Get to know Pros and cons of point solutions

Let’s start with an example. Assume if you are an insurance company. Then part of the business will be that the consumers fill a form with their details, select the life insurance/ type of insurance they choose, select sum assured, get verified, do any applicable tests, get the policy, file claims, submit details, verify with third parties and get the claim settled. 

I used to work in an Insurance tech company decades back - so this is the knowledge I have. Please do not judge the accuracy of my knowledge/ work flows … 😀   

There are more flows like this for the company to operate as an insurance company; however, you get the point. Now if you are a digital/ IT solutions provider then a point solution would be that your solution helps in settling the third party of verification of claims. 

So the definition of a point solution is that the solution will take care of a small aspect (point) in the larger flow for the consumer. Point solutions are also helpful and they have cons as well. 

Let’s get to know the pros and Cons of point solutions. 

Pros of point solutions - 

• Point solutions are hyper focused on one single challenge. They do small things and do it really well. Think about Stripe payment processing. Your bank also can do payment processing but does Stripe do better? 

• Most of the time the point solutions are scaled solutions. They charge based on the number of transactions and hence their cost may be low. Think about Slack - only messaging nothing else. A lot can be added in Slack; but no. Thats why, I said maybe, it is not necessary that all point solutions are low cost … 🙋 

• They create easy on ramp and off ramps for themselves. They are the ones who can get hooked to the existing ecosystem very quickly. This is one of their primary value propositions. Not so right example; Dunkin Douts. We sell only donuts nothing more.

Cons of point solutions - 

• The biggest con for point solutions is that they hamper customer experience. Think about it in the insurance example. Only for the third party verification step you have to go to a different website which is hard to trust for the customer … ☎️

• Point solutions may create data silos. Data silo is a technical word, please bear with me. Think about it in such a way that the only third party verification data is not with the Insurance Company. As an insurance company we need to go to the third party and get data from them. This creates dependency on the point solution partner. 

• It is a bit harder to expect that the point solutions will comply with all the industry norms, privacy, security, etc. Sometimes it is burdensome to drag them along with the rest of the organisation … 👏 

• One or two point solutions are fine; but imagine the Insurance company has more then 4 point solutions then it is very hard to co-ordinate among all. This is time as well as resources consuming.  

I have not considered the onboarding, maintenance, operations, etc. related challenges as they will remain with every other system. Pros and cons are mentioned assuming value delivered is very similar. 

Hope this helps you in understanding the pros and cons of point solutions and you can make the right decision. 

"Simple can be harder than complex: You have to work hard to get your thinking clean to make it simple."

------ Steve Jobs

Go all digital for your business …🎖️