Both approaches require significant upfront and ongoing expenses, installed software and hardware, consulting or IT services, and custom coding. In fact, Yankee Group research of 800 data application integration implementations found that initial integration software licensing costs represent only 12 percent of the three-year TCO of the typical integration project. The primary costs of these projects are internal and external labor requirements to install and maintain the integration software.
The IaaS Answer
IaaS overcomes these challenges by utilizing B2Bi integration technology as the bridge between the SaaS solution and in-house business applications. B2Bi systems are capable of driving this new on-demand integration model because they are traditionally employed to automate business processes between manufacturers and their external trading partners. That means they provide application-to-application connectivity along with functionality that is crucial to linking internal and external software: i.e. secure data exchange across the corporate firewall.
Unlike pure enterprise application integration solutions designed only for internal data sharing, B2Bi platforms have the ability to encrypt files for safe passage across the public network, manage large data volumes, transfer batch files, convert disparate file formats and guarantee data delivery. Just as these abilities ensure smooth communication between manufacturers and their external suppliers or customers, they also enable reliable interchange between hosted and installed applications.
The IaaS model also leverages the adapter libraries developed by B2Bi vendors to provide rapid integration with various business systems. Because the B2Bi partner can supply pre-built connectors for major ERP, CRM, SCM and other packaged business applications as well as legacy systems from AS400 to MVS and mainframe, the SaaS provider can meet the integration needs of most customers quickly and reliably without custom programming.
The use of a hub-and-spoke architecture further simplifies implementation and avoids placing an excessive processing burden on the customer side. The hub is installed at the SaaS provider's data center to do the heavy lifting such as reformatting files. A spoke unit, typically consisting of a small downloadable Java client, is then deployed at each user site to handle basic tasks such as data transfer. This also eliminates the need for an expensive server-based solution, data mapping and other tasks at the customer location.
With these pieces in place, SaaS providers can offer integration services under the same subscription-based pricing model as their core offerings. Different plans can be set up to accommodate the needs of different customers. Businesses with relatively sophisticated IT infrastructures that simply need file transfer services can pay a lower rate than those that require full back-end integration between the SaaS solution and their internal databases and/or enterprise systems.
Broad User Benefits
For the growing number of businesses that are turning to SaaS solutions for their software needs, this Integration-as-a-Service model provides benefits ranging from the information visibility achieved through the application integration itself to rapid deployment, minimal impact on IT resources and low total cost of ownership.
The ability to hand integration responsibilities and most of the integration infrastructure over to the SaaS provider relieves IT departments of costly in-house integration projects, software upgrades and the need for on-board integration specialists. It also reduces the burden of installing and managing integration-related servers, databases and storage area networks in the user's data center, keeping equipment and overhead to a minimum.
The use of pre-built connectors accelerates the integration process and lowers implementation risk. The security provided by the B2Bi communications backbone aids compliance with regulatory requirements such as Sarbanes-Oxley. And once the integration infrastructure is set up for one SaaS solution, it can be easily extended to connect to other on-demand systems or even to external trading partners.
Finally, from a cost perspective, businesses benefit from the bundling of integration expenses into the SaaS fee structure. This strategy eliminates tens of thousands of dollars in upfront integration expenses, allows those costs to be amortized over many months, and makes it easier to justify the project to management.