For years, the standard objections to deploying CRM applications via the Software as a Service (SaaS) or on-demand model were threefold: security, uptime and integration.
In recent years, two of those concerns have been addressed. Enterprise companies like AMD and Merrill Lynch have signed on to on-demand CRM, showing confidence in the model, and smaller companies have come to the realization that SaaS vendors have more resources to commit to security, helping on-demand CRM to clear the security hurdle. Additionally, a well-publicized outage of Salesforce.com in December 2005 led the company to create a website dedicated to monitoring system uptime and motivated many customers to work system availability into their standard licensing agreements, answering some of the reliability concerns.
Integration remains an issue with buyers, however.
"It's probably their primary concern," said Jeff Kaplan, managing director of Wellesley, Mass.-based THINKstrategies. "Now that they've recognized security, privacy and reliability are not as big an issue as they originally thought, the issue becomes how do they integrate the SaaS products with on-premise and other SaaS applications."
On-demand integration not as hard as some think
The rise of third-party integration vendors offering SaaS integration, as well as the SaaS CRM vendors maturing and bolstering their own integration capabilities, has helped to assuage some of those integration concerns. Also, some companies have found that they didn't need to do as much integration work as they thought.
"That still is the weak point, but it may not be as big a problem as you think when you get down to what you need to integrate with," said Bill Band, senior analyst with Cambridge, Mass.-based Forrester Research.
Some CIOs are finding that -- particularly when it comes to sales force automation -- there's not as much integration to do, and the requirements aren't as complex as they had feared, Band said.
"The SaaS players have added more integration interfaces to their offerings, so -- as more people are getting to Web services and SOA types of architectures -- that lends itself to being able to pass data more easily," he said. "Clients are also adopting more modern architectures. The vendors are offering stronger interfaces, and there are these emerging solutions that are being plugged in between. The market seems to be starting to connect the dots together."
United Way asks for help with its CRM integration project
Integration was a major concern for the national office of the United Way of America, in Arlington, Va., when it implemented Salesforce.com to track its constituents of 1,300 local United Way offices and major corporate partners.
"It was a big issue," said Michael Pinck, director of application management. "Before Salesforce.com, we were using a tool that lived here, and we had access directly to the data. We could integrate it with other systems, particularly our extranet and our public website. When we moved over to Salesforce, that was a big question: How do we keep up those connections?"
The answer at the time, and for the next three years, was for Pinck's staff to handle it themselves. Using Salesforce.com's APIs, the United Way managed its own integration between the CRM application and back office systems like Oracle, SAP, Microsoft SQL Server and DB2.
"Initially, we thought that we'd be able to just use the Salesforce.com API and do the integration ourselves," Pinck said. "We found that it was more time-consuming than [we] thought it would be."
While it had considered third-party integrators when it first embarked on the project, the United Way decided against that approach. In March 2007, its executives changed their minds and began using the Integrator product from N.Y.-based Bluewolf Inc. Integrator takes information on registrations, donations and volunteer work, captured through its website, and syncs that with Salesforce.com.
Market for third-party SaaS CRM integrators expands
A number of third-party integrators have emerged in recent years, including Bluewolf and Cast Iron Systems.
"There's a subset of systems integrators born and bred for SaaS," THINKstrategies' Kaplan said. "The systems integrators like Accenture, EDS and CapGemini are trying to play in this game as well, but they're facing the same challenges established ISVs are facing. Adapting to the on-demand world is very difficult. The size and scope of professional services is much smaller. They can't scale down."
The most common integration processes required are between billing and financial systems and CRM applications -- or data migration and cleansing from an older CRM system like ACT, Kaplan said. SaaS CRM vendors at first provided pre-built integrations like connectors into SAP R/3 but are now turning to third parties. For example, NetSuite, which already offers its own on-demand ERP product, has launched a NetFlex Applications program, and Salesforce.com provides on-demand integration tools from partners on the AppExchange. SugarCRM, which offers an on-demand version of its product, leverages open source for integration. Oracle touts its own middleware to integrate its products.
"The one advantage or disadvantage that Salesforce has is they have to integrate with other things," Band said. "Microsoft has native integration with Microsoft databases. It's not exactly the same thing, but it can talk to itself [more easily] than Salesforce can. In the case of Siebel, Oracle is investing a lot in this Application Integration Architectures to bring PeopleSoft, Oracle and Siebel together. That speaks to the desire from buyers who want to have solutions talk to each other more easily."
What in the past took an army of people months or years to address with a customized solution, now takes a small group of in-house and external experts only a matter of weeks or months, Band added.
"It's a natural outgrowth of bringing multiple applications together," Kaplan said. "With Web services, with APIs with the third-party tools, as well as the independent systems integration skills, these issues are very easily addressed."
However, United Way's Pinck encourages people to think carefully about the frequency with which they need to update their systems and the business rules.
"If changes are made in both systems at the same time, or nearly the same time, which change wins out?" he asked. "Is one system canonical and always wins, or does the last update win? This is particularly important when there is a lag in sending updates from one system to the other."