2012 SaaS Integration Survey_MuleSoft THINKstrategies

8/12/2019 2012 SaaS Integration Survey_MuleSoft THINKstrategies

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2012 TrendsVolume I IFebruary 2013

SaaS

Integration

Survey


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2012 SaaS Integration Survey | MuleSoft & THINKStrategies 2

Table of Contents

Introduction 3

Executive Summary .. 4

SaaS Integration is now an executive level concern.. 5

Connectivity is extremely important to winning new customers .. 6

Integration is the most time consuming part of implementation .. 9

Ecosystem strategies are still in their infancy..... 10

Growing dissatisfaction with existing integration tools . 11

Conclusion .13

Recommendations for SaaS Executives .13

Survey Respondent Demographics .14


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Introduction

One of the fundamental promises of the cloud is the assurance that the burden of successfullydeploying and maintaining applications shifts from the customer to the vendor.

Customer expectations have shifted dramatically over the last few years, requiring cloud vendors totake on more burdens formerly held by end-users. The initial success of the SaaS industry to fulfillthis promise has led to its tremendous growth, but also raises the bar for vendors to meetcustomers escalating needs and expectations. The following survey confirms that integration hasbecome one of the additional responsibilities held by the SaaS vendors in order for them to besuccessful.

Customers concerns about integration represent both a threat and an opportunity for SaaSproviders. Failing to offer integration can impede sales and create customer support issues. Offeringseamless integration capabilities can reduce sales friction, and increase customer satisfaction andopen new market opportunities.


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Executive Summary

A number of studies indicate that integration is a major obstacle among organizations of all sizes inthe deployment of Software-as-a-Service (SaaS) and cloud solutions, but none have examined theintegration problem from the perspective of the SaaS provider. For the second year in a row,

THINKstrategies and MuleSoft have collaborated on a market research survey of SaaS and Cloudvendors to quantify how integration and the emerging need to build an ecosystem of integrationshas impacted their success in a highly competitive marketplace.

With a total of 210 respondents, this survey is uniquely focused on the key challenges faced bySaaS and cloud providers.

In this survey, we found that integration is still the most common hurdle in the SaaS sales process,with nearly 90% of respondents considering integration to be important or extremely important inwinning new customers. The SaaS vendors we surveyed also identified integration as the most time-consuming element of customer implementation process. Most importantly, more than two thirds ofthe SaaS vendors surveyed view integration as a critical part of their SaaS solution.

An area of concern for SaaS executives l ies within an ecosystem strategy-- or lack thereof. Althoughecosystems are growing in popularity (Only 30% of respondents indicated that do not have anecosystem), very few companies are providing development, sales, marketing or support incentivesfor their partners. In addition roughly 40% of SaaS providers are developing integrations for theirecosystems in house.

Worth noting are two year-over-year findings in this report. This year we saw higher participation byCEOs, Founders, VPs and Director level managers. This suggests the integration issues identifiedby our survey are gaining higher-level attention. In addition SaaS vendors are growing moredissatisfied with their existing integration solutions (Satisfaction with existing integration solutionsdecreased by 15% from 2011 to 2012).

Our survey clearly shows that leading SaaS vendors must incorporate integration into their go-to-market strategies in order to succeed in todays marketplace. In addition, SaaS ecosystemstrategies are an emerging area of focus and potential growth for SaaS providers where integrationcan take hold. We believe that these results further validate using an integration platform-as-a-service (iPaaS) to create a repeatable and scalable path to market. This report discusses the findingsof the survey and provides recommended steps for SaaS providers to respond to this marketopportunity.


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SaaS Integration is now an executive level concern

As the SaaS marketplace becomes more and more competitive, executives within SaaSorganizations are looking for ways to optimize their go-to-market strategies. Integration has becomea critical component across sales, marketing, services and support.

Executives believe SaaS integration is a critical part of their application, more so that non-senior levelmanagement.

Figure 1: Which of the fol lowing best character izes your company s att i tude towards SaaS integration?

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Connectivity is extremely important to winning newcustomers

As the total number of SaaS solutions grow, and as enterprise adoption of these solutions increase,

SaaS providers are finding that integration is becoming a key issue in the sales process regardless ofwhat application category they compete in.

Over ninety four percent (94%) of survey respondents view integration as either important orextremely important in winning new customers, with only 6% of respondents saying that integrationis not at all important.

Figure 2:How important is the abi l i ty to integrate with other syst ems in winning new customers?

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Survey respondents also indicated that integration with existing systems is the most commonobjection in their sales cycle, followed by objections around total cost of ownership (TCO) and theiruser interface.

Figure 3: How common are t he fol lowing sales hurdles in your sales conversations?


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Many of the anchor applications that customers require connectivity to include CRM, accountingand billing applications such as QuickBooks, NetSuite, SAP, MS Dynamics and Salesforce.com.

Figure 4: What are the top 3- 5 appl ications or systems your customers need to connect to? NamedAppl ications

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Figure 5: What are the top 3- 5 appl ications or systems your customers need to connect to? Appl icationTypes

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Integration is the most time consuming part ofimplementation

As more enterprises evaluate cloud-based versus traditional on-premise applications, time to live

metrics are a key consideration. If a legacy application takes 12 to 18 months to go live, and a SaaSapplication takes 2 weeks to 1 month, there is a clear time savings and accelerated time to value forthe customer.

For SaaS providers, incremental improvements in their time to live metrics can increase the valuationand growth of their business. Survey respondents indicated that integration or data import is thelargest inhibitor (highly or somewhat time consuming) to getting their customers live.

Figure 6: How time-consuming are these common elements of customer implementation?

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Ecosystem strategies are still in their infancy

Integration to third party applications is critical to acquiring new customers, however very few SaaSproviders have been able to monetize those integrations through an ecosystem.

Less than 30% of survey respondents do not have an ecosystem, and nearly 40% of SaaScompanies who do have an ecosystem are developing integrations in-house. The most commonway survey respondents have incentivized partners in their ecosystems is through sales andmarketing activities. In addition, only 20% of survey respondents are receiving a percentage of theirpartner ecosystem sales.

Figure 7: What character istics best descr ibe your ecosystem? Check al l that apply.

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Growing dissatisfaction with existing integration tools

As more SaaS providers develop integration to third party applications, gaps and challenges withexisting tools sets are emerging. In 2012, the satisfaction of existing SaaS integration solutionsdecreased by nearly 15% from our previous survey findings in 2011.

Figure 8: Are you completely satisf ied with existing SaaS integration solutions?

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Conclusion

I ts t ime to think about your integrat ion strategySurvey respondents have indicated that integration plays a critical part in their customer acquisition

and retention strategies. In addition, the growing popularity of ecosystems indicates that integrationmay become a source of customer acquisition and top line revenue for SaaS providers in 2013.

Recommendations for SaaS Executives

Def ine Your Customer Integrat ion RequirementsIntegration surfaces in many SaaS sales cycles as a question, Do you connect to my [insert thirdparty application here]. Identify and quantify customer requirements to understand the scope ofresources that will be needed to address your growing customer demands.

What applications do your customers most frequently asking for connectivity to? What are the business processes your customers are trying to automate using your

application? Are you seeing patterns across customer requests? If yes, this could be an extension of

your application that you could monetize?

Out l ine The Market OpportunityDeveloping an ecosystem or providing integration as part of your service could significantly impactyour Monthly Recurring Revenue (MRR), Customer Acquisition Cost (CAC), in addition to other topand bottom line SaaS growth metrics. Understanding the size of your connectivity market will helpyou identify top areas for investment.

What markets do you want to gain entry to? Do customers in those markets require connectivity to a particular application or type of

application? If you were to provide integration as an option to the customer in those markets, what could

you charge? How many customers would you expect to acquire?

Engage With an Integrat ion ExpertYou can create connectivity to your application by either developing the integrations in house, orengaging with a vendor or service provider. Depending upon the complexity of the third partyapplication and the resources you have available internally, one approach may align more to yourGo-to-Market strategy over another.

Simplify internal development and expedite post sale implementations using an integrationplatform as a service (iPaaS)

Drive new business with packaged, repeatable integration offerings developed by a SaaSintegration provider

Grow your ecosystem by referring custom projects to System Integrators with expertisearound a third party application.


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Survey Respondent Demographics

Figure 9: How many employees work at your company?

Figure 10: Does your business primarily sell to other businesses (B2B) or consumers (B2C)?

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Figure 11: What best describes the function of your application?

Figure 12: What is your job function?

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Figure 13: What best describes your role?

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Founded in 2001, THINKstrategies, Inc. is the only strategic consulting firm focused entirely onhelping its clients capitalize on the fundamental shift in the technology industry from product-centricto services-driven solutions, such as Cloud Computing, Software-as-a-Service and ManagedServices. THINKstrategies helps IT/business decision-makers with their sourcing strategies; solutionproviders with their go- to-market strategies; and VC and PE firms with their investment strategies.THINKstrategies also created and administers the Cloud Computing Showplace, the largest, vendor-independent, online directory and industry best practice resource center in the Cloud market, withover 1800 solutions divided into over 90 application, service, technology and industry categories inthe Software-as-a-Service (SaaS), Platform-as-a-Service (PaaS) and Infrastructure-as-a-Service(IaaS) areas, including Managed Services. For more information: info@thinkstrategies.comwww.thinkstrategies.comwww.cloudshowplace.com

MuleSoft provides the most widely used integration platform for connecting SaaS and enterpriseapplications in the cloud and on-premise. With the rise of cloud and mobile, enterprises face achoice: get overwhelmed by the resulting explosion of end points or seize the opportunity to gaincompetitive advantage. Founded on the idea that connecting applications should not be hard,MuleSoft lets organizations harness the power of their applications through integration. MuleSoftsAnypoint technology eliminates costly, time-intensive point-to-point integration, enabling businessagility. Delivered as a packaged integration experience, CloudHuband Mule ESBare built onproven open source technology for the fastest, most reliable integration without vendor lock-in.Supporting billions of transactions per day, MuleSoft is used in production by thousands ofenterprises, including Walmart, MasterCard, Nokia, Nestl and Honeywell, and powers integrations

with leading SaaS vendors such as Salesforce.com, NetSuite, Workday, Intuit and Zuora.For more information: www.MuleSoft.comFollow us on Twitter: @MuleSoft

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2012 SaaS Integration Survey_MuleSoft THINKstrategies