Fernando Labastida: Technology, Austin, Latin America

By Dennis Hall, Director of Business Development, Pervasive Software 

Over 100 business people attended the the Softletter SaaS (Software as a Service) conference in Altanta, GA on January 30-31st.  Softletter, headed by Merrill R. (Rick) Chapman, produced a stellar event filled with valuable topics from start-up financing to delivering managed services and knowledgeable speakers, including Zach Nelson (NetSuite), Peter Lee (Salesforce.com) and Mike Hoskins (Pervasive Software). 

Almost everyone at the SaaS conference had integration pain.  This fact was interesting to me because 1) IT and traditional vendors have been calling data integration the “Achilles heel” of SaaS since 2003, 2) Executives from Zach Nelson (SMB XML) to Tim Minahan (SupplyExcellence blog master) have been saying integration for SaaS was a minimal issue or solved since 2004 and 2007 respectively and 3) Solving integration pain pays my bills!

So let me share a few of the most common pain points from the SaaS providers I spoke with…extended Sales cycles, implementation delays and tapping into traditional systems behind the corporate firewall.

Extended Sales Cycles

After years and years of software salespeople telling customers that integration was “no problem” and the customer finding after the deal closed that integration was going to cost an additional 30-50% of the entire deployment budget*, customers are increasingly keen to understand (in detail) how SaaS vendors can tap into key systems, such as CRM, Inventory or A/R.  (side note: even today almost all of the software salespeople I’ve spoken with hope and pray that “integration stuff” doesn’t come up until after the deal is sealed!) 

In addition, our partners tell us that their customers are also asking more frequently to see the SaaS application working with their internal data in the proof of concept phase.  If your integration solution has not been pre-planned, then you should plan to wait in line behind the 10 other IT projects in front of you – good luck!  My favorite quote came from Louise Allen, VP Products at QuickArrow, who said “the relationship with Pervasive has reduced integration discussions from weeks to less than 15 minutes.”

Implementation delays

Again, the length of the line in IT (the dreaded IT Bandwidth objection!) often dictates how long the business drivers must wait to realize the benefits of the SaaS solution. The easier the SaaS vendor can make implementation or consumption, the faster they implement and start recurring revenue streams.  We see many vendors thrust the responsibility to standardize the existing (mostly legacy) data from multiple sources into the vendors “pre-built template”.  Why?  Because it’s hard work that requires technical and subject matter expertise.

Unfortunately, many end users underestimate the scope of work required to make this happen.  I’ve seen such implementations delayed by over 6 months with costs in excess of over $100,000 to implement.  After the “pre-migration” work is done, the vendor writes scripts and lays eyeballs on the incoming data streams for information that does not fit or comply with the business rules.   Most times, bad data does get through resulting in unhappy customers (buyer’s remorse anyone?) and increased support costs (fix it now or pay later!).

Integrating with “Stone-Age”, “Brick and Mortar”, or “Traditional” applications

Pick your vernacular! Zach Nelson either coined or borrowed the phrase “Stone Age applications” to describe the SAPs of the world– the audience loved it of course…how three years of SaaS proliferation has emboldened these folks!  Best of Breed companies understand the importance and value of aligning the SaaS application with their existing business systems and processes.  The challenge is that the majority of source or target systems do not have modern, web-enabled hooks or interfaces so you just can’t connect “in the cloud”.  A multi-tenant environment adds additional complexity because VPN and custom-code won’t work…they just don’t scale!  So what are you going to do?  Dedicate a server to every client – good luck if you want to grow to salesforce.com proportions.  Just call your company an ASP and pack it up! 

SaaS vendors (like all others) understand the implications of getting integration right – it entrenches them in the customer’s environment thereby providing the “long tail” - increasing the probability of renewals year over year.  At our company, we’ve integrated our SaaS CRM system with four plus systems, including accounting and project management apps.  Sure, we eat our own dog food with Data Integrator, but the effort is still time consuming and costly so it will take major discomfort for us to change.

Whether you’re a SaaS provider, Systems Integrator or IT Professional, data integration will rare it’s ugly head at some point in your next deployment.  It’s up to you to make a difference for the market and your organization by making sure your project is “integration-ready” well before the launch.

Dennis Hall, Director of Business Development, Pervasive Software

*Gartner 2006