Some application domains are gray areas for SaaS, including CRM. One high-tech vendor ended up choosing Oracle’s CRM software over Salesforce.com because its use of CRM extended from order to cash, bringing the application into the heart of the ERP transaction system. The salespeople preferred Salesforce.com, but the CIO couldn’t make it work at the ERP transaction level necessary for the company’s sales processes. Not all companies need that level of integration, since they’re not constantly recalibrating their sales forecasts or inventories, but for those that do, it’s a complex integration task, agrees Schwab’s Hohenstein. “If someone is taking orders in the field, they need that integration. If not, the data can be sent in a batch mode,” notes Tina Phillips, a principal at Deloitte Consulting’s SaaS practice.

The Integration Challenge
The convenience of using SaaS applications—especially when adoption is driven by business users—can mask a significant IT challenge, notes Gartner’s Pring. That challenge is integration, both with other enterprise applications and with data sources.

In some respects, integrating SaaS can be easier than integrating in-house or ASP-provided applications. That’s because SaaS’s multitenant nature requires vendors to pay more attention to the data exchange and application programming interface (API) connections to other applications so that a broad variety of customers can use the SaaS application without any customization or significant hand-holding—both of which would defeat the SaaS vendors’ business model. “Integration is a little bit easier because someone has already given some though to it,” says Sapphire’s Perry.

Another factor, says MedImmune’s Young, is how separate the SaaS application is from other enterprise applications. “In a loosely coupled application space, it may be easier to bolt on SaaS apps if they use common APIs like XML,” he says.

Integration with enterprise data is a more straightforward issue, says Rob Desisto, a Gartner research vice president. Most SaaS applications are designed to export and import standard data formats for their application domains—vendors really had no choice if they wanted to be taken seriously, he notes.

Typically, SaaS works best when data is exchanged in periodic batches, not in real-time transactional environments, says Calvin Do, CIO at digital imaging vendor EFI. At EFI, salespeople use Salesforce.com to manage leads, but after the lead gets past the quotation stage, the data is passed to the ERP system for deal analysis and order management. Similarly, performance reviews and résumé analysis happens in SuccessFactors, but salary and title changes, as well as new hires, are transferred to the ERP system. This approach requires duplication of data between the ERP and SaaS applications, Do notes, as well as some custom integration work to reconcile the data when it is brought into the ERP system, but he figures the effort took half as much resources as doing a similar integration between in-house apps, which are not as well-designed for interoperability.