What is the integration domain
What you should know about iPaaS
"Integration Platform as a Service" means the integration of applications and data from the cloud and on-premises environments. With iPaaS, processes can be developed between applications without running the effort of an integration platform.
What exactly is iPaaS and how does it work? What are the pros and cons of iPaaS? What types of iPaaS providers are there? And most importantly, how do you find the right iPaaS solution for your company? Learn everything about iPaaS here.
1. What is iPaaS?
iPaaS stands for Integration Platform as a Service. With the help of this cloud solution, companies can network data, applications, processes and systems cleanly, uniformly and clearly. IT and business processes can be linked seamlessly and operated without interruption.
One aspect that is repeatedly emphasized in the relevant specialist and marketing literature is that iPaaS greatly simplifies the integration work and makes it generally accessible. Company employees who want to take on integration tasks therefore need little or no programming knowledge. The new role is embodied by the so-called Citizen Integrator. In practice, however, this requires a differentiated approach.
iPaaS is a coordinated collection of cloud services that ensures that data, applications, services and processes work together largely automatically, both within a company and between organizations.
Data integration: challenges posed by digitization and cloud computing
The age of the Internet and increasingly complex business processes are causing data, applications and services to explode. Increasing cloud computing has given this development another powerful boost. In addition, applications become obsolete much faster today and are changed at ever shorter intervals; It is not uncommon for the existing software to be operated temporarily alongside the new one.
This has led to more and more data being stored in distributed systems. When data is stored in different systems and in different formats and cannot be exchanged, data silos arise. This makes smooth cooperation considerably more difficult: within the departments, between the departments and between companies.
Increasing data islands favor the use of iPaaS
Many companies still have legacy applications that are directly integrated with the other software. These point-to-point connections between applications have increased even further as a result of digitization.
Over time, a so-called spaghetti architecture developed. This not only makes further integration work very complex, it also becomes much more difficult to find faults and to eliminate them. Especially when employees who carried out the original integration work leave the company.
The result is a large number of scattered databases, which make smooth cooperation between and within the departments more difficult. Traditionally, attempts have been made to meet such challenges through integration approaches such as Extract, Transform, Load (ETL), Hub-to-Spoke Integration or Enterprise Service Bus (ESB). These integration processes still play a role today. However, because they are rooted in an on-premises world, they have limited support for cloud connectivity, even if newer versions are getting better and better. This is where iPaaS comes in.
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2. How does iPaaS work?
With iPaaS, a provider provides an integration platform in the cloud. This makes a complete IT infrastructure including tools for integration work available online. The provider is also responsible for maintenance work, updates, upgrades, security and reliability of the platform.
Companies that use iPaaS are therefore only responsible for developing processes, mappings and configurations. This enables them to concentrate on their actual know-how. In addition, almost any applications, services and databases that are provided by third-party providers can be connected to ERP or CRM systems.
Alternatively, the ERP or CRM system itself can be included in a comprehensive network. For example in a hybrid integration platform (HIP) of a multinational company with branches, subsidiaries and an ecosystem of customers, suppliers and other stakeholders.
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3. What types of iPaaS providers are there?
As long as the term iPaaS is only vaguely perceived, one is inclined to largely equate all market offers. However, a closer look reveals that iPaaS providers of different sizes with services of different depths share the market.
From the point of view of business customers, iPaaS providers can be roughly divided into those who try to address the broadest possible range of customers with their services. The possible use cases are aimed at small companies and start-ups as well as large international companies. These iPaaS providers are often large and well-known IT groups.
There are also service providers who have specialized in niche needs - also known as domain-specific iPaaS. An example of a domain-specific iPaaS use case would be the reporting of internationally traded goods that have to meet national legal requirements to national customs authorities (e.g. the EDI Service for SAP GTS).
Many of the domain-specific iPaaS providers are smaller companies or startups. In practice, however, the boundaries are often fluid and many iPaaS service providers try to cover more than one spectrum.
Larger medium-sized companies that have a background in iPaaS-related services can be divided into another category of iPaaS providers - e. B. Integration of on-premises systems or B2B integration. Over time, some of these companies have added both enterprise and domain-specific iPaaS solutions to their service portfolios. They are continuously expanding their range and depth.
The number of nationally and internationally active iPaaS providers is now likely to be in the lower three-digit range and will continue to grow.
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4. iPaaS market: yesterday, today and tomorrow
iPaaS in its current form is already over a decade old. The emergence and development of this integration process are closely linked to the growth of cloud computing and SaaS.
iPaaS: The first providers were dependent on partnerships
When the first SaaS providers came onto the market, their customers needed help to integrate the cloud-based software with each other and into their existing IT landscapes. The first iPaaS providers saw an opportunity here. They approached SaaS providers and offered them partnerships.
As a result, iPaaS providers benefited by not having to acquire customers. The SaaS providers gained by being able to reduce the effort for the connection projects or even to delegate them completely. This created a win-win situation that served as a catalyst for the growth of both market participants.
iPaaS is thriving: Large software manufacturers are taking over the helm
Due to the increasing complexity, iPaaS approaches have evolved. New areas have emerged: z. B. Cloud-to-Cloud or IoT-to-On-Premises; iPaaS-supported EDI was also added. As a result, large software manufacturers such as SAP, Microsoft and Oracle began to expand their SaaS services more strongly.
After working with iPaaS vendors for a while, they bought them out or developed their own iPaaS solutions. The focus was: The major software providers wanted to closely combine their own cloud solutions with their on-premises solutions.
Large providers have another advantage: They can scale through their partners or the huge customer base. However, the integration of external systems remains problematic with these approaches. That was, among other things, the reason why numerous other iPaaS providers have emerged in recent years. Many of them focus on niche needs. The domain-specific iPaaS providers mentioned above fall into this category. The market is therefore hotly contested.
iPaaS: Market development & provider selection
Often times, when a market has greater growth potential, a few large vendors try to secure the lion's share; many smaller ones, however, occupy the niches. The smaller iPaaS providers have very specific knowledge - often limited to one domain or even subdomain. There are also iPaaS providers who position themselves somewhere in between.
As SaaS and other cloud services continue to grow, the market for integration services remains attractive. That is why many such providers are currently pouring into this market to get a piece of the pie. Experience has shown that such a development culminates in oversupply, after which the trend is reversed - until equilibrium is reached.
It is therefore likely that many iPaaS vendors - especially smaller ones - will be bought out, changed their focus, or given up their business. This fact is of great importance when choosing an integration partner: Strategic uncertainty and potential switching costs come to the fore here. Mappings, workflows and configurations that have been set up with one iPaaS provider can often not easily be transferred to another.
Companies should therefore carefully consider these questions before choosing an iPaaS partner. The subject is explored in more detail in Chapter 10, which deals with Choosing the Right iPaaS Solution.
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5. iPaaS & integration scenarios
The strength of iPaaS lies in the ability to combine a large number of data, applications and processes in almost any way and to integrate them across different operating environments. The most important operating environments or integration domains are:
Integration scenarios at the application level form the main area of activity of iPaaS. The primary aim here is to synchronize data between applications as promptly as possible; this supports or enables a business process or other operation. The data exchange process is often triggered by an event (e.g. a customer order) or by a regular process (e.g. daily data synchronization).
Another special feature of the iPaaS-supported application integration is that data is mostly exchanged via modern web APIs. APIs are usually configured in such a way that they can only serve a limited number of calls. This must be taken into account, especially with large amounts of data and frequent queries; otherwise the susceptibility to errors of the integration points can increase. With iPaaS it is possible to master these challenges.
Application integration is also of the utmost importance because today's applications have to work more and more with other applications and services. For example, data moves between applications every time companies add a new employee, partner or customer. Another example: SAP S / 4HANA users can connect to external business partners via APIs, e.g. to transfer orders, invoices, etc.
In addition, the applications not only work with different data formats, but also with different business logic. Well-planned and implemented integration processes ensure that all processes run smoothly and support the business goals in the best possible way.
Processes ensure that data and applications work together in such a way that a company's business goals are efficiently achieved. Here iPaaS is well suited as a control center. Mappings, configurations and workflows can be developed; they route the right data in the right formats at the right times between the relevant applications.
In other cases, the processes to be integrated are already prefabricated and only need to be combined into a process chain. An online order that consists of several coordinated processes could serve as an example.
Process integration is also important in larger cross-company contexts: It extends from the end customer to the first supplier or service provider in the value chain. If processes are not sufficiently coordinated with one another, business goals are sabotaged - even if individual applications and processes function correctly. With the help of the tools and services that online integration platforms make available, individual processes can be combined into coherent and efficiency-increasing process chains.
B2B process integration also plays an important role here. Specific data is exchanged automatically, quickly and reliably with customers, suppliers and partners. An example of this is Electronic Data Interchange (EDI). This means that invoices, delivery notes or orders can be exchanged automatically between companies, among other things.
In contrast to traditional EDI approaches, data via iPaaS can not only be transferred asynchronously in a batch process, but also in real time thanks to API integration. In addition, the time guaranteed in the SLAs (Service Level Agreements) for setting up EDI connections is often reduced from days to a few hours or even minutes.
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6. iPaaS vs. other integration approaches
iPaaS is a newer integration method. Other integration methods have traditionally been used. They still have a meaning today.
Point-to-point integration between applications
With point-to-point integration between applications, each application communicates directly with the other. Young companies or established companies that want to take on new tasks or try out new fields of activity often make extensive use of this in the beginning. As long as the number of corresponding applications remains manageable, this can be an acceptable solution.
However, as the number of integration points increases, it is easy to lose track of things. As a result, effort and costs increase rapidly: The connectors for each new point-to-point connected application usually have to be programmed individually. After updates or upgrades, extensive adjustment, maintenance and testing work is required.
This is a major challenge for in-house IT. The advantages of iPaaS solutions that rely on cloud-based technologies, can be centrally managed, enable the use and management of modern web APIs and offer many ready-made connectors are obvious here.
ETL / Hub-to-Spoke Integration / ESB
Other well-known approaches aimed at on-premises integration are Extract, Transform, Load (ETL), Hub-to-Spoke Integration and Enterprise Service Bus (ESB). The difference between ETL and ESB is fluid, but in general ETL is more associated with moving and processing larger amounts of data, especially master data, and ESB with near real-time data processing.
In the hub-to-spoke model, the connections between applications and services are handled by a central broker - the hub. The spokes that connect the hub to the apps and services can be serviced individually. This allows the applications themselves to be more focused, with all types of integrations being handled via the hub and the spokes. The main disadvantage of this approach is the centralization of the hub, as it becomes a single point of failure for the system and your infrastructure communication.
When using these approaches, applications are not integrated directly, but rather through an intermediate layer - this makes them fundamentally similar to iPaaS solutions. Modern versions of these technology bundles are also increasingly capable of SaaS integration and other cloud-based integration processes.
However, ESB and ETL were mainly developed for on-premises integration scenarios. This is also the reason why they will always lag behind high-quality iPaaS solutions when it comes to providing cloud connectivity and only support relatively simple SaaS scenarios. Their biggest disadvantage compared to the cloud-based iPaaS is the low scalability.
It should be noted, however, that ETL / Hub-to-Spoke Integration / ESB and iPaaS do not have to be mutually exclusive in practice; rather, they can often be operated in a meaningful way with and next to one another. Larger international companies in particular with diverse integration needs should benefit from the use of both methods.
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7thDisadvantages of iPaaS
Of course, iPaaS also has some disadvantages. They are not necessarily limited to iPaaS, but because of their scope they play an important role in making a sustainable decision.
General inadequacies of iPaaS are the inadequate support of very specific functional requirements and the difficult search for a suitable provider.
Little scope for very individual requirements
Solid iPaaS solutions can already cover many integration scenarios. The number of use cases supported is constantly increasing. In practice, however, there will always be use cases for which the iPaaS market does not offer an answer. This can be due to the fact that the required solution is technically too individual or not (yet) economical from the perspective of the iPaaS provider.
Traditional integration methods such as B. ETL / Hub-to-Spoke Integration / ESB or direct connections between applications can therefore make more sense here. Nevertheless, it is worthwhile to carefully check the range of iPaaS solutions available beforehand. Practical experience shows that in many cases a suitable solution is available more often than is generally assumed. Under certain circumstances, it can be profitably combined with existing local integration resources.
Complex integration needs require technically competent staff
Citizen Integrators are getting a lot of attention in connection with the iPaaS discussion. They certainly deserve their place, but in the long term they will often only be the tip of the iceberg when it comes to integration tasks. The fact is that by far not all integration processes can be implemented sustainably using drag & drop and point & click.
Relevant and advanced software or IT skills are very often required for this. Because many corporate tasks are becoming more and more complex due to increasing market, compliance or regulatory requirements, little will change in this in the foreseeable future.
In addition, the majority of Citizen Integrators are busy solving the immediate and pressing problems of their departments. As a result, the overall strategy quickly disappears from view and, over time, additional data islands form within the company.
Experience has shown that these island solutions consist of many poorly cobbled together solutions and abandoned construction sites. A competent IT team is required to bring order back into the situation that has arisen.
One possibility to prevent this development is to provide the Citizen Integrators with professional support right from the start. These tasks could be taken over by internal IT / software specialists or by an iPaaS provider who provides the appropriate specialist staff. Indeed, a rethinking has recently been observed in many companies, which has led to the fact that the budgets are increasingly moving back into IT.
Confusing wide range of providers
Another disadvantage of iPaaS is the now confusing number of providers. They often differ in their range of services and focus. Some try to cover as many use cases as possible, others pursue a domain-specific strategy.
In addition, on comparison portals and in the specialist press, providers of conventional integration processes who have only supplemented their solutions with SaaS connectivity are sometimes lumped together with full-fledged iPaaS providers. For newcomers to the subject, this contributes to confusion and makes it difficult to decide on the right iPaaS provider.
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8. Benefits of iPaaS
The advantages of iPaaS can be summarized as follows:
Cost savingsWith the increasing spread of SaaS applications, conventional integration methods quickly reach their limits and expensive workarounds are necessary. iPaaS offers a cheaper alternative.
ScalabilityScalability is a strength of iPaaS. For example, when companies conduct mergers and acquisitions, an iPaaS solution effortlessly connects the company's IT both with each other and with the parent company.
Central management of integration flowsAnother benefit is the fact that iPaaS tools and services can be managed using the same user interface, similar to a control panel.
AvailabilityThe availability of iPaaS systems guaranteed by SLAs is in many cases 99.99% or higher.
User-friendly operation and regular updatesModern iPaaS solutions also beat traditional ETL / Hub-to-Spoke Integration / ESB approaches when it comes to user-friendliness.
Integrated multi-tenancyThe multi-tenancy enables a clean separation of the processes without having to set up a separate "physical" environment for each application. This enables the customer to separate different business areas and their integration scenarios or even just to separate development, test and production environments.
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9. iPaaS as part of a long-term integration strategy
A good iPaaS solution already covers a large number of use cases in today's business world. In many cases it can therefore form the heart of a modern integration strategy and, in the best case scenario, largely meet a company's integration needs.
However, many companies will not be able to put iPaaS at the center of their integration strategy overnight. Special integration needs and established integration structures stand in the way, which require careful handling. For one reason or another, the corporate world still relies on traditional integration technologies. To give it up too quickly would often be uneconomical.
For example, many larger organizations have in-house ETL / Hub-to-Spoke integration / ESP platforms and specially trained specialists. In other cases, the direct integration points between on-premises applications should continue to be operated for a while because they still perform their service adequately.
IPaaS solutions also sometimes have to be supplemented, for example with an independent API management platform. Or the necessary connectors for new or highly specialized SaaS applications are (still) missing. Here it becomes clear: the big picture or the resulting ecosystem must work together successfully.
iPaaS plays the role of a building block, albeit an important one, which has to fit into the bigger picture in the long term, both technologically and strategically. The resulting ecosystem is sometimes referred to as a hybrid integration platform (HIP). Because the digital transformation is taking ever deeper roots, it is to be expected that the importance of iPaaS within this expanded ecosystem will increase significantly in many companies in the long term.
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10. The right iPaaS solution for your company
What is the reason for iPaaS?
iPaaS usually becomes interesting as soon as SaaS solutions and other cloud services are introduced on a broad basis in the company. Another entry option is when there are many distributed systems on-premises, but the existing integration resources are outdated, unsatisfactory or inadequate.
Here it can be worthwhile to invest in an iPaaS solution right away and thereby make the company's integration strategy future-proof. Many iPaaS providers also have solution options that can be operated on-premises. In addition, the budget can of course also be split between conventional integration technologies and iPaaS - as part of a hybrid investment strategy.
What should be considered when choosing an iPaaS provider?
Background information about different categories of iPaaS providers can be important for a sustainable decision. Some of them are highlighted below.
How diversified is the corporate strategy?
The complexity of your own corporate strategy will have a major impact on the integration strategy. Basically, the following can be said: The greater the range of the various SaaS services and the more customers, suppliers, companies, partners or services that have to be connected from outside, the more iPaaS comes into question.
In this context, the number of different applications, protocols and data formats that have to be converted and integrated with one another is usually increasing. An example of such a use case is a multinational corporation that consists of many sole proprietorships that are intended to be linked to each other as well as to the parent company.
Another example is the classic supply chain, as it is often practiced in retail and even more in the automotive industry across national borders and at several levels. Several hundred to several thousand suppliers are usually involved in such a supply chain. The supply chain is controlled by the intensive exchange of electronic messages between the business partners involved, all of which have to be integrated into the digital ecosystem.
How good are the existing integration solutions?
Every large company already has extensive existing integration solutions that already cover the most important integration needs to date. Most of these solutions are based on in-house integration platforms that are usually operated by companies on-premises.
For these companies there is an inexpensive entry point into the iPaaS world as soon as there is a gap between the existing integration solutions and the actual needs. Even if there is only a supplementary need, this is a good opportunity to gain experience with iPaaS and to create comparative values with existing solutions.
For many SMEs, however, the direct connections between applications still predominate. At the latest when the organization spends the same or more time on the integration and management of data and processes than on the core business, there is an urgent need for action. Should the SaaS or B2B data exchange also play an important role, a detailed study of online integration platforms is advisable.
How demanding are the tasks?
The knowledge and qualifications of the users play an important role in the choice of the integration strategy. If the application is simple - for example, SaaS software for travel expense accounting is to be integrated into an HR module - the majority of the tasks can be taken over by the Citizen Integrators.
However, it often makes sense that the Citizen Integrators are supported by experienced IT specialists. In the long term, this can ensure fewer data islands and better data security, as well as protecting against conflicts with data protection laws.
Complex use cases, on the other hand, usually require a team of experienced software developers. Examples are highly individualized use cases or integration scenarios that involve high data volumes or are to be implemented in highly regulated environments - e. B. in the financial industry or in health care. Consulting services offered by a potential iPaaS partner can also be relevant in this context.
Can the solution keep up with the requirements in the long term?
In any company, integration requirements will change over time. One of the drivers of this change process is the advancing digitization, which will affect every industry and every company in the long term.
Some industries are more innovation-driven and more subject to change than others. Another driver is the changing individual situation of the company. This applies, for example, to major changes in business strategy - for example through new products and services or M&A activities.
These future changes must be taken into account right from the start when selecting the iPaaS provider. It is important to identify the iPaaS provider whose overall package shows the greatest flexibility and sustainability and offers the company adequate investment protection. If a decision turns out to be wrong over time, the subsequent search and switch effort can be very expensive.
Before you decide on an iPaaS solution, the answers to the following questions will help you narrow down your search:
Now you are armed with information about iPaaS - what it is, how it works, which scenarios make the most sense for an iPaaS solution, and some details about the market. With this information, you can start looking for vendors and determining whether an iPaaS solution is right for your business. It is a good idea to do a Proof of Concept (POC) with your chosen provider to ensure that what you want to achieve with your iPaaS now and in the future is also possible with their offering. Contact us to discuss your requirements using the form below.
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