Getting SaaS and Onsite Software To Coexist

Both the software and the media industries love a good David vs. Goliath story, which is why SaaS is often cast as the spunky new alternative to on-premises software. You know, Workday vs. SAP, Salesforce.com vs. Oracle, Google vs. Microsoft, and so on.

It’s true that these companies sometimes compete against one another, but the whole picture is far more complex. For organizations that buy and consume software, it’s far more important that SaaS and on-premises software live in harmony, because it’s so vital that applications easily exchange the data underlying important business processes. And increasingly, IT infrastructures that include a combination of SaaS and on-premises software are the norm.

R “Ray” Wang, a partner with the consulting firm Altimeter Group, and who previously worked as a software analyst for Forrester, has visited thousands of companies that are using SaaS. So I asked Ray in a recent conversation, “What’s the most common thing customers tell you about their experiences with SaaS?”

Ray didn’t miss a beat. “Why didn’t I do this earlier?” he shot back. “Second, they want to know how to get more of their software into a SaaS environment. And the third question is, ‘How do I handle integrations?’” Typically, their requirements include getting a SaaS app to communicate and share data with an onsite app.

In terms of integration, Ray likens SaaS to where on-premises software was in the 1990s. Software such as customer-relationship management, financials, and enterprise-resource planning existed as separate applications, requiring IT professionals to build those integrations. There weren’t the on-premises “suites” that exist today.

There is progress, however. The SaaS industry and the broader software industry recognize the problem, and they continue to work toward more and better integration tools. And as SaaS companies grow and add more types of applications, that will lead to the availability of SaaS suites.

For the past few years I’ve been watching startups come along that specialize in SaaS integrations; small companies that used to specialize in something else now specializing in SaaS integrations; and larger companies building SaaS integration specialties. That includes, but is not limited to, IBM, Boomi, Cast Iron, Informatica, Pervasive, and many of the large consulting firms. Offerings include pre-built integration templates, data migration tools, consulting services, and wizards that help simplify Web services such as SOAP. Boomi Atomsphere, for example, supports a variety of integrations among Workday, NetSuite, Taleo, RightNow, Oracle E-Business Suite, PeopleSoft, SAP, and Siebel.

SaaS vendors are also focused on this important area. Two years ago Workday acquired Cape Clear, the developer of an enterprise service bus (ESB), and now includes that ESB with every customer deployment. An ESB is middleware that serves as a universal translator and orchestrator of data among applications – basically it lines up all the fields of information between the systems and ensures that the correct data is delivered at the right time in the right form. Workday also offers pre-configured integrations to connect with other providers, has developed its own Web services to be used for integrations, and also offers custom integration services.

But Workday CTO Stan Swete tells me the work won’t stop there. Workday will continue to build out its portfolio of configured integrations and develop more types of tools that let customers support more complex integrations with on-premises applications, he said. Having established itself in Software as a Service (SaaS) for human capital management, Workday has recently added a Financials SaaS to its product family, thus working closer to the ideal of an integrated product suite while also opening up a whole new range of integration requirements.

Meanwhile, partnerships are strengthening among various SaaS vendors. That, with the emergence of cloud computing platforms for building and running SaaS apps, should ease SaaS-to-SaaS integrations.

No question, SaaS integration is a work in progress. But there’s a lot happening in this area, and it’s getting easier all the time. And the benefits of SaaS seem to far outweigh any integration challenges companies face. As R “Ray” Wang noted, it’s typically the third thing his customers ask about, after first asking themselves why they didn’t adopt SaaS sooner.

(P.S. Interested in Workday and other SaaS users’ experiences with integration? Read my story, “Setting The Enterprise Free.”)