Did you know that Forrester estimates in their 10 Cloud Predictions For 2012 blog post that on average organizations will be running more than 10 different cloud applications and that the public Software-as-a-Service (SaaS) market will hit $33 billion by the end of 2012?
However, in the same post, Forrester also acknowledged that SaaS adoption is led mainly by Customer Relationship Management (CRM), procurement, collaboration, and Human Capital Management (HCM) software and that all other software segments will “still have significantly lower SaaS adoption rates”. It’s not hard to see this in the market today, with cloud juggernaut salesforce.com leading the way in CRM, and Workday and SuccessFactors doing battle in HCM, for example. Forrester claims that amongst the lesser known software segments, Product Lifecycle Management (PLM), Business Intelligence (BI), and Supply Chain Management (SCM) will be the categories to break through as far as SaaS adoption is concerned, with approximately 25% of companies using these solutions by 2012.
I am not at all surprised that CRM, and HCM are leading the way as far as SaaS application adoption is concerned. One only needs to examine the reason behind why these categories took off. During the so-called “Great Recession,” companies wanted an efficient way in which to grow revenues and cut costs. On the revenue side of the equation, companies found that sales force automation (SFA) helped them close more deals faster, and increased customer visibility allowed them to focus on customer retention as well as potential upsell and cross-sell opportunities. On the costs side, some have argued that functions such as HR and Talent Management were the first to be moved to the cloud as they were considered “non-core”.
As data volumes, global deployment, and end-user adoption grew, it became increasingly clear that out-of-the-box CRM or HCM functionality was not going to cut it, and that customization options would be necessary. Out of this necessity evolved the world of Platform-as-a-Service (PaaS). Similar to the concept of SaaS, a PaaS environment involves built-in scalability, reliability, security, databases, interfaces to web services and a container with development tools for building custom apps. Salesforce.com was one of the early creators of this new cloud ecosystem with its Force.com platform. This platform, which now numbers over 220,000 apps (as of the publication of this blog post) provides numerous options to customize a CRM deployment as well as build websites, and numerous productivity-enhancing and vertical specific apps from the ground up that tied into the core CRM functionality.
While the PaaS ecosystem provides a great avenue to build custom apps and increase cloud application adoption, too often it is tied into the code-base of the dominant SaaS player that brought it into existence. As a result, other non-CRM and non-HCM functions such as PLM, SCM, BI, and ERP still largely remain in the on-premises world.
This is where iPaaS, or integration PaaS comes into play. Each of these other non-CRM functions is an important part of the value chain, whether upstream, or downstream. PLM and SCM systems for instance interact frequently with ERP systems. BI and analytics software have multiple touch points with all these systems. Integrating all these systems together and tying them to specific customer records in the CRM system has been such a time-consuming task that most SaaS providers simply chant the mantra of “web services” when asked by customers how they can connect various SaaS ecosystems together. Web services typically accomplish a very specific business process and specific task between two different SaaS applications, and the web services APIs do not lead to repeatability. In fact, a Slashdot blog on the API economy mentioned that there were some 5,000 APIs estimated by the end of 2012 and some 30,000 estimated in the next four years.
The proliferation of APIs along with SaaS adoption only strengthens the need for an integration PaaS that abstracts the underlying orchestrations of these APIs to end users. An integration PaaS, allows developers to build full (or partial, if desired) native connectivity to every single object within an application, whether SaaS or not. By building native connectors, every permutation and combination of objects between different SaaS applications is possible, thereby increasing the possibility for companies to choose those SaaS apps that fit their business function or department. With increasing confidence of the existence of the integration PaaS, companies will continue to adopt SaaS apps in other LOBs, and not just the mainstream CRM or HCM categories. This in turn spurs the other SaaS category providers to invest more in R&D and come out with even more advanced functionality.
With the increased innovation occurring across all SaaS applications, we can expect more and more complex use cases involving larger amounts of data. All of this coupled with custom apps built on competing PaaS platforms will only further increase the use of an integration PaaS to achieve cloud data integration.