! !

! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !

SaaS Integration Survey

2012 Trends Volume II February 2013

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

2012 SaaS Integration Survey | MuleSoft & THINKStrategies

Introduction
One of the fundamental promises of the cloud is the assurance that the burden of successfully deploying and maintaining applications shifts from the customer to the vendor. Customer expectations have shifted dramatically over the last few years, requiring cloud vendors to take on more burdens formerly held by end-users. The initial success of the SaaS industry to fulfill this promise has led to its tremendous growth, but also raises the bar for vendors to meet customers escalating needs and expectations. The following survey confirms that integration has become one of the additional responsibilities held by the SaaS vendors in order for them to be successful. Customers concerns about integration represent both a threat and an opportunity for SaaS providers. Failing to offer integration can impede sales and create customer support issues. Offering seamless integration capabilities can reduce sales friction, and increase customer satisfaction and open new market opportunities.

! ! !

2012 SaaS Integration Survey | MuleSoft & THINKStrategies

Executive Summary
A number of studies indicate that integration is a major obstacle among organizations of all sizes in the deployment of Software-as-a-Service (SaaS) and cloud solutions, but none have examined the integration 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 Cloud vendors to quantify how integration and the emerging need to build an ecosystem of integrations has impacted their success in a highly competitive marketplace. With a total of 210 respondents, this survey is uniquely focused on the key challenges faced by SaaS 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 in winning new customers. The SaaS vendors we surveyed also identified integration as the most timeconsuming element of customer implementation process. Most importantly, more than two thirds of the SaaS vendors surveyed view integration as a critical part of their SaaS solution. An area of concern for SaaS executives lies within an ecosystem strategy-- or lack thereof. Although ecosystems are growing in popularity (Only 30% of respondents indicated that do not have an ecosystem), very few companies are providing development, sales, marketing or support incentives for their partners. In addition roughly 40% of SaaS providers are developing integrations for their ecosystems in house. Worth noting are two year-over-year findings in this report. This year we saw higher participation by CEOs, Founders, VPs and Director level managers. This suggests the integration issues identified by our survey are gaining higher-level attention. In addition SaaS vendors are growing more dissatisfied with their existing integration solutions (Satisfaction with existing integration solutions decreased by 15% from 2011 to 2012). Our survey clearly shows that leading SaaS vendors must incorporate integration into their go-tomarket strategies in order to succeed in todays marketplace. In addition, SaaS ecosystem strategies are an emerging area of focus and potential growth for SaaS providers where integration can take hold. We believe that these results further validate using an integration platform-as-aservice (iPaaS) to create a repeatable and scalable path to market. This report discusses the findings of the survey and provides recommended steps for SaaS providers to respond to this market opportunity.

! ! ! !

2012 SaaS Integration Survey | MuleSoft & THINKStrategies

SaaS Integration is now an executive level concern

!
As the SaaS marketplace becomes more and more competitive, executives within SaaS organizations are looking for ways to optimize their go-to-market strategies. Integration has become a critical component across sales, marketing, services and support. Executives believe SaaS integration is a critical part of their application, more so that non-senior level management.
Figure 1: Which of the following best characterizes your company's attitude towards SaaS integration? !
+!"#

*!"#

)!"#

(!"#

'!"#

DE5;18?5# F07#DE5;18?5#

&!"#

%!"#

$!"#

!"# ,-#./0123#45#256#578952:#-0#-/5#;1.-0<59# =5#/>?5#>7#5;0.:.-5<#0@#A>9-759.#-0#B/C;/#B5# 95@59#;1.-0<59.# =5#?C5B#C-#>.#>#;9C8;>2#A>9-#0@#019#.021807#

! !! !

2012 SaaS Integration Survey | MuleSoft & THINKStrategies

Connectivity is extremely important to winning new customers

!
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 of what application category they compete in. Over ninety four percent (94%) of survey respondents view integration as either important or extremely important in winning new customers, with only 6% of respondents saying that integration is not at all important.
Figure 2: How important is the ability to integrate with other systems in winning new customers?

"#$

'()*+,+-.$/,01*)23)$ %&#$ !"#$ 4,01*)23)$ 51)$2)$2--$/,01*)23)$

2012 SaaS Integration Survey | MuleSoft & THINKStrategies

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

Figure 3: How common are the following sales hurdles in your sales conversations?

!! ! !

2012 SaaS Integration Survey | MuleSoft & THINKStrategies

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

!
Figure 4: What are the top 3- 5 applications or systems your customers need to connect to? Named Applications !
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

2012 SaaS Integration Survey | MuleSoft & THINKStrategies

!
Figure 5: What are the top 3- 5 applications or systems your customers need to connect to? Application Types !
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

!!

2012 SaaS Integration Survey | MuleSoft & THINKStrategies

Integration is the most time consuming part of implementation

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 SaaS application takes 2 weeks to 1 month, there is a clear time savings and accelerated time to value for the customer. For SaaS providers, incremental improvements in their time to live metrics can increase the valuation and growth of their business. Survey respondents indicated that integration or data import is the largest inhibitor (highly or somewhat time consuming) to getting their customers live.

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

=12+7,-341#5#.-2-#0/64,2#

89*2+/#:41;7<,-341# >07?@9#3/+#:41*</017# 84/+A?-2#3/+ :41*</017# B42#-2#-@@#3/+ :41*</017# )*+,#2,-01017#

)*+,#-./010*2,-341#5#6+,/0**041*#

!"#

$!"#

%!"#

&!"#

'!"#

(!!"#

($!"#

2012 SaaS Integration Survey | MuleSoft & THINKStrategies

10

Ecosystem strategies are still in their infancy

Integration to third party applications is critical to acquiring new customers, however very few SaaS providers 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 SaaS companies who do have an ecosystem are developing integrations in-house. The most common way survey respondents have incentivized partners in their ecosystems is through sales and marketing activities. In addition, only 20% of survey respondents are receiving a percentage of their partner ecosystem sales.

Figure 7: What characteristics best describe your ecosystem? Check all that apply.
($"# (!"# '$"# '!"# &$"# &!"# %$"# %!"# $"# !"# )*#+,-./0*#123*1# )*#9,*2;*#233#-:#;<*# ?@AB#)*#0-#4-;# )*#+,-./0*# 240#52,6*748# /4;*8,27-41#/4#-=,# <2.*#24#*9-1>1;*5# 1=++-,;#/49*47.*1# /49*47.*1#:-,# *9-1>1;*5# :-,#+2,;4*,1# +2,;4*,1# )*#+,-./0*# 0*.*3-+5*4;# /49*47.*1#:-,# +2,;4*,1# )*#,*9*/.*#2# C-#D*9-5*#2# +*,9*4;28*#-:#-=,# 5*5D*,#;<*,*#/1#24# +2,;4*,1#*9-1>1;*5# 244=23#:**# 123*1#

2012 SaaS Integration Survey | MuleSoft & THINKStrategies

11

Growing dissatisfaction with existing integration tools

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

Figure 8: Are you completely satisfied with existing SaaS integration solutions?
$!!"# ,!"# +!"# *!"# )!"# (!"# '!"# &!"# %!"# $!"# !"# %!$$# %!$%# -.# /01#

2012 SaaS Integration Survey | MuleSoft & THINKStrategies

12

Conclusion
Its time to think about your integration strategy Survey 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 integration may become a source of customer acquisition and top line revenue for SaaS providers in 2013.

Recommendations for SaaS Executives

Define Your Customer Integration Requirements Integration surfaces in many SaaS sales cycles as a question, Do you connect to my [insert third party application here]. Identify and quantify customer requirements to understand the scope of resources 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?

Outline The Market Opportunity Developing an ecosystem or providing integration as part of your service could significantly impact your Monthly Recurring Revenue (MRR), Customer Acquisition Cost (CAC), in addition to other top and bottom line SaaS growth metrics. Understanding the size of your connectivity market will help you 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 Integration Expert You can create connectivity to your application by either developing the integrations in house, or engaging with a vendor or service provider. Depending upon the complexity of the third party application and the resources you have available internally, one approach may align more to your Go-to-Market strategy over another. Simplify internal development and expedite post sale implementations using an integration platform as a service (iPaaS) Drive new business with packaged, repeatable integration offerings developed by a SaaS integration provider Grow your ecosystem by referring custom projects to System Integrators with expertise around a third party application.

2012 SaaS Integration Survey | MuleSoft & THINKStrategies

13

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)?

%#$

&"&$ &"'$

!"#$

2012 SaaS Integration Survey | MuleSoft & THINKStrategies

14

!
Figure 11: What best describes the function of your application?
F-2>A3<?# @/1E;</# 721D/3-0# 64>>2C41234-# +>2B419# @/<:1;.A# =;-2-<;2>?# 6499:-;<234-# 6*7# ,8#72-20/9/-.# 567# ,-./01234-# )*+# !"# $"# %"# &"# '"# (!"# ($"# (%"# (&"#

Figure 12: What is your job function?

(;A19#

C,+0)8-9#

?)97/199#@161A+*B1/-#

:;,<1=/>#

(1,67819#

.+)/01,2#345#

()**+,-# !"# $"# %!"# %$"# &!"# &$"# '!"#

2012 SaaS Integration Survey | MuleSoft & THINKStrategies

15

!
Figure 13: What best describes your role?
(%"!#$

(!"!#$

'%"!#$

'!"!#$

&%"!#$

&!"!#$

%"!#$

!"!#$ )*+*,-.$ /+012103*4$56+7.18376.$ 91.-:76.$ ;<-:3=2-$

2012 SaaS Integration Survey | MuleSoft & THINKStrategies

16

Founded in 2001, THINKstrategies, Inc. is the only strategic consulting firm focused entirely on helping its clients capitalize on the fundamental shift in the technology industry from product-centric to services-driven solutions, such as Cloud Computing, Software-as-a-Service and Managed Services. THINKstrategies helps IT/business decision-makers with their sourcing strategies; solution providers 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, vendorindependent, online directory and industry best practice resource center in the Cloud market, with over 1800 solutions divided into over 90 application, service, technology and industry categories in the 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.com www.thinkstrategies.com www.cloudshowplace.com

MuleSoft provides the most widely used integration platform for connecting SaaS and enterprise applications in the cloud and on-premise. With the rise of cloud and mobile, enterprises face a choice: get overwhelmed by the resulting explosion of end points or seize the opportunity to gain competitive advantage. Founded on the idea that connecting applications should not be hard, MuleSoft lets organizations harness the power of their applications through integration. MuleSofts Anypoint technology eliminates costly, time-intensive point-to-point integration, enabling business agility. Delivered as a packaged integration experience, CloudHub and Mule ESB are built on proven 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 of enterprises, 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.com Follow us on Twitter: @MuleSoft

! !
! ! ! ! ! ! ! ! ! ! !

"#$%&'()!*+,!)-%!"#$%&'()!$'.'!*/%!)/*,%0*/12!'(!"#$%&'()!3+45!6+!)-%!7+6)%,!&)*)%2!*+,8'/!')-%/!4'#+)/6%25!9$$!')-%/!:/',#4)!*+,!4'0:*+;!+*0%2!*+,!0*/12!0%+)6'+%,! 6+!)-62!,'4#0%+)!*/%!)-%!:/':%/);!'(!)-%6/!/%2:%4)6<%!'=+%/2!*+,!*/%!0%+)6'+%,!('/!6,%+)6(64*)6'+!:#/:'2%2!'+$;5!9$$!4'+)%+)2!>':;/6.-)!?!@ABCD!"#$%&'()!3+45!

2012 SaaS Integration Survey | MuleSoft & THINKStrategies

17