As software as a service matures, CIOs need to look at how well cloud-based products integrate with existing on-premise systems.
It is unrealistic for most businesses to move everything into the cloud. Businesses have a choice: they can run applications in their own datacentre, use a co-location centre or run a fully hosted datacentre.
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But beyond the question of who owns or operates the IT, CIOs should consider the practicalities of making cloud applications work as part of a fully-fledged enterprise system.
In a recent Ovum report, Exploring Different Approaches to SaaS Integration, analyst Saurabh Sharma notes the rapid rise of cloud computing in general – and in particular of software as a service (SaaS) – is adding to the existing heterogeneity of enterprise application portfolios.
Sharma writes that many organisations are realising that cloud computing can lead to more information silos and greater integration complexity.
NetSuite specialist First Hosted has worked with one customer on integrating an on-premise system from ERP software publisher JD Edwards with a new platform based on the NetSuite SaaS product, for its international subsidiaries.
Andrew Peddie, managing director of First Hosted, says: “We worked with a US client that manufactures medical devices, which has been running JD Edwards for 10 years. Over time the company had ended up with a system that did what it wanted.”
The company wanted to grow outside the US, but it did not make sense to replicate the disparate IT it had built up. “NetSuite is lower cost, and can be deployed quicker, in a lighter way to an SAP or Oracle system,” Peddie explains. The international business looked at the cost and found the software version of JD Edwards was 10 years old and was heavily customised, so it could not be upgraded easily. The expertise for maintaining JD Edwards was US–based and many people had moved on.
When the international business acquired another company, there was no budget left to re-implement JD Edwards. Instead, the company chose to run global sales from JD Edwards in the US and use NetSuite’s OneWorld module for subsidiary operations.
“When we were called in, we had to demonstrate what core functionality NetSuite could replicate. Each international office runs a separate accounts system.” Initially, First Hosted mapped NetSuite’s 37 standard record types to the same information in the JD Edwards system, which acts as the master database system. After aligning the data, First Hosted developed a tool to run a one-time upload of data from JD Edwards into NetSuite. The two systems are kept synchronised using a web service.
When a sales order is taken, the transaction is pushed into NetSuite using web services. The NetSuite system now processes 50,000 orders a day and keeps in sync with the JD Edwards system.
He writes: “Ovum believes that the most prominent driver of services-oriented architecture (SOA ) adoption is its capability to meet complex integration requirements, including onpremise- to-SaaS integrations and B2B integrations that involve multi-enterprise process automations. “There are several common scenarios for integration of on-premise and SaaS applications where SOA is a suitable option.
According to Gartner, SaaS integration is taking place and is following the adoption curve of SaaS.
In other words, as businesses move beyond simply running a single SaaS application to making it part of a business process, there is a need to integrate. Gartner believes this is occurring in mid-sized organisations. But over the past year, large enterprises are beginning to integrate
Gartner fellow Massimo Pezzini says that, when it comes to integration with on-premise systems, businesses have to deal with a number of scenarios. First, and arguably the most straightforward, is the one-off extract, translate and load task that needs to be undertaken when uploading customer data from a system like SAP to Salesforce.com.
But Pezzini says: “We are also seeing integration of end-to-end business processes like hire-to-retire, so the integration requirements are more sophisticated.” IT organisations can continue to use whatever technology they have in place, but Pezzini warns that cloud service integration has issues different to those of on-premise integration projects. For instance, there is a bigger security risk in using cloud services.
Another factor is timescale. When people buy a SaaS product, they expect the new software will be up and running quickly. “Integration has to be available and provisioned quickly,” Pezzini says. Another problem IT departments face, when it comes to integrating SaaS and on-premise IT, is the coordination of updates.
Pezzini says: “Salesforce.com updates software every three months. Google updates its software daily, so it is very difficult for users to keep track of all the changes.”
Looking at the main suppliers, SAP has made some progress with its acquisition of cloud-based business commerce network business Ariba in May 2012 and its recent strategy announcement around SAP Hana cloud integration.
According to Pezzini, the Ariba acquisition makes sense in SAP’s integration strategy: “Ariba is a procurement platform so it makes sense to integrate with SAP,” says Pezzini. SAP plans to deliver pre-packaged integration. Pezzini believes some components will be available in 2013. He says system integrators will be able to use the Hana cloud integration platform to build their own pre-packaged solutions.
According to Pezzini, Oracle’s so-called Red Stack does not yet have an answer to cloud integration. Oracle’s cloud products include SaaS products such as RightNow (CRM) and Taleo (talent management). Its WebLogic platform is available as a cloud service and it offers Oracle database service in the cloud. But Pezzini says: “So far, Oracle has failed to address the integration strategy. This is a significant gap, which I am sure Oracle is looking to fix.” In many ways, Oracle has little interest in supporting third-party cloud services. The marketing rhetoric revolves around the merits of the Red Stack, buying into Oracle end-to-end. But Pezzini says this is unrealistic.
“Customers will not only run Oracle Red Stack. They are not naive. Even if you run an on-premise Oracle stack, how would you move from Oracle eBusiness to SuccessFactor in the cloud?” he says. “Oracle is in a vacuum. It is not saying anything about cloud integration.“ From a pragmatic point of view, CIOs who have bought into the Red Stack can use Oracle Fusion middleware to connect to third-party cloud providers such as SAP-owned SuccessFactors.
Microsoft has Dynamics and certainly appears to be making waves in the SaaS market. In theory, the Microsoft story is about writing applications for onpremise and cloud deployment using one application programming interface (API). However, while the APIs for Azure and .Net are similar, they not the same thing. As Pezzini points out, some work is required to migrate a .Net application to Azure, Microsoft’s cloud platform. “Azure SQL is not exactly the same as SQL Server,” says Pezzini.
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However, Microsoft recognises its SaaS offerings will have to be integrated with on-premise applications. As such, it is developing cloud integration as part of Azure. Gartner expects to see a product during 2013. In 2010 IBM acquired cloud integration software, appliances and services company Cast Iron Systems. IBM says the acquisition enhanced its WebSphere business integration software portfolio. With Cast Iron Systems, IBM clients can expect fast and flexible SaaS and cloud application integration in a matter of days (rather than weeks or even longer); and to achieve lower cost and higher return on investment in cloud and SaaS models.
However, there has been little in the way of integration to date. Gartner expects a higher degree of integration in the future as IBM builds out its SmartCloud strategy and the role its WebSphere middleware will play in this. In 2010 Dell acquired Boomi. The Boomi platform connects information between existing on-premise and cloud-based applications. The company claims it can provide cloud integration in weeks rather than months. Taleo – the cloud-based talent management suite Oracle acquired in 2012 – uses Boomi. The question is: will Oracle continue to use Taleo, or will it develop its own product? The situation gets more complex because RightNow – which Oracle acquired in 2011 – provides some cloud integration capabilities, according to Gartner. Informatica, Tibco and Software AG are also expected to boost their respective cloud integration platforms during 2013.
Forrester principal analyst Liz Herbert discusses a skills issue with SaaS integration in her report, Clients Need Services Providers That Can Help Them Get The Most Value Out Of SaaS. She observes that leading SaaS packages — such as Salesforce.com, SuccessFactors, Workday, and RightNow Technologies — are primarily horizontal in nature. “But the consultants who work in the ecosystem surrounding these applications offer deep industry skills, industry-specific templates, and know-how and lessons learned from deploying these applications in a particular sector,” says Herbert.
So there is an issue of combining the horizontal approach to SaaS with the industry expertise built into vertically integrated business processes. As SaaS adoption takes hold in businesses, they will need to link seamlessly to traditional ERP and other on-premise and third-party cloud applications. Unfortunately for IT, the market for cloud integration is still maturing, with little progress expected for the next six to 12 months.