It is no longer controversial to assert that Software-as-a-Service (SaaS) has arrived as an acceptable, if not preferable, model for software delivery. Evidence: IDC reports that 79 percent of enterprises are currently purchasing or evaluating SaaS solutions. And Gartner Group projects that a third of all software revenues will be derived from SaaS offerings.
It's easy to see what's driving the interest. SaaS solutions deliver software functionality, content and services over the Internet from a single application instance that is shared among all customers. That means there is no need to install or maintain costly software or hardware. Pricing is based on a "pay-as-you-go" subscription, and system performance and service levels are managed by the solution provider.
Numerous independent research studies have quantified the measurable advantages this model provides in the form of faster implementation, greater system adoption, more rapid innovation and lower total cost of ownership (TCO).
What's the Catch?
One hurdle facing SaaS is overcoming misconceptions about the model and application integration. Traditional installed software vendors and IT departments attempt to position integration as the Achilles' heel of the SaaS model, arguing that SaaS solutions only focus on narrow processes, are built for small- to mid-size businesses (SMBs) and lack integration capabilities.
Anyone delving into these issues quickly ascertains that such claims are pure myth. SaaS providers now offer integration solution suites supporting complete end-to-end processes, such as source-to-pay, order-to-cash and even complete back-office operations, such as financials and human resources. And, while SaaS delivery and pricing models extend to SMBs, large enterprises are currently the biggest users of SaaS solutions.
Leading SaaS providers have also developed innovative new enterprise application integration approaches that marry proven business-to-business integration (B2Bi) methods with the delivery and cost benefits of Software-as-a-Service to permit a flexible array of data integration options — from periodic batch to real-time messaging — between SaaS solutions and installed enterprise applications.
This new Integration-as-a-Service (IaaS) model treats integration as a fully hosted service, eliminating many of the burdens and costs of implementing and maintaining enterprise application integration using traditional software and methods. IaaS delivers a multitude of pre-defined adapters between your SaaS solution and leading enterprise applications. IaaS ascribes to a flexible, subscription-based pricing model that scales based on the level of integration required.
The Integration Fallacy
Vendors and enterprises criticizing SaaS' integration capabilities are often really criticizing any best-of-breed application. What they are saying is that they believe the best way to tackle the integration challenge is to standardize on a single ERP system for all business application requirements.
This consolidation approach may simplify software vendor management for the IT department, but it often fails to deliver the application functionality that business line executives require to meet their cost, profit and performance goals. And there is ample evidence that it doesn't solve the integration conundrum. Even top-performing IT organizations still grapple with a heterogeneous systems environment that requires data and business-process integration between disparate commercial and homegrown systems. In fact, industry studies report that integration costs account for more than a quarter of total enterprise IT budgets.
Traditional enterprise application integration approaches typically come in two flavors:
- Point-to-point, which "hardwires" integration between applications.
- Middleware, which provides a centralized messaging bus for routing data between multiple applications.