Is SaaS Sabotaging Enterprise Integration Efforts?

Hosted applications remove the burden of buying and maintaining hardware, but off-premise systems could cause data integration problems that require serious consideration in any purchase decision.

Through industry standards, application programming interfaces (APIs), and middleware for enterprise integration, manufacturers have made great progress in uniting the islands of information that once kept them from sharing data between plant floor and enterprise systems.

As a result of these enterprise integration efforts, companies can now connect production operations with back-end accounting systems to keep material costs under control and manufacturing schedules on track. They can integrate supply chain data, warehouse management systems, and even sales forecasting applications to deliver the right product, to the right people, at the right time. When done right, it’s a huge competitive advantage. But any CIO or systems integrator will tell you that integrating applications that target different departments is not easy to do, since business needs change as fast as applications are upgraded.

Enter software as a service (SaaS) applications, which might seem to be an IT manager’s dream: no server and storage systems to buy and maintain. But their emergence presents a whole new integration problem between on-premise legacy apps and those that live in the cloud.

According to the recent InformationWeek Analytics 2011 Enterprise Applications Survey, 43% of SaaS users are very happy with the ability to deploy the applications quickly, but are much less satisfied with the complexity of integrating hosted apps with on-premise systems and data sources.

The InformationWeek article cites a handful of SaaS-based problem areas that are causing many CIOs to forgo the cloud, for now. Among them was the view that a lack of integration creates information silos—catapulting us back to the islands of information that make it difficult to share information or run business analytics. Another issue respondents cited was the inability to maintain a master data set that includes enterprise wide governance of the information flowing among the applications.

One has to wonder whether some of the new integration appliances and brokering services emerging, including Jitterbit, CloudSwitch, Cast Iron, Boomi, and Vordel, will address these challenges. They may well offer a better alternative to custom programming, but that’s just a start. They’ll have to do a good job of integrating on-premise and off-premise data, managing workflows, governing data structures, and keeping the enterprise secure.

To that end, it’s pretty clear to me that a lot more work will need to be done before CIOs at large organizations fully embrace the cloud as part of their technology landscape. Sure, they’ll dabble with an app or two, but for now, SaaS will likely remain an application island within the enterprise.

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3 Comments

  1. Posted August 16, 2011 at 1:21 pm | Permalink

    Great blog post, Stephanie. I agree that we have a long way to go before the cloud is fully embraced. You mentioned two options above: SaaS or on premise with a lot of enterprise integration efforts. But what about on premise without any integration efforts? Some ERP software is completely comprehesive–supply chain, warehouse management, forecasting, scheduling, workflows, etc. already incorporated–to offer business analytics and transparency across every aspect of the shop floor. With the right ERP system, you can avoid enterprise integration altogether, whether on premise or in the cloud.

  2. Posted August 22, 2011 at 10:10 pm | Permalink

    I would agree that SaaS/Cloud applications can create integration headaches. Thus, it is safe to conclude that SaaS is not right for every IT environment/application scenario.

    However, onsite ERP isn’t always a safe bet either. It has been my experience that few companies run their entire business through their ERP system, thus requiring manual data duplication between systems or some form of systemic integration.

    The happy medium is perhaps a middleware hub that is able to reach out to disparate data sources and platforms, bringing such data together (a mash-up) into a dashboard for the end user. The problem is getting data back and forth and making it a seemless process/transaction.

  3. Posted August 23, 2011 at 2:25 pm | Permalink

    I need to express a different point of view on this topic. The integration challenge is quite similar whether the system deployed resides on premise or is accessed from a SaaS provider. The challenges are functional and technical. Different systems with different functional assumptions are difficult to integrate because of the business assumptions made by the producers of the software and by how customers may have re-purposed parts of the software. On the technical side, there will always be an issue whenever the integration capabilities of the installed software are weak. Where on premise and SaaS may differ is in the ability to customize the code when it resides at the vendor and not on premise.

    At Plex Systems we provide a robust integration layer based on web services and we work with our customers to integrate with local applications. Plus, we work with our customers to extend Plex Online to fit their needs. If an integration requires business logic enhancement, we collaborate with our customers to modify Plex Online while maintaining the robustness and integrity of the software. One of our customers is using PleXML (plant floor integration layer) and VisionPlex (application development layer) to extend their Plex Online ERP with an energy management application and a predictive maintenance module that brings together PLC pressure readings with the actual production numbers that Plex Online receives via its plant floor integration layer. Other customers integrate market forecast data, electronically negotiate shipments with carriers, bring sales orders from e-commence websites and the list goes on.

    In terms of integration tools, Integration as a Service (IaaS) providers like Plex Systems’ partner Pervasive Software offer pretty much the same tools for on premise and SaaS software, allowing both to be integrated as suits the business.

    In summary, SaaS by definition does not create silos. It is applications that cannot be opened to other third party applications, whether on-premise or on the cloud.

2 Trackbacks

  1. [...] They can integrate supply chain data, warehouse management systems, and even sales forecasting Applications to deliver the right product, to the right people, at the right time. When done right, it’s a [...]

  2. [...] Stephanie Neil poses an interesting question on whether SaaS and Cloud solutions create as much work in enterprise integration as they solve in reduced hardware and storage management. Enter software as a service (SaaS) applications, which might seem to be an IT manager’s dream: no server and storage systems to buy and maintain. But their emergence presents a whole new integration problem between on-premise legacy apps and those that live in the cloud. [...]

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