If you listen to its backers, the low-code/no-code movement has taken the enterprise tech industry by storm. Startups and tech giants alike are all touting the efficacy of a new method of software development that proves to be faster, more efficient and more accessible than ever before.
Low-code and no-code tools promise to do everything from solving the developer scarcity crisis to empowering the average business user to build applications. To that tune, a wave of startups including Builder.ai and Genesis Global have raised $100 million or more to bring those promises to fruition.
That funding has also gotten the attention of the platform players. SaaS giants from ServiceNow and Salesforce to Microsoft all have their own brand of low-code and no-code development features. Around late last year, there were “over 200-and-something low- and no-code startups, vendors, large companies like ourselves in this market,” said Marcus Torres, vice president and general manager of ServiceNow’s low-code platform App Engine.
It’s worth noting that although the terms are often lumped together, there is a distinction between low-code and no-code. While low-code tools require some understanding of programming languages, no-code tools only require basic logic, and generally employ a drag-and-drop user interface.
Despite the market activity, industry experts and practitioners disagree on where the real value of the industry lies. And even with all the VC money tossed around, it’s pretty clear that low-code and no-code companies still haven’t had their breakout moment.
Life with less code
The low-code/no-code movement has been around for several years, but gained increasing prominence as the developer shortage and the need to digitize more business processes accelerated in the wake of the pandemic.
“When we started the company back in 2013, there wasn't such a thing as low-code/ no-code,” said Eran Zinman, co-founder and co-CEO of Monday.com. The concept existed, but Zinman and his team didn’t have the phrases to describe it to investors. “I think in the last two to three years, as we’ve seen the rise of such tools, the term low-code/no-code came because so many people can understand the value of it.”
In those years, adoption was lower as well.
“If I go back five, six, seven years ago, a lot of developers … a lot of them were naysayers,” said Ed Macosky, head of Product at integration platform Boomi. At the time, developers wanted to write all the code themselves, but with ever-increasing workloads, that’s changed.
While this movement may have initially started with a focus on developers, it’s now expanded to providing tools for the average business user as well, said Chris Yin, a principal at Scale Venture Partners.
Now Yin sees low-code and no-code companies as serving one of four markets based on whether the tool is designed for the average business user versus an actual developer, and if the application will be primarily for internal use versus customer-facing.
The low-code/no-code market can be divided into four segments.Chart: Chris Yin/Scale Venture Partners
But a mixture of hype and the proliferation of vendors can make the low-code and no-code industry difficult to parse, which is why vendors, companies and VCs disagree on which of those markets is the most valuable.
The real deal
For one, there’s still debate about whether developers or the average business user are the better target market for low-code and no-code development tools.
Most of the companies Protocol spoke with agree that those tools do actually make the process of coding less time-consuming for development teams “because then you can very easily, with limited effort, create new enterprise-capable applications,” said Claus Jepsen, CTO of enterprise resource planning provider Unit4.
But as a former developer himself, Mackey Craven, a partner at OpenView Venture Partners, disagreed that developers are the best target market for these tools. “To me, it's a little bit more about taking someone who [doesn’t have] the full level of specialized skill sets to be a developer themselves and providing them more capability to solve their own problems,” he said.
Those individuals are known in the industry as “citizen developers,” or line-of-business employees who are now able to build their own applications because of the ease of low-code or no-code tools.
But the idea that low-code and no-code tools only have value because they let anyone code is a bit of a misnomer. “What we're really talking about are those kinds of systems-thinkers and power users that can understand the logic, and with a really simple toolset, put it into an application that goes into production,” said Josh Kahn, senior vice president of ServiceNow’s application experience platform Creator Workflows.
Even though anyone can build an application, “the problem is: was it done well? And there's a system-design mindset that's needed to understand inheritance, objects, schemas, integration, design” and so on, said Gary Hoberman, founder and CEO of no-code platform Unqork.
What the industry can agree on is that these tools won’t be used to build customer-facing applications inside enterprises.
Although the tools have gotten more complex, they still provide the most benefit internally. “We would probably never use it internally to provide enterprise-grade software that we sell to customers — it’s not used for that,” said Unit 4’s Jepsen.
That’s why among the different companies in the market, Scale’s Yin sees the most promise in those that focus on internal applications, where the movement originally started. “The reason why it started off that way is it turns out internal software is just a huge area of spend, and the math just makes sense there,” said Yin.
The breakout moment
But the question still remains whether standalone low-code and no-code vendors or platform players will capture that portion of the market.
Some view these tools as a feature more than a business model, a viewpoint that tilts in favor of the platform players. “I look at low-code and no-code as a product choice, as a way to create value in an end market,” said Craven.
Even though companies like Mendix, OutSystems and Retool have found some success as standalone development platforms, some industry practitioners don't believe these types of companies will survive longer term. “I think the industry is changing right now to the point where you can't be standalone any longer,” said Matt Calkins, founder and CEO of low-code platform Appian.
Continued consolidation, such as ServiceNow’s acquisition of SkyGiraffe, may be another sign that the market is becoming commoditized. “To me it's a generic sort of tooling. I think it's hard to be [standalone], and I think there's probably another consolidation going on,” said Jepsen.
Still, there are advantages to the standalone vendors.
While developers can build low-code or no-code applications on top of Salesforce or ServiceNow, for instance, they’ll be limited by the platforms’ walled gardens. “If I'm trying to do something that uses data from a number of different parties, or is more independent, I'd be much more likely to go with a third party,” said Craven.
Although there’s room for both standalone companies and the SaaS giants to play, there’s likely another wave of consolidation ahead. It seems clear that the winning low-code/no-code companies will focus on building internal software, but it’s still an open race between business users or developers as the more lucrative target market.
One thing seems certain, however: Low-code and no-code development aren’t going away any time soon, and even with all the hype, the industry is still building toward its breakout moment.
“I think within companies, they are on the forefront of it and they're breaking out now, but it's still early,” said Yin. “We're still waiting for more.”
