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An Integration Platform as a Service, iPaaS for short, is a range of cloud services. They let an organisation create, use and monitor data streams without needing to operate their own integration platform. It connects processes, services, applications and data within an organisation’s own IT environment and beyond, including clouds. Using an iPaaS can help you meet your long-term cloud integration goals.
What exactly is an iPaaS and how does it work? What are the advantages and disadvantages of an iPaaS? What types of iPaaS providers are there? And most importantly, how do you find the right iPaaS solution for your business? Learn all about iPaaS here.
iPaaS stands for Integration Platform as a Service. Based in the cloud, it lets companies connect data, applications, processes and systems neatly, coherently and transparently. This allows companies to reap the benefits of modern and efficient cloud integration, namely seamlessly networked, reliable business and IT processes.
You often hear that using an iPaaS simplifies cloud integration work and makes it more accessible. Employees who need to perform integration tasks require little or no programming knowledge. This is embodied by the new role of the citizen integrator.
iPaaS is a coordinated collection of cloud services that ensures that data, applications, services and processes work together in a largely automated manner, both within a company and between organizations.
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An effect of the internet, cloud computing, and increasingly complex business processes is that data, applications and services are virtually exploding. Another is that today's applications are becoming obsolete much faster. This means that there is constantly new software entering a company, where it often temporarily runs alongside the software it is replacing.
This has led to more and more data being stored in distributed systems. When data is stored in different systems and formats and cannot flow, this creates data silos. This makes it difficult for departments and companies to work together.
Many companies still use legacy systems, which they have integrated with newer software. As digitalisation has increased, so too have the number of point-to-point connections in an organisation.
This has led to the IT architecture in many companies resembling a big pot of spaghetti. This not only makes further integration work very costly, it also makes it much more difficult to find and eliminate faults, especially when employees who did the original integration work leave the company.
The result is a large number of scattered data sets, which make it difficult for employees and departments to work together. Not to mention customers and business partners. Previously, companies have tried to solve with approaches such as Extract, Transform, Load (ETL), hub and spoke Integration or by using an Enterprise Service Bus (ESB). These integration methods still play a role today. However, since they are typically rooted in an on-premises world, they provide limited support for today’s need for cloud connectivity and integrating cloud applications, though this is improving with newer versions. This is where iPaaS comes in.
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iPaaS means that a provider offers integration services on a public or private cloud. The integration platform has a full IT infrastructure, including solutions and tools for integration work, available online. The provider is also responsible for maintenance, updates, upgrades, security, and the scalability and reliability of the platform.
Companies using an iPaaS are only responsible for developing business processes, mapping and configuration work. The platform operator takes care of the rest. This lets companies concentrate on their core business. An iPaaS also lets you connect almost any third-party applications, services, and databases to an ERP or CRM system. This is useful when integrating clouds, SaaS or following a multi-cloud strategy.
Alternatively, the ERP or CRM system itself can be included in an overarching network such as a Hybrid Integration Platform (HIP) in a multinational company with subsidiaries, affiliates, and an ecosystem of customers, suppliers, and other stakeholders.
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The iPaaS market contains providers of different sizes, offering services of varying depth.
Some iPaaS providers attempt to appeal to the broadest possible customer base with their services. Their clients will include small companies and start-ups as well as large international companies. These iPaaS providers tend to be large, well-known IT service providers.
Others are service providers that specialize in niche needs – also known as domain-specific iPaaS. An example would be reporting internationally traded goods, to national customs authorities (e.g. the EDI Service for SAP GTS) to ensure they comply with national regulations.
These niche providers tend to be smaller companies or start-ups. In practice, however, the boundaries are often blurred and many iPaaS service providers attempt to cover more than one sector.
Another category of iPaaS vendors is larger midsize companies that have a background in iPaaS-related services. This may be on-premises system integration or B2B integration. Over time, some of these companies have added both enterprise and domain-specific iPaaS solutions to their service portfolios. They regularly expand the breadth and depth of their offerings.
The number of active iPaaS providers worldwide is currently in the low hundreds, and is growing.
Enterprise iPaaS providers attempt to serve a broad range of integration scenarios through their solutions. They focus on several business user profiles, from citizen integrators to experienced IT professionals to domain-specific iPaaS users. There are both large international IT organizations and medium-sized IT companies in this sizeable iPaaS market segment. This means that it’s likely that an organisation looking to develop their cloud and SaaS integration strategy find what they need.
Large iPaaS providers often do well on tasks with high horizontal complexity – i.e. merging several similar integration points. Medium-sized iPaaS providers tend to tailor their services more individually, while at the same time offering integration services with a high level of resources and integration services. As the level of difficulty of cloud and SaaS integration increases, consulting services play a significant role for both groups.
The most important target group for enterprise iPaaS providers is companies or other organisations with more extensive cloud integration needs. These organisations are increasingly using PaaS (Platform as a Service) and IaaS (Infrastructure as a Service) services as well as SaaS. They often operate complex local IT landscapes and rely on high-quality B2B services. End-to-end business process automation is important here, for which an iPaaS is perfectly suited.
A further category is domain-specific iPaaS service providers. These provide specialist services, such as integration solutions for communication with customs authorities (Global Trade Solution) and Global E-Invoicing Solutions. These providers may be small, niche companies, or large companies with a broad portfolio.
As the iPaaS market matures and the need for advanced cloud integration increases, we expect niche solution providers’ market share to grow. Experience has shown that these niche areas start to grow once the main markets are saturated.
iPaaS in its current form is already over a decade old. The origin and growth of this integration method is closely linked to the growth of cloud computing and SaaS.
When the first SaaS providers entered the market, their customers needed help integrating cloud-based software solutions with each other and with their existing IT landscapes. The first iPaaS providers saw an opportunity there. They approached SaaS providers and offered them partnerships.
As a result, iPaaS providers benefited by not having to acquire customers. The SaaS providers benefitted as they could reduce – or even fully delegate – their integration work. This win-win situation fuelled the growth of both parties.
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As the IT world has become more complex, iPaaS approaches have evolved. New areas have emerged, including cloud-to-cloud, IoT-to-on-premises and iPaaS-supported EDI. As a result, major software vendors such as SAP, Microsoft or Oracle started expanding their SaaS portfolio.
After working with iPaaS vendors for a while, they bought them out or developed their own iPaaS solutions. They wanted to make cloud and SaaS integration easier for their customers by closely integrate their own cloud solutions with their on-premises solutions.
Large providers have another advantage: they can scale via their partners or their own huge customer base. However, integrating third-party systems remains problematic with these approaches. This is why numerous other iPaaS providers have emerged in recent years with a focus on niche requirements. The domain-specific iPaaS providers mentioned above fall into this category. This all equates to a highly competitive market.
If a market has growth potential, large providers often try to secure the lion's share while smaller providers occupy the niches. The smaller iPaaS providers therefore tend to have very specific knowledge in cloud or SaaS integration. This is often limited to one domain or even a sub-domain. Other providers position themselves somewhere in between.
Due to the continuing growth of SaaS and other cloud services, the integration services market remains attractive, drawing further providers to this market to get a piece of the pie. This could eventually lead to oversupply, after which the trend should reverse until it balances out.
It is therefore likely that many iPaaS vendors – particularly the smaller ones - will be bought out, will change their focus, or go out of business. It is critical to be aware of this when choosing an integration partner as it increases the risk and the potential of further costs. You also need to consider that it is difficult to transfer one provider’s mappings, workflows, and configurations to another.
Companies should therefore fully consider these issues before choosing an iPaaS partner. Chapter 10 on selecting the right iPaaS solution takes a closer look at this topic.
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An iPaaS’s main strength lies in its ability to connect almost any combination of various data, applications and processes, and to integrate these across different IT environments. The most important environments or integration domains are:
Their cost savings, high flexibility, and easy implementation and handling have made SaaS solutions very popular. Furthermore, because the barriers to entry are low, this SaaS market segment continues to grow faster than others. This is particularly true for SaaS integration. Indeed, this is also likely to account for the largest share in the future. It’s therefore worth taking a closer look at a multi-cloud strategy.
The term “on-premises-to-cloud” might trigger images of ‘dusty’ old legacy systems which need connecting to newer cloud solutions. However, the sale of on-premises software still accounts for a significant share of the software market.
While it is true that SaaS is growing strongly, new on-premises software will continue to play an important role in the coming years. The reasons for this include the fact that on-premises operation still seems attractive for highly individualized applications and software systems. There is a significant advantage to iPaaS-supported on-premises-to-cloud integration. An iPaaS expands the lifespan of existing and on-premises systems by seamlessly integrating them into a company’s cloud strategy.
In an on-premises-to-on-premises integration approach, a company's data and applications either remain behind a firewall on premises or are hosted on a dedicated third-party server. It is crucial to be able to integrate on-premises software. It still plays a significant role in corporate IT environments, and is often intended to run for many years to come.
An example of the above would be synchronizing order data between a company’s sales, accounting and warehouse/shipping departments. Some iPaaS providers also provide on-premises solutions for this.
Integration scenarios at application level are the main job of an iPaaS. The primary objective is to synchronise data between applications in as close to real time as possible to enable or support a business process or other operation. Data exchange process is often triggered by an event – such as a customer placing an order - or by a regular process such as daily data synchronisation.
Another particular characteristic of iPaaS-supported application integration is that data is mostly exchanged via modern web APIs. Usually, APIs are configured for a limited number of calls. This quickly becomes a problem if dealing with large amounts of data or frequent calls. However, this is a challenge which iPaaS easily masters.
Application integration is so important because today's applications need to work together. Every time a company acquires a new employee, partner or customer, data flows between various applications. Equally, SAP S/4HANA users connect to external business partners using APIs, for example to transfer documents such as orders or invoices.
Furthermore, the applications not only work with different data formats, but also with different business logic. Well-planned and implemented integration processes ensure that your operations run smoothly and can best support your business objectives. These days, high quality, well-implemented integration processes are an important foundation to cloud integration to ensure your company's competitive success.
A process defines how data and applications work together to best achieve a company's business objectives. An iPaaS is well suited as a control centre. By configuring the iPaaS and developing workflows and mappings, the data is routed to the right place at the right time in the right format.
You can also use ready-made processes and integrate these into a longer chain, for example for an online order.
Good process integration is also important when communicating beyond your company. Automation lets you exchange specific data quickly and reliably with customers, suppliers and partners. Whether information needs to reach an end customer or the first supplier in a value chain, insufficiently coordinated processes will sabotage your objectives. Even if the individual applications and processes are functioning correctly. An online integration platform gives you the tools and services you need to combine the elements you need into a coherent, efficient process.
Whereas there is still some room for traditional EDI approaches, an iPaaS can transfer data both in an asynchronous batch process and in near real-time, through API integration. Furthermore, an iPaaS service level agreement (SLA) is likely to guarantee an extremely quick set-up. Rather than days, this could hours, minutes or even seconds.
iPaaS is a newer way of integrating applications and processes, whether these are on premises or in the cloud. There are also older methods that are still used to a certain extent.
Point-to-point integration means that an application communicates directly with a second application. This is often the first integration approach attempted by a company starting out, or an established company trying something new. This works for as long as the number of applications you use remains manageable.
However, as you integrate ever more applications with each other increases, the situation can quickly get out of control. How do you keep track of so many integration points? These connections usually need to be individually programmed and tested, including after updates or upgrades to an individual application. Suddenly, workload and costs spin out of control.
This is a huge challenge for any in-house IT department. By contrast, you can manage an iPaaS solution that relies on cloud-based technologies from one place. It lets you easily use modern Web APIs and its providers will often be able to supply you with ready-made connectors to commonly used applications.
Other well-known, integration approaches for on premises systems include hub-to-spoke integration, an enterprise service bus (ESB) and extract, transform, load (ETL). Although there is some overlap between ETL and ESB, as a rule, ETL tends to be used for moving and processing high volumes of data, especially master data. An ESB tends to be used for near real-time data processing.
In the hub and spoke model, the connections between apps and services are handled by a central broker – the hub. You can maintain the spokes that connect the hub to an app or service independently from the other spokes. This allows an app to have a narrower focus, as it’s the hub that handles integration, including for cloud and SaaS. The main downside to this approach is that because everything goes through the hub, if this fails, so does your system.
These approaches all use an intermediary layer to integrate applications, as does an iPaaS. Modern versions of these technology bundles are increasingly mastering SaaS integration and other cloud-based integration methods.
However, ESB, ETL and hub-spoke models were designed for on-premises integration. That's why they will always lag behind high-quality iPaaS solutions in cloud connectivity, and can only support relatively simple SaaS scenarios. Their biggest disadvantage compared to cloud-based iPaaS is their low scalability.
However, ETL / hub-spoke / ESB and iPaaS do not have to be mutually exclusive. Indeed, you can run any of these alongside each other. Larger, international companies with a high range of integration needs can particularly benefit from combining these methods.
iPaaS is naturally not without its disadvantages. Although these are not limited to iPaaS, you need to be aware of their implications when choosing a sustainable integration method.
The general shortcomings of iPaaS are not just the difficulty in finding a good provider, but that the technology doesn't offer much support for very specific functional needs.
Decent iPaaS solutions already cover a range of integration scenarios, and this is constantly increasing. In practice, however, there will always be scenarios for which the iPaaS market does not offer an answer. This may be because the solution required would need too high a level of technical customisation, or is generally not (yet) economical from the perspective of an iPaaS provider.
You may find that if you have very specific integration needs, you’d be better served by a more traditional method such as ETL / hub-spoke / ESB or even point-to-point connections. Nevertheless, it is worth looking at how iPaaS can help you with your cloud integration needs. You may also want to combine an iPaaS with existing on-premises resources.
Citizen Integrators are mentioned a lot in iPaaS discussions. While they certainly have a place, they can really only scratch the surface. Long term, you will need much more than integration tasks that are simple enough for drag & drop or point & click.
Many integration tasks require advanced software or IT knowledge. As market and legislative forces are only making business processes more complex, this will not change in the foreseeable future.
Furthermore, the majority of citizen integrators tend to be firefighting - solving their department’s most immediate issue. As a result, they can lose sight of the overall strategy. This can lead to data islands within the company. These are isolated, cobbled-together solutions, which are soon abandoned. Then, you will need IT professionals to tidy it all up.
One way to prevent this development is to give citizen integrators professional support right from the start. This could come from in-house IT professionals, or from an iPaaS provider who finds skilled professionals to train the citizen integrators. In fact, many companies are completely rethinking the citizen integrator concept, and ploughing more money back into the IT budget.
Another disadvantage is that there is now a bewilderingly large number of iPaaS providers. These often focus on different areas and differ in the range of services they offer. Some try to cover as many scenarios as possible while others pursue a domain-specific strategy.
Moreover, on comparison portals and in the trade press, more traditional integration providers who have since added iPaaS to their portfolio are sometimes lumped together with specialist iPaaS providers. For newcomers to the area, this makes it trickier to choose the right iPaaS provider.
The main benefits of iPaaS are as follows:
A good iPaaS solution already covers a great many use cases in today's business world. It is often at the core of a modern integration strategy and may even fulfil the greater majority of a company's integration needs...
Nevertheless, many companies will not be able to make an iPaaS the centre of their integration strategy overnight. They will still have the obstacles of an existing integration jungle and an industry-specific or company-specific system or two to integrate. There are many reasons why the corporate world still relies on conventional integration technologies. Abandoning them prematurely would not make economic sense.
Many larger organizations, for example, already have in-house ETL / hub and spoke / ESP platforms, alongside specially trained personnel for these. In other companies, the point-to-point integrations are still doing their job well enough.
Even iPaaS solutions sometimes need supplementing, for example with a stand-alone API management platform. You may also find that the connectors you need for new or niche SaaS applications are have not (yet) been developed. Essentially, you need to look at your IT ecosystem as a cohesive whole.
An iPaaS is a building block, albeit an important one, which must fit into the big technical and strategic picture long term. The result is often termed hybrid integration platform (HIP). As digital transformation continues to take root, iPaaS will most probably play an ever more significant role for many companies.
iPaaS usually becomes an interesting option once a company adopts or extends SaaS or other cloud services as part of a multi-cloud strategy. Equally, a company may decide to employ an iPaaS if they have several distributed systems on-premises, but their existing integration resources are outdated or just no longer up to the job.
If your integration strategy needs updating, it may be worth investing in an iPaaS straight away to future-proof it. Many iPaaS vendors offer solutions which also work on-premises. Another option is to split your budget between traditional integration technologies and an iPaaS as part of a hybrid investment strategy, in which some integrations are cloud-based and others kept on-premises.
In order to make an informed decision, you need to understand the iPaaS market. The following introduces different types of iPaaS providers.
Large, globally recognised providers have a strong incentive for enterprise iPaaS to be their core business. Their size already allows them to provide services of consistent quality at high volume, and they will benefit from the economies of scale further customers create. Although some providers offer some domain-specific iPaaS services in their service portfolios, these are generally a relatively minor part of their overall strategy.
Unlike the large iPaaS providers, many start-ups and young companies focus on providing an iPaaS and related tools for a single domain, or even a sub-domain. This gives them the chance to compete against the major market players in long term. However, there is a risk that even successful smaller iPaaS providers may be bought out or taken over. They would be an ideal acquisition for a large IT company looking to expand its portfolio in a certain direction. You need to be aware of this risk when planning your long-term integration needs.
There is a third group of iPaaS providers often consisting of mid-sized yet long-established companies. They have often been active in the market for decades and have a background in services related to iPaaS. This extensive experience in related integration technologies and processes is a huge advantage for the customer as it means their consulting services are more mature than those offered by start-ups yet more individualised than those offered by large corporations. They are a safe choice for both enterprise iPaaS and more specific iPaaS needs.
The complexity of your corporate strategy will have a major impact on your integration strategy. Essentially, the greater the range of SaaS services and the more you need to connect from outside the company, be these customers, suppliers, companies, or partners, the more you will benefit from a multi-cloud strategy and an iPaaS.
Naturally, the more points that need connecting, the more applications, protocols, and data formats there will be to convert and integrate.
Imagine the integration needs of a multinational corporation consisting of several individual companies that not only need connecting to the parent company but also to each other.
Or how about the classic supply chain? In retail, and even more so in the automotive industry, this often stretches across national borders and consists of several levels. It can easily involve several hundred or even several thousand suppliers. A supply chain depends on an intensive exchange of electronic messages between the various actors to keep it moving. Of course, these all need integrating into a digital ecosystem.
These days, every larger company is already using integration technology to a certain extent. In many cases, this is an integration platform operated on-premises.
Once such a company notices that their in-house integration solution is no longer meeting their needs, this is the perfect time to enter iPaaS world. You don’t need to replace everything at once. If you just adopt an iPaaS for your new integration needs, this gives you a perfect opportunity to try it out and compare it to what you already have. In today's digital world, it is never too early to start securing a strategy for inevitable cloud or SaaS integration.
Many small and medium-sized companies are still using point-to-point connections to integrate systems. You need to act before an organisation starts spending as much time on managing their IT as their core business. It’s also become clear that the cloud, which includes SaaS, is now playing a prominent role in today’s corporate world. Companies need to be considering how to integrate these offerings into their IT. If you also require B2B data exchange, then it’s really time to start looking closely at an online integration platform.
Consider your users when choosing how to integrate an element into your IT. What are their skills like? For a simple case like integrating a travel expense SaaS into an HR package, you may find that this can be done by a citizen integrator.
However, it often makes sense to have experienced IT specialists on hand to offer ongoing support to citizen integrators. In the long term, this will ensure fewer data islands and better data security, including proper compliance with data protection laws.
There are also complex cases where you will definitely need a team of experienced software developers. These include niche or highly individualized cases; integration scenarios that involve high volumes of data, and integration within a highly regulated industry, such as financial or healthcare. In these cases, you would also benefit from the consulting services offered by a potential iPaaS partner to ensure the success of your cloud integration long term.
Every company will find that their integration needs change over time. One of the drivers of this change process is digitalisation, which will have a lasting impact on every industry and every company.
Some industries are more innovation-driven than others, making them more subject to change. Another driver could be changes within the company itself, whether this be a change of direction, introducing new products and services, or M&A activities.
You need to consider how your company may change in the future when choosing an iPaaS provider. The best way to protect your investment is to find an iPaaS provider who offers good overall flexibility and forward-looking products, with whom you can envisage staying with long term. If you later discover you've made the wrong choice, selecting and switching to a new provider can be very costly. In addition, this may involve rethinking your entire cloud integration strategy.
Answering the following questions will help you decide whether an iPaaS provider is right for you:
You now have the information you need to make an informed decision. What is iPaaS? How does it work? How does the market work? And when does an iPaaS solution make sense for my company?
You can now begin developing and implementing your cloud integration. We also recommend conducting a proof of concept (POC) with your chosen provider, to ensure that what you want to accomplish with your iPaaS is possible with what they offer, both now and long term. Contact us to discuss your needs, using the form below.
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