product is established as an infrastructure itself becomes a competitive advantage, rather than the application riding on top of the infrastructure, and this design and scalability become differentiating factors.

Thus, compounding can be said to be a concept that focuses on the composition of products in order to realize multi-products.

All in One

Finally, we have All in One. This concept is the most commonly used and is very polysemic, being used from various perspectives such as product strategy, product composition and marketing.

First, we'll focus on two aspects—product strategy and configuration—and structure them accordingly. Then, All refers to the function or product, and One refers to the underlying product or platform. The term "platform" has various analogies, but here we will assume that it is established as the foundation when multiple products are offered and the common parts are cut out. In other words, when multiple products are offered on a single platform, the terms "platform" and "compound" are synonymous.

When providing APIs, a group of APIs released to a third party is called an API platform, and when providing not only SaaS that can process order and supply operations but also functions that can actually place and receive orders, these functions are sometimes called matching This function is sometimes called a matching platform.

When examining the 'All' and 'One' combination, two patterns emerge: the first involves providing multiple functions as a single product, similar to the add-on type in a multi-product strategy. The second offers multiple functions as a single product but not as a multi-product. The second type of product is one that offers multiple products on a single platform, which corresponds to the suite or category type in the multi-product strategy. However, in the case of a suite or category type, there is no common product foundation, and it is possible that the multi-product is completely independent. In the case of a completely independent multi-product, it is a prerequisite that the platform is functioning (being a compound).

If we change the perspective a little and look at All in One based on marketing, it can be used as an appeal to users. In other words, it is used in the sense of appealing to the fact that the product is capable of broadly fulfilling user needs. In contrast to All in One in this sense is Best of Breed, which is also a concept from the user's perspective, and refers to selecting and combining the best products for each specific field or function.

Thus, All-in-One is applied not just in product strategy and configuration but also in marketing, with interpretations varying widely depending on the context and user. It is important to note that such a concept is easily misunderstood, both when seen or heard in use.

Summary

As the total addressable market (TAM) is limited in Japan, multi-product strategies, compounding, and all in one are expected to be widely adopted, and the segmentation and optimization of strategies will continue to increase. Every month, we hear stories of product development projects in which companies are actually considering which type of multi-product strategy they should use for their target segments and where they should place the emphasis in compounding. We would be happy if this could serve as a basis for discussion when adopting multi-product strategies, compounding, and All in One, etc. in the future.