By Robert L. Moul, President and CEO, Boomi
Don’t Make Integration My Problem!”
The Software-as-a-Service (SaaS) industry is changing due to popular
demand. Consumers of SaaS applications are pushing back on independent
software vendors (ISVs), saying in essence, “Don’t make
integration my problem. I’m buying your application as a service
and I want integration included.” Gone are the days when
customers would subscribe to a SaaS application for $50 a month and
then be willing to pay tens of thousands of dollars to integrate that
application with the rest of their portfolio.
Most analysts covering the SaaS industry today would agree that
integration is the number one barrier to the adoption of SaaS
technology. The problem lies not in the SaaS technology itself but in
the attempt to use conventional integration products and appliances for
SaaS integration. Conventional integration products were built for
traditional on premise software implementations – not SaaS.
The fundamental limitation of conventional integration products
(whether hosted on premise or “in the cloud”) is that they
are single-tenant. Each customer must buy, install and maintain its own
copy of the product and must do so at every location where integration
occurs. As a result, using conventional integration products to
integrate SaaS greatly increases cost, complexity and time to deploy
while also greatly limiting scalability. To date, ISVs have had little
choice but to pass that cost and complexity on to the end customer.
Several events this year, including the acquisition of Cape Clear by
Workday, signal the beginning of a trend that will profoundly impact
the SaaS industry. ISVs are looking beyond conventional integration
strategies because they’re simply too costly, complex and time
consuming to be effective in the SaaS ecosystem. At the same time, the
strategic importance of integration is rising.
Workday recognized that integration is not just an additional
customer requirement that must be addressed, but it is in fact a
critical and central part of its solution – a real competitive
differentiator. Integration is the lynchpin of successful SaaS
deployments. A recent Saugatuck survey underscored this point. Survey
respondents ranked the ability to integrate SaaS and on-premise
workflows as the number one business consideration when selecting a
Choosing a Strategy that Works
Though integration is clearly a priority for the consumer, ISVs were
in an awkward position. Lacking a better solution, the tendency of ISVs
has been to sell around the integration topic in the sales cycle. When
addressing a prospect’s integration requirements during the sales
process, ISVs generally promote their application programming
interfaces (APIs) as a means for integration to occur.
Well constructed APIs are essential to SaaS integration, but
they’re not the “Holy Grail” that’s been
promised. An API opens up secure access to data but it does not
accomplish the integration itself. And in addition, there are very few
small to mid-size businesses that have the developers to integrate
between APIs, and companies at the enterprise level would prefer to put
their development resources elsewhere. In these cases, ISVs had little
choice but to offer professional services engagements to build the
integrations on behalf of the customer. Unfortunately, this approach
reverses many of the benefits of a SaaS offering and it becomes an
enormous maintenance and scalability issue as the ISV grows.
The good news is there’s no need to repeat the mistakes made
with enterprise integration in the past. Integration itself can now be
delivered as a service at a fraction of the time, complexity and cost
of conventional integration products and appliances. For the first
time, ISVs have an integration option for customers – one that
aligns with the SaaS business model, namely on-demand integration.
On-demand integration is itself built using SaaS technology. Just
like SaaS applications, it is a single instance, multi-tenant platform
hosted in the cloud. There is only one platform and all customers use
that platform for integration. As such, it natively delivers all the
great values of SaaS: rapid time to deployment, faster innovation
cycles, ultra-low cost and infinite scalability.
On-demand integration radically alters the economics of purchasing
integration. Customers can buy only the services they need and not pay
for an entire integration product or products. It has a dramatically
reduced cost structure because everyone leverages one platform.
On-demand integration finally aligns integration cost with that of
on-demand applications – an issue which has been a major barrier
to sales for SaaS ISVs.
On-demand integration also eliminates the cost and hassle of
maintaining and upgrading each instance of a conventional product. In
the on-demand world, upgrades and enhancements to the common platform
are continually released to the user community and everyone enjoys the
And importantly, on-demand integration allows ISVs to lift the
burden of integration off the shoulders of the end customer. On-demand
integration allows SaaS ISVs to offer bundled and pre-built integration
as a service – solving integration on behalf of the customer.
Since the customer is buying the application as a service, it only
makes sense to buy the integration as a service.
Integration Options for ISVs
In a blog post, Phil Wainewright discussed the acquisition of Cape
Clear and asks the question, “Where, by the way, does this leave
other SaaS vendors and should they, too, be considering whether to
package up integration capabilities with their on-demand
offerings?” The answer to the latter question was a resounding
“yes,” and Wainewright offered several suggestions,
including integration provided as a service within a platform ecosystem
or independent integration-as-a-service vendors.
In summary, SaaS ISVs have the following options in developing their strategy for integration:
Continue to resell conventional integration products and appliances
Sell professional services engagements and build custom integrations
Build an on-demand integration infrastructure on their own
Partner with integration-as-a-service vendors to package integration for their clients
It’s a classic build/buy/partner decision, but if integration
is not an ISV’s core competence, partnering is an ideal option.
This allows the ISV to focus its valuable development assets on
building and perfecting its core application or service.
Integration is quickly moving from a non-core offering of SaaS ISVs
and technology providers to a strategic imperative and source of
competitive advantage. Forward-thinking vendors are already plugging
the integration gap in their offerings by bundling integration as a
service for their customers. In the not-too-distant future, providing
affordable integration coupled with application services will become
the industry standard.
Consumers are flocking to the SaaS paradigm because it saves them
time and money, and by providing integration as a bundled part of an
offering, ISVs can offer a great service to their customers while
increasing win rates and accelerating sales.
About the Author
In August 2006, Bob was appointed President and CEO of Boomi. Bob first joined Boomi in late 2005 as an advisor and member of the board of directors and has led the company’s strategic shift into the SaaS integration market.
Prior to joining Boomi, Bob was group president at MAXIMUS and president of the global education software business at SCT where he led the company to ten consecutive record-setting quarters of growth. Bob began his career with EDS initially as a systems engineer and advanced into senior management positions including director of EDS’ operations in Hong Kong and China, and executive director of its federal government business in Australia. His 27-year career has spanned all aspects of IT services, software and consulting in executive leadership, technical management and engineering roles.
Bob graduated from the University of Maryland, University College, with a Master of Science degree in technology management. He also completed executive programs at the University of Michigan Business School and the Center for Organizational Learning at MIT. He serves on the advisory boards of several start-up companies including Rave Wireless, Intelliworks, and Provost Systems (acquired by Edison Schools).