Published: 15 July 2024
Contributors: Tasmiha Khan, Michael Goodwin
SaaS integration is the process of connecting software as a service (SaaS) applications with other applications and systems, whether cloud-based or on-premises.
SaaS integration enables applications to request and share data seamlessly, driving workflow automation and enhancing functionality across various business processes.
SaaS is a cloud-based software delivery model in which service providers host applications and make them available to customers over the internet. Users can access these applications on demand without needing to install or maintain the software on their local devices. The SaaS provider hosts the application in the cloud and manages all underlying infrastructure, security and updates.
SaaS applications bring the benefits of rapid deployment, minimal management expenses and predictable costs to businesses of all sizes, from startups to large global organizations. SaaS solutions are typically subscription-based and offer scalability, automatic updates and accessibility from any location with an internet connection. This helps organizations focus on core operations while using cutting-edge technology without heavy upfront investments in infrastructure.
These advantages have made SaaS the dominant software delivery model today and fueled SaaS adoption across all industries. Customer relationship management (CRM) systems such as Salesforce and HubSpot, collaboration tools such as Microsoft 365 and Slack, and enterprise resource planning (ERP) solutions such as those from SAP and Oracle exemplify the integral role SaaS applications play in modern businesses.
This ubiquity underscores SaaS's role as a transformative force in modern business operations, driving efficiency, flexibility and innovation across diverse sectors. The incorporation of artificial intelligence (AI), machine learning (ML) and Internet of Things (IoT) devices has helped strengthen these tools and drive their adoption. Industry analyst Gartner forecasts global SaaS expenditure to grow 22% to total USD 295 billion by the end of 2025.1
SaaS applications offer numerous benefits, but their value to organizations depends on effectively mitigating the accompanying challenges and risks. As IT environments grow increasingly complex, they introduce new challenges such as fragmented workflows, data silos and compatibility issues with existing systems. SaaS integration helps organizations address these issues. It facilitates the seamless connectivity and data flow across disparate applications and systems needed for business process automation.
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SaaS integration works by using application programming interfaces (APIs) to enable the exchange of information between a SaaS application and other enterprise applications and systems. An API is a set of rules and protocols that enables software applications to communicate and exchange data, features and functions.
APIs work by first authenticating applications before authorizing any data transfer. Data is typically exchanged using standard formats such as JSON and XML. While some SaaS applications update in real time, providing immediate synchronization and data updates as changes occur, others rely on batch processing. Batch processing involves accumulating data over a set period and then sending it in bulk at scheduled intervals.
SaaS integration can be thought of as the interconnected network of roads in a city. Each building in the city represents a different application or system, each with its own specific function and purpose. The roads—the APIs in this analogy—connect these buildings, enabling vehicles (data) to travel smoothly from one place to another. Without these roads, each building would operate in isolation, unable to share resources or communicate effectively.
The network of roads enables information to flow freely between buildings, much like SaaS integration facilitates seamless data exchange and coordination between different software applications. This interconnected infrastructure is essential for the city's overall function, just as SaaS integration is crucial for enhancing workflow automation and boosting productivity across various business processes.
Most SaaS applications publish their own APIs that are ready to use, or are compatible with common API types such as REST APIs. In some cases, particularly in more complex systems, additional programming and configuration might be required to integrate a SaaS application with existing applications and systems.
By integrating SaaS applications, teams can create stronger, more efficient workflows, better leverage automation, minimize manual data entry (reducing human error) and derive more value from application data.
There are several ways organizations can integrate SaaS applications, each providing distinct advantages and features.
Connecting applications through methods such as custom development or point-to-point integrations is labor-intensive, inflexible and costly. As organizations increasingly adopt hybrid and multicloud environments, along with a growing number of SaaS applications, the need for an integration strategy that is better suited for such complexity grows more critical. iPaaS solutions are designed to address this need and aid organizations in digital transformation.
An iPaaS platform is a centralized hub that standardizes data flows between applications and streamlines business processes. iPaaS solutions typically offer a suite of templates and prebuilt connectors that reduce the complexity and time required to connect applications and systems. iPaaS platforms also offer low-code and no-code tools in the form of intuitive visual interfaces and drag-and-drop modules that enable nontechnical users to build and manage integrations.
iPaaS solutions can be used to automate tasks such as syncing orders and inventory between e-commerce platforms and CRMs and to connect multiple data streams with ERP software. Furthermore, an iPaaS solution can trigger automated actions, such as sending an invoice upon project approval or dispatching technicians or support to affected customers during service outages.
iPaaS platforms can also handle critical integration requirements such as data delivery acknowledgment and data governance, eliminating the need for companies to develop these capabilities in-house. The result is a more connected enterprise that is better positioned to take advantage of automated business processes. With iPaaS solutions, organizations don’t have to build their own integrations. However, technical expertise is still needed to troubleshoot issues with iPaaS platforms.
Embedded iPaaS presents another solution. With embedded iPaaS, SaaS companies offer integration capabilities directly within SaaS products. EiPaaS services facilitate customer-facing integrations between third-party applications and a vendor’s platform, so that customers can link their apps with the vendor’s services. With EiPaaS, clients can build and deploy their own integrations within the provider’s software, or vendors can build integrations on the client’s behalf and allow them to choose which integrations to adopt.2
Robotic process automation is a technology that uses software bots to automate repetitive tasks otherwise performed by humans. In the context of SaaS integration, RPA can automate data extraction, manual data entry and other routine tasks across multiple SaaS applications. RPA tools are particularly useful for integrating legacy systems with modern SaaS apps, reducing the risk of human error and freeing up employees to focus on more strategic activities.
For example, in human resources, RPA can be used to collect and sync new hire information across different platforms. An automated bot can be used to input employee information, complete necessary forms and update employee records within the HR system, distribute onboarding materials and access request forms, send introductory emails and other tasks. Such automations can contribute to a smooth and efficient onboarding experience without the need for manual intervention. While implementing RPA can save time, bot workflows can fail following application updates or user interface changes.
A custom SaaS integration strategy avoids third-party involvement and relies on in-house developers to build and maintain integrations. Custom integrations offer a high level of flexibility and customization. For this reason, businesses that need specific functions that standard app integrations do not offer often must rely, at least in some degree, on custom integration. This method can also be suitable for organizations with limited integration needs, where custom integration demands won’t become prohibitively expensive.
However, developing custom API integrations for many SaaS applications can be complex, time-consuming and expensive for enterprises that work with many SaaS applications and on-premises systems. The process often involves multiple rounds of development and testing to achieve proper data flow. Maintaining and updating custom integrations over time can lead to technical debt and costly revisions, challenging scalability and flexibility for future growth.
Middleware integration is the use of intermediary software that connects SaaS applications and on-premises systems. Middleware solutions include enterprise service bus (ESB) tools and iPaaS platforms that connect all components in a tech stack. Traditional middleware solutions are often expensive to acquire and need specialized knowledge to implement and manage effectively, which is becoming increasingly rare. iPaaS is a cloud-based type of middleware designed for SaaS applications and modern enterprises and is generally considered an upgrade from more traditional middleware solutions.
Enterprises across all industries are adopting SaaS integration strategies to simplify connectivity and automate business processes within their IT environments. Common SaaS integration use cases include:
Organizations can integrate platforms such as HubSpot and Microsoft Dynamics 365 to enable the automatic transfer of leads. When a lead is captured in an automated HubSpot marketing campaign, it automatically gets added to Microsoft Dynamics 365 for follow-up by the sales team.
Integrating transaction data from e-commerce platforms such as Shopify with ERP systems such as NetSuite enables the automatic synchronization of orders, inventory and customer data. When a customer places an order on Shopify, Shopify sends the corresponding data to NetSuite, with real-time updates on pricing, inventory and shipping reflected in Shopify and other integrated applications and systems.
HR teams can implement RPA automation solutions in their HR software to sync data entry and automatic actions between HR software and internal systems.
SaaS integration provides numerous benefits, including seamless data integration, automated workflows, improved scalability, unified analytics, cost savings and efficiency gains and a stronger ROI on SaaS investments.
SaaS integration enables smooth and accurate data flow between business applications. This helps minimize errors and provide real-time updates across all endpoints.
SaaS integration solutions facilitate the creation of workflows across multiple applications and systems (whether cloud-based or on-prem), reducing the manual processes and repetitive tasks employees must complete.
When an e-commerce platform, CRM platform and data analytics dashboard are all connected, a sales rep can get all the information they need on a particular customer, without having to check multiple applications or rely on other employees to manually migrate or enter data. Better yet, if these applications are all integrated with internal machine learning workflows, organizations can extract sharper insights from data.
Selecting the right integration strategy enables businesses to quickly adapt to market changes and new opportunities by integrating new tools and applications.
SaaS application integration enables organizations to connect ERP systems with other on-prem and cloud-based applications and systems. This unified environment provides businesses with a more comprehensive view of the business and a more complete data set. With this, organizations can extract actionable insights from integrated data that support strategic planning and informed decision-making.
A successful SaaS integration reduces IT overhead by lowering the need for extensive IT support and custom development, while also improving productivity by reducing the time spent on manual tasks.
SaaS application integration helps maximize ROI by enabling businesses to take full advantage of the functions these applications provide. By creating an integrated application ecosystem, organizations can enhance collaboration, streamline workflows and be more productive.
While SaaS integration offers numerous benefits, it also presents certain challenges:
With the rise of cyberattacks and data breaches, securing data and meeting regulatory requirements such as GDPR and HIPAA (links reside outside ibm.com) is more critical than ever. Robust encryption, strict access controls and regular security audits are necessary to maintain compliance and protect sensitive information when integrating SaaS applications.
Complex IT architectures using many SaaS applications can pose significant challenges to a SaaS integration strategy. Custom development is often required to bridge gaps between incompatible applications and systems, while specialized technical expertise is often needed for effective implementation and management. Organizational structure and complexity are important factors to consider when business leaders are choosing an integration solution.
Synchronizing large datasets in real time between multiple systems can sometimes cause performance issues. Latency can result in slower response times and reduced efficiency in system interactions, which can significantly disrupt user and customer experiences.
IT teams must regularly update integration flows to make sure they remain functional when underlying applications are updated. Careful planning is needed to manage downtime during updates and minimize operational disruption.
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Footnotes
1 “Gartner Forecasts Worldwide Public Cloud End-User Spending to Surpass USD 675 Billion in 2024” (link resides outside ibm.com), Gartner, 20 May 2024.
2 “What is iPaaS”, Chrystal China, 10 July 2024.