Question 3: Does the Product Become the System of Record?

What You’re Really Asking

This question identifies data gravity—the accumulating mass of information that makes the product increasingly central to operations and increasingly painful to abandon.

Systems of record are different from tools. Tools help you do work. Systems of record are where the work lives.

System of Record Characteristics

A true system of record has specific properties:

• Authoritative source of truth: When there’s a question about the data, this is where you look—not a copy, not a sync, not a report, but the original
• Cumulative value: The data becomes more valuable as it accumulates through historical records, trend analysis, and longitudinal insights
• Operational dependency: Daily work cannot proceed without access to this system—it’s not a nice-to-have, but infrastructure
• Audit and compliance anchor: For regulated industries, this is what auditors examine

Strong vs. Weak Systems of Record

Strong systems of record:

• CRM (customer relationship history)
• ERP (financial and operational transactions)
• HRIS (employee records and history)
• Medical records systems
• Legal matter management

Weak or non-systems of record:

• Project management tools (work can be reconstructed)
• Communication tools (conversations are transient)
• Analytics dashboards (derived from other sources)
• Design tools (outputs exist independently)
• Scheduling tools (calendars are commoditized)

The Verdict

NO → Floor only. The company lacks data gravity and must compete on continuous feature value.

YES → Ceiling possible. The company accumulates switching costs automatically through usage.

This is part of a comprehensive analysis. Read the full analysis on The Business Engineer.