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SaaS integration: The emerging trend in service-oriented architecture

Businesses large and small are becoming familiar with SaaS (software as a service) -- most easily defined as software bought and maintained by an outside party which charges business customers to access their applications via the Internet. The rapid widespread adoption and integration of SaaS is facilitated by a continuing push toward service-oriented architecture. The future belongs to companies willing to join the next wave of the high-tech revolution, if they haven't already done so. "This is a journey, not a destination," says one IT expert in a recent presentation at the W. P. Carey School of Business. "We will always be moving toward a service-oriented architecture, not getting there."

2006-02-15

Imagine being able to run a modern business without plunging huge amounts into expensive software, space-gobbling hardware and pricey IT staff to untangle the inevitable high-tech snarls. This is a growing reality for the most savvy of businesses — albeit a reality that is emerging piecemeal, according to David Linthicum, chief executive officer of BRIDGEWERX, an innovative niche company in Seattle. BRIDGEWERX provides integration for "software as a service" (SaaS), most easily defined as software bought and maintained by an outside party which charges customers to access their applications via the Internet. Linthicum is widely acknowledged as the high-energy guru of advanced SaaS integration and the service-oriented architecture on which it is based. Along with his CEO position, he maintains two weekly blogs and a podcast, writes articles for a wide variety of organizations, and lectures frequently. Previously, he was chief technology officer for Mercator and ran IT shops for SAGA Software, Mobil Oil, EDS, AT&T and Ernst & Young. Linthicum was a featured speaker recently at the the W. P. Carey School's new MSIM Executive Lecture Series. He points to San Francisco-based Salesforce.com as an example of a booming SaaS company. Customers pay a monthly fee that starts at $65 per user to tap into Salesforce.com's applications, a variety of customer relationship management tools to track leads, monitor salesperson productivity, forecast sales, draft custom reports, create service e-mails and more. "We don't use technology just because it's cool anymore. We use it because it's got return on investment," Linthicum says. "It's simply less expensive to use software services via Web-based applications delivered through the Internet, because you avoid paying to build an IT infrastructure. Most businesses can't afford SAP-class apps or CRM — SaaS is the great equalizer." Salesforce.com has more than 350,000 subscribers at almost 19,000 companies, including heavy hitters like AOL, Nokia, United Way and Dow Jones Newswire. There's even a "Salesforce.com For Dummies" book. But, like other SaaS companies out there, Salesforce.com specializes in a software niche. For now, most SaaS customers are testing the waters by electronically outsourcing various functions one at a time; the Salesforce.com customers obviously start with sales-based management. Unlike Salesforce.com, which has several large corporate clients, most of the other existing SaaS providers cater to small and medium-size businesses — "the ones who want to move up, to get more plug and play" — Linthicum says. An example is San Mateo, Calif.-based NetSuite Inc., which offers a CRM product similar to Salesforce.com, as well as financial, order and inventory software. Customers use a "dashboard" screen display that lists customized buttons for, say, overdue shipments, payables, profit, open cases, this month's sales versus the same month last year, and on and on. The same dashboard can display a chart tracking orders and your weekly calendar. Like other SaaS providers, NetSuite can package the data for different user roles within a customer's company — executive, sales manager and controller, for instance. Among its customers are Big Toy Express, Alpine Investors and the Cayman Islands Department of Tourism. Readers of SmallBusinessComputing.com recently voted for NetSuite as a "Best E-commerce Product" for 2006. Smaller players are sometimes more open to cutting-edge technology solutions than the mega-corporations with their enormous customer bases and gigantic operations already in place. A smaller operation's security and privacy issues may be easier to handle. IT managers at big companies often share a "not in my shop" mentality. Linthicum says they're uneasy about "consuming software right off the Internet without knowing who developed it." He adds, "They also don't want to lose control of their applications." "CIOs are worried," agrees Julie Smith David, associate professor of information systems at the W. P. Carey School of Business. In the long term, the evolution of SaaS may potentially decrease job opportunities for software developers, integration specialists and analysts in corporate settings. In the short term, however, she agrees with Linthicum who says SaaS "will require more IT specialists, not fewer, to build these services allowing companies to plug and unplug." Linthicum reassures panicking IT types, "We will still have developers. We will still have software." But the market for experts who can design business processes, understand supply chain and find the right IT tools to execute will expand rapidly, David predicts. Expect to see a shift in universities from purely computer-science majors to business IT majors as a result. In the meantime, while much of the Fortune 500 keeps its distance, SaaS providers continue to grow. Need a company blog? Check out iUpload, which offers "customer conversation systems." Hot Banana does multilingual Web site content and management. SaaS providers can handle credit reports, auctions, payroll, ecommerce, benefits, recruiting, package tracking, scheduling, shipping and logistics, expenses, contacts and support, Linthicum says. And that's where his company, BRIDGEWERX, enters the picture. BRIDGEWERX integrates SaaS for companies. Say you want to contract with three SaaS vendors: one to handle accounting, another to manage orders and a third to handle the corporate Web site. BRIDGEWERX integrates all three by mapping their data structures so they can connect. When the SaaS vendors upgrade their software, the BRIDGEWERX integrator automatically upgrades the mapping, for enhanced connectivity. "It's still a small company, but what it can do in terms of linking software services is pretty impressive," David notes. She uses Linthicum's book "Next Generation Application Integration" as a text in her systems integration course. Linthicum says there's a lot of buzz right now about tiny StrikeIron, employer of 20 people headquartered in the Durham, N.C.-area Research Triangle Park. StrikeIron is a Web service marketplace; customers tap its platform for more than a dozen of its own SaaS options, such as marketing do-not-call lists to shipping addresses. But customers can also access more than 80 other Internet-based vendors at StrikeIron, according to spokeswoman Kristi Lee. "We're the eBay of Web services," she says. Revenue is proprietary, but Lee says profits doubled in the last 12 months. Daily transactions using StrikeIron services can reach hundreds of thousands, she adds. Despite what he calls excessive hype, SaaS is not new technology, Linthicum insists. "It is true that we're moving away from enterprise-level software as a commodity. But we never invent anything new in software, we just return to old ideas and wrap a new buzzword around it." His predictions for the future: a continuing push toward service-oriented architecture to support the unstoppable spread of SaaS, aided by additional start-ups that push the envelope, widespread technology upgrading and increasing middleware to coordinate "what's on the Web and what's in your company." "This is a journey, not a destination. People don't get that, but that's what it is. We will always be moving toward a service-oriented architecture, not getting there."

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