What You Should Know About iPaaS
An Integration Platform as a Service, iPaaS for short, is a range of cloud services. They let an organization create, use and monitor data streams without needing to operate their own integration platform. It connects processes, services, applications and data within an organization’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.
What Is iPaaS?
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.
How Does iPaaS Work?
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.
What Types of iPaas Providers Are There?
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.
iPaaS Market: Yesterday, Today and Tomorrow
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.
The first iPaaS providers
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.
2008 | Release of the first cloud-based integration platform with a subscription business model |
2009 | Gartner publishes its inaugural integration-focused Magic Quadrant https://en.wikipedia.org/wiki/Magic_Quadrant |
2011 | Gartner uses the term iPaaS for the first time Gartner Application Architecture, Development & Integration Summit |
2014 | Gartner releases its first MQ for the term iPaaS https://solutionsreview.com/cloud-platforms/gartner-releases-a-magic-quadrant-for-enterprise-integration-platform-as-a-service-ipaas/ |
2017 | iPaaS market starts to divide https://www.linkedin.com/pulse/ipaas-market-bifurcation-domain-specific-massimo-pezzini/ |
Source: https://lefthook.com/blog/ipaas-isaas-brief-history-acronymic-sin/
iPaaS is thriving: large software vendors are at the helm
As the IT world has become more complex, iPaaS approaches have evolved. New areas have emerged, including cloud-to-cloud, IIoT-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.
iPaaS: Choosing the right supplier in a dynamic 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 "Choosing the Right iPaas Solution for Your Organisation" on selecting the right iPaaS solution takes a closer look at this topic.
iPaaS & Integration Scenarios
Integration Domains
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:
Cloud-to-Cloud IntegrationTheir 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. |
On-Premises-to-Cloud IntegrationThe 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. |
Integration On-Premises-to-On-Premises
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 Patterns
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.
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 vs. Other Integration Approaches
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.
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.
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.
The Disadvantages of iPaaS
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.
The Advantages of iPaaS
The main benefits of iPaaS are as follows:
Using an iPaaS as Part of a Long-Term Integration Strategy
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.
Choosing the Right iPaas Solution for Your Organisation
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.
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.
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.
In order to make an informed decision, you need to understand the iPaaS market. The following introduces different types of iPaaS providers.
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Large, international IT concerns as 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.
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Start-ups or smaller IT companies as iPaaS providers
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.
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Established, mid-sized iPaaS vendors
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.
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.
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.
Answering the following questions will help you decide whether an iPaaS provider is right for you:
- How well does the provider’s range of existing connectors, services and tools fit your needs?
- How often are new connectors, tools and other resources added?
- How often are updates released?
- Does the solution support multi-tenancy?
- How extensive are the consulting services?
- How likely is it that the iPaaS provider can hold its own in the market for the long term?
- What level of availability does their SLA guarantee?
- How well does the deployment model suit your integration needs?