Software as a Service (SaaS) has invaded the enterprise in a big way. IDC reports that 79% of enterprises are currently purchasing or evaluating SaaS solutions, and Gartner Group projects that a third of all software revenues will eventually be derived from SaaS offerings. But one major cloud has still been raining on SaaS’ parade: the challenge of integrating hosted software with the customer’s installed business applications.

Traditional installed software vendors and IT departments frequently attempt to position integration as the Achilles heel of the SaaS model, arguing that SaaS solutions lack enterprise application integration capabilities. SaaS providers are now responding with a new approach that enables an enterprise’s legacy applications to be integrated with the hosted solution with the same delivery and cost benefits of the SaaS model itself.

This new Integration as a Service (IaaS) model treats integration as a fully hosted service, eliminating the complexity, lengthy deployment cycles and upfront expense of custom integrations. IaaS delivers a multitude of pre-defined adapters between the SaaS solution and leading enterprise applications. It also offers a flexible, pay-as-you-go, subscription-based pricing model that scales based on the level of integration required.

One of the first proponents of this model is Procuri, Inc., a provider of on demand supply management solutions. Procuri recently introduced an IaaS option that uses enterprise application integration technology from SEEBURGER Inc. to quickly connect customers’ back-end systems to any solution in Procuri’s On Demand suite, using pre-built integrations with dozens of leading ERP and business applications.

That partnership is paving the way for other SaaS providers to solve the integration dilemma once and for all.

The Integration Challenge

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.

There is also 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.