There are currently well over 2,000 SaaS vendors by some counts, and according to Gartner over 95 percent of companies have expressed interest in maintaining or increasing their current SaaS usage.
The success of this first generation of SaaS and cloud vendors has sparked a “Cloud Rush,” drawing even more players — ranging from fledgling startups to the biggest vendors in the hardware, software and services industry — to enter the market. Meanwhile, the cloud continues to be a hot topic among enterprise IT departments, with companies large and small taking advantage of the cost benefits and time savings of incorporating cloud and SaaS vendors into their mix.
The integration roadblock for SaaS vendors
Despite the success of this market, the cloud harbors a little talked-about, rapidly emerging issue that threatens to slow its current rate of adoption. The main question is, how do you integrate new SaaS applications with existing on-premise and cloud applications?
For SaaS and Cloud providers, growing customer concerns about integration represent both a threat and an opportunity. Failing to offer integration can blunt sales and create customer support issues.
My company partnered with THINKstrategies (see disclosure) to put together a recent survey of SaaS and Cloud vendors, in which a majority (52.8 percent) of respondents indicated that more than half of their customers require integration between new SaaS applications and other systems. Cloud integration is in fact the most common hurdle in the SaaS sales process, with nearly 90 percent of respondents considering integration to be important or extremely important in winning new customers. In other words, cloud integration is becoming a widespread issue.
Although organizations have typically handled integration projects internally, the unique challenges of integrating SaaS and cloud applications have shifted the locus of responsibility to SaaS vendors. According to the survey, nearly two-thirds (62.5 percent) of respondents believe integration is a critical part of their solution. Less than 4 percent of SaaS vendors think integration should be left entirely to the customer.
Implications for end-users
While it is clear that integration threatens to slow down overall SaaS adoption and sales for individual SaaS vendors, where does this leave current and prospective SaaS users? More precisely, what do the survey results cited above mean for end-users?
End-users can rest assured that their integration concerns aren’t going unnoticed. Taxed by the burdens of building and maintaining custom solutions and finding few other options available, SaaS users are looking to vendors to address their integration issues. As the survey suggests, SaaS vendors get the message loud and clear and recognize the need to include integration capabilities in their product offerings. Those that do will gain a competitive edge over other SaaS vendors.
As SaaS vendors begin to provide integration solutions along with their core offerings, SaaS users will have a wider range of options for solving the integration problem. In particular, SaaS users should look for integration solutions that are:
? Cloud-based and seamlessly embedded in the application experience
? Packaged solutions that can be easily configured, maintained and supported and minimize the need for custom point-to-point coding
? Flexible and robust enough to tackle complex integration patterns
? Extensive in connectivity options, including off-the-shelf connectors to popular SaaS and on-premise applications, a means of easily developing new connectors, and capabilities for integrating with legacy databases and systems
A promising approach to bridging the cloud integration concerns of both SaaS vendors and end-users is the emerging category of what Gartner calls “integration platform-as-a-service (iPaaS).” According to Gartner, 35 percent of businesses will begin using iPaaS in one form or another within the next five years.
iPaaS will benefit both end-users and SaaS vendors by providing a complete platform for integrating on-premise as well as cloud applications. Ideally, iPaaS providers will partner with SaaS vendors to create a prepackaged combination of both the integration solution and the SaaS vendor’s offering, thus alleviating the integration headache for both the SaaS vendor and the customer from the very start.
Ross Mason is the CTO and Founder of MuleSoft and founded the open-source Mule project in 2003. Mason has been named in InformationWeek’s Top 10 Innovators & Influencers and InfoWorld’s Top 25 CTOs.
Disclosure: MuleSoft sponsored the survey by THINKstrategies referred to in this report.
Image courtesy of Flickr user TheArtGuy.