More and more companies are adopting Software-as-a-Service (SaaS) applications, fueled by a fiercely competitive business environment. However, 62 percent of IT executives report "Integration with non SaaS applications" as their number one challenge when trying to roll out these applications. This article investigates why traditional methods of integration are failing to solve the problem and highlights the new technologies that are emerging to fill in the gap.
Let's get SaaSy!
There's no denying it, SaaS applications — like salesforce.com, NetSuite, RightNow and Siebel CRM On Demand — are extremely attractive. They appeal to the IT department because they're easy to deploy and manage and they appeal to business users because they can start using the new systems quickly. And everybody likes subscription pricing because it means fewer budgetary issues get in the way of procuring these new applications. It's no surprise then that SaaS applications, also known as on-demand applications, are spreading rapidly within companies today. The Yankee Group forecasts that 50 percent of software purchased by small to midsize companies in 2008 will be delivered as an on-demand service and this market will reach $10 billion annually.
However, with the deployment of SaaS applications comes the challenge of accessing and updating business-critical information locked away in highly customized back-end systems. While many SaaS application providers have gone out of their way to provide well defined API’s that turn the issue of integration into a competitive differentiator, things get a lot more complex when trying to deeply integrate with complex on-premise systems.
How Does Integration Become a Critical Issue After the Application is Deployed?
SaaS applications usually start off at the departmental or workgroup level. For instance it might start with the sales department getting a SaaS solution to manage and monitor the progress of sales opportunities through the pipeline. Soon, other departments in the company — or salespeople in other groups or divisions — become aware of the new SaaS application and want to use it as well. With few IT resources needed for implementation, it's easy for these new groups to also start using the new system.
Vendors of SaaS applications offer attractive entry points and then develop strategies to help wider adoption across multiple departments. Many SaaS companies now have customers with subscriptions to several hundred seats of their application. As the number of users rises, the amount of data and the number of back-end systems they need access to quickly increases, making integration a critical problem to solve.
Another reason that integration rises in importance is competitive pressure. Since SaaS applications offer the same benefits to all customers, any advantages gained by deploying a SaaS application at one company are just as easily realized by its competitors. SaaS applications by themselves therefore provide little differentiation unless they are integrated with highly customized back-end applications that are core to a company's operations. Retaining differentiation and making this enormous amount of corporate data available to the SaaS systems often brings the issue of application integration to the forefront.
While companies of all sizes anticipate the easy deployment of SaaS applications, they often need to turn to specialized SaaS integration solutions to help them conquer the three main areas in which integration with existing systems is required.
Three Reasons SaaS Systems Get Integrated
There are three main reasons for integrating SaaS applications and they fall into the categories of migration, synchronization and extraction. Let's take a quick look at each of them: