Modular CDP: The Future of Customer Data Management

Packaged CDPs: Turn-Key Solutions with Limited Flexibility 

When you think of a CDP, you’re probably thinking of a more traditional, packaged CDP.  

All of the necessary CDP functionality (ingestion, cleansing, enrichment, etc.) comes packaged as a ready-made solution optimized for specific use cases—including pre-defined features, tools, and integrations that make implementation fast and straightforward. This helps you get up and running quickly with minimal development effort. 

A traditional packaged CDP architecture collects, stores, and processes customer data within its own database, creating a centralized data store for all customer interactions and behaviors. While this approach allows for full control over data quality, it requires data duplication, which results in higher storage costs compared to a composable CDP.  

The primary advantage of a packaged CDP is ease of use, including user-friendly interfaces and simplified data management. Drawbacks include: 

• Inherent rigidity. Pre-defined structures and limited customization can create frustrating constraints. Marketers often find themselves restricted by predetermined data models and functionality, which may not align perfectly with their unique business needs and specific strategies.  
• Cannot be unbundled. This forces companies to pay for features they might not want or use. This can increase costs and lengthen the window for meaningful ROI. 

Composable CDPs: Custom Solutions that Introduce Complexity 

Businesses that want more flexibility in their customer data management often consider a composable CDP. 

A composable CDP is a set of disparate, unbundled software components that provide the various pieces of CDP functionality—integrated to meet the specific needs of the business. For example, your business may choose to implement one product for data cleansing and another product for data analytics and activation.  

Creating a composable CDP requires a microservices architecture, which breaks down software applications into smaller, modular components that can be combined as needed. Also called a zero-copy architecture, these CDPs connect directly to existing data sources (e.g., data lakes or warehouses) without duplicating or moving the data. It queries data in place, avoiding replication and associated storage costs. Composable CDPs are usually managed by the company’s central IT teams as a universal repository intended to serve multiple purposes.  

The primary upside to composable CDPs is the high degree of flexibility.  

But that flexibility comes with some significant drawbacks to composable CDPs:  

• Unnecessary complexity. While the overall marketing technology stack benefits from composability—allowing different functional systems to connect and work together—implementing composability at the component level creates unnecessary complexity and technical debt. This is particularly true for CDPs, where component-level composability can impair critical functions needed for customer data management and activation (like real-time personalization). 
• Significant technical requirements. Building and maintaining a composable CDP requires significant technical resources to select and integrate the right components. This process can be both complicated and fraught, especially for businesses with many stakeholders. 
• Multiple vendor relationships. Composable CDPs require you to integrate various components from third-party point solutions. This means managing multiple vendor relationships and ensuring that all the different components work together seamlessly. Not only is this time-consuming and resource-intensive, it can also cause data latency which is a big problem when delivering personalized experiences in real time. 
• Not all data is suited for living in the data warehouse: Customer behavioral data, for example, can become stale within minutes, which makes it a poor candidate for warehousing.  
• Not dedicated to marketing. Architectural decisions are often made by IT in consideration of the entire system’s needs, which may not always prioritize customer experience or marketing program requirements.

Modular CDPs: A Hybrid Approach with the Best of Both Worlds 

David Raab, Founder and CEO of The CDP Institute, explains that as composable CDPs have caught buyers’ interest over the past couple of years, traditional packaged CDPs quickly caught on to the demand—and began splitting their offerings into modules. In response, composable CDP vendors have started to offer multiple components and a complete set of CDP functions.  

As packaged and composable CDPs grapple for market share, a new type of CDP has emerged: the modular CDP. 

A modular CDP offers a hybrid approach that blends the best elements of both packaged and composable solutions. It gives marketers the freedom to customize the functionality in their CDP while still providing a user-friendly interface that streamlines data management and marketing operations. 

This hybrid solution not only offers the flexibility needed to adapt to evolving business needs and strategies, but also ensures ease of use for marketers across various skill levels.