In the cloud, integration is the competitive advantage

It is no longer the case that applications drive competitive edge. The cloud has leveled the playing field.

Commentary - To drive ongoing success and growth, enterprises are constantly seeking out ways to gain a competitive advantage. This can take the form of various activities, from revamping marketing and sales processes and optimizing back-end processes to improving knowledge about customer demands and improving business agility.

Twenty years ago, organizations drove these activities through enterprise software applications to gain a competitive advantage. To be more precise, they architected custom implementations of packaged software frameworks to differentiate their processes and practices from competitors.

Such custom implementations required two things: time and money. SAP, for instance, would typically take two years and $10 million to customize, while Siebel might take 18 months and several million dollars. Companies, however, were willing to invest their resources into such customization projects because they believed that doing so would give them a competitive edge. This was true for many, as reflected in their unique data architectures and workflows.

And then the cloud arrived.

Legacy enterprise applications: No longer a competitive advantage
The world today is moving at lightning speed to SaaS and cloud applications, and the idea of gaining competitive advantage through legacy enterprise applications is no longer relevant.

There are plenty of reasons why SaaS apps are so appealing. They offer fast implementation, seamless upgrades and robust solutions that are battle-tested by hundreds and thousands of other users. As David Cearley of Gartner states, SaaS and cloud technologies “[set] the stage for a new approach to IT that enables individuals and businesses to choose how they’ll acquire or deliver IT services, with reduced emphasis on the constraints of traditional software.” It’s no wonder then that SaaS has become widely adopted, with Gartner forecasting that global SaaS revenue will reach $14.5B in 2012.

Moreover, SaaS applications by their very nature are about configuration, delivering real value to customers by eliminating the need to undertake lengthy and costly customization projects. Granted, every company implements Salesforce.com in a slightly different way, but compared to the landscape two decades ago, things are essentially the same everywhere.

Perhaps most importantly, with the atomization and disaggregation of the traditional enterprise application, configurations across customers are becoming increasingly homogeneous. Customers are no longer purchasing entire ERP or CRM suites. They are subscribing to best of breed point solutions, such as Intacct for accounting, Zuora for billing, Marketo for marketing automation, Concur for expense management and many others. And each of these point solutions looks pretty much the same from customer to customer.

Edging out competitors in the cloud era
Given this increasing homogeneity among the SaaS apps being deployed from company to company, how does an organization gain competitive advantage? In short, it is the combination of various point solutions, and the process logic between them that drives competitive advantage in the cloud. Current cloud-based point applications serve two main purposes: storing data and delivering application logic to carry out a specific business function. For instance, customer support processes are executed by one set of logic while expense management is carried about by another. This means that any business process that extends beyond a narrow function requires some integration between multiple point SaaS systems.

As the cloud becomes mainstream, organizations will need to select the best combination of SaaS systems and integrate them better than their competitors to gain an advantage. Fortunately, cloud applications give business owners more control in making IT decisions. Gone are the days of CIOs unilaterally selecting a huge ERP solution for an entire organization; now business owners can select best of breed SaaS solutions to support their specific needs. The remaining challenge, then, is to integrate these various best of breed solutions in a way that differentiates an organization from the rest of the pack.

Looking ahead
So where does this leave us? When thinking about integration strategies in the new cloud-centric IT landscape, you should consider the following:

Is your SaaS strategy fully aligned with the cloud model? Is it simple enough to deploy so that it doesn’t cancel out the benefits of the cloud? (In other words, don’t purchase a SaaS subscription and then pay high-priced consultants to spend 18 months integrating everything.) Can your SaaS integration strategy drive a competitive advantage through your unique business processes? (In other words, integration isn’t just moving data around; it’s also about business processes.) Are your integration processes agile? Can they change quickly in response to rapidly evolving business conditions? (It’s easy to employ point-to-point custom integrations, but these are difficult and expensive to change when your business needs do.)

It is no longer the case that applications drive competitive edge. The cloud has leveled the playing field. Organizations of all sizes now have access to a wide and growing selection of SaaS applications. To compete in the cloud economy you need to have a SaaS strategy focused on integration to drive operational efficiency, agility, innovation and customer reach.

biography
Ross Mason is founder and CTO of Mulesoft. Prior to founding MuleSource (now MuleSoft), Ross was Chief Executive Officer of SymphonySoft Limited, an EU-based company providing services and support for large-scale integration projects.