Vying for the Enterprise: SaaS Vendors Can't Shake Integration Concerns

Loraine Lawson

Given the results of recent Gartner research, software-as-a-service providers might want to focus more on integration problems-assuming, of course, they want to be contenders in the enterprise.


Even though it's been pointed out to me on various occasions that integration is also a problem with on-premise organizations-and thus, shouldn't be a reason to avoid SaaS solutions - the reality is that <strong>SaaS introduces new complexities to integration</strong>.Hence, <strong>all the customer complaints about SaaS integration problems</strong>.


The other reality is enterprises are already invested in on-premise solutions, but they aren't invested in SaaS. As a shoe salesman pointed out to me recently when I was trying to find a new shoe, "We're trying to eliminate problems, not add to them."


So, I can't say I was surprised by Gartner's finding that ease of integration and functionality (29 percent) ranked among one of the top considerations enterprises use for evaluating SaaS. Although, to be fair, it ranked below meeting technical requirements (46 percent) and security/privacy/confidentiality concerns (38 percent).


Thirty-eight percent of enterprises that haven't tried SaaS specifically mentioned integration as a reason, with 42 percent mentioning cost and 33 percent listed a failure to meet technical requirements


The survey of 333 enterprises in the U.S. and U.K. also found most companies are pretty neutral about their SaaS experience, giving it an average 4.74 on a 7-point scale. It seems U.S. companies were slightly happier with SaaS, rating their experience an average of 4.94, compared with 4.34 in the UK.


As Silicon.com demurely pointed out, this could really put a damper on predictions that all software will be hosted by 2013.


Unless, of course, SaaS companies find a way to address these problems head-on. Gartner Analyst Twiggy Lo, in a released statement, offered this advice to SaaS companies:

At a time when SaaS is becoming more of a consideration for more enterprises, the results of this survey will be somewhat disquieting for SaaS vendors. Underwhelming customer satisfaction scores, hesitation over the true cost of SAAS solutions and concerns regarding how successfully SAAS applications can be integrated with other applications all point to issues that will need addressing and resolving.

To truly impress enterprise clients, SaaS vendors need to offer "integration strategies that recognize the heterogeneous environments that most customers now run and will run in the future," as well as a lower TCO and easier deployments.


Despite these mediocre survey results, SaaS adoption will grow. While 58 percent plan to maintain the SaaS status quo, 32 percent say they'll expand their use of SaaS. Only 10 percent say they'll discontinue or decrease use.


It'll be fascinating (for me, at least) to watch what happens through 2009 and 2010. I'm curious to see whether SaaS vendors will tackle integration on their own or through partnerships. And, as David Linthicum recently pointed out, SaaS could play a role in making or breaking some SOA vendors.


Assuming, of course, that SaaS vendors themselves don't drown in the undertow of their own hype.

Add Comment      Leave a comment on this blog post
Jul 14, 2009 3:03 AM francis Carden francis Carden  says: in response to Bob Moul

Nice post Loraine. As you know, this has been a hot topic of mine for quite some years. Naively, the SAAS vendors often underestimate the same problem every on-premise, packaged, bespoke or other software vendor underestimates. And that is, just how hard it is to replace or integrate with the 100's of 1000's of apps being used in the enterprise today. This is not a new problem and nor is their a panacea solution, least of all, from the SAAS vendor.

Heck, I argue that most SAAS vendors have trouble integrating with another SAAS vendor and their apps are relatively new and thus it should be a walk in the park!

We get approached daily by SAAS vendors trying to find ways to integrate with the unknown apps they are coming across at their prospects and clients. Each site is different, not just the app but the business process, logic and interfaces. Your shoe analogy would work again IF there were only the same number of legacy apps and variations of those apps as there were shoe sizes. Truth is, there's almost as many apps out there, with no readily available API, as there are shoes in the world!

We at OpenSpan focus on providing ways to give closed applications (of any type) an almost instant API - with that, whether your SAAS or other application vendor, you can reliably talk to that API - even if you don't have access to the source code or business logic! Bridging SAAS or closed apps has never been so easy!

Jul 14, 2009 10:51 AM Bob Moul Bob Moul  says:

Hi Loraine,

Great post and important topic.  I won't comment on the overall Gartner survey, but I do think they got it right on the topic of integration.  It is absolutely the key for SaaS to penetrate the enterprise.  We've seen the SaaS industry evolve in phases.  Initially app vendors (understandably) tried to sell around integration in the sales cycle but consumers began to demand answers and actual demos of integrated apps.  Then some vendors tried to use conventional integration products but the cost and complexity were completely incongruent with the SaaS value prop.  In addition, conventional integration products aren't "digitally native" and don't handle the nuances and complexities of SaaS such as multi-tenancy and modern-day APIs that dynamically expose application customizations.  We believe the key to success is to use SaaS technology to integrate SaaS applications.  What's evolving now is an approach to "loosely couple" business clouds such as Salesforce and NetSuite with each other and with on-prem apps using "cloud middleware."  I wrote a post on the topic here (http://tinyurl.com/ku5ho9).  As far as partnering, in our view it makes little sense for each SaaS vendor (now numbering 2000+) to solve the same integration challenge over and over again.  Cloud middleware platforms like Boomi AtomSphere allow these vendors to connect once and immediately interoperate with every other app in the network eliminating substantial R&D effort and greatly helping them scale.  This approach creates "living" integrations that evolve as the apps and customizations to those apps evolve - not hard coded "dead" integrations that are brittle and break as soon as changes are made to the apps.  Much like it took a universal power grid to unlock the full potential of the industrial revolution, a "universal integration grid" is required to unleash the full potential of the SaaS and cloud computing revolution.

Bob Moul

Boomi CEO


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