2015/2016 is seeing a shift in the business model of SaaS implementation partners. Some of them are moving from offering purely individual implementation and integration projects to adding integration as a service in form of integration marketplaces to their portfolios.
As it is with any other recent trends and shifts in SaaS industry, it is essential for SaaS implementation partners as well as their channel partners to understand the reasons behind these changes and outline the core strategy in order to be able to secure own market share.
In this article, I want to share what we’ve been observing working with various SaaS implementation partners and what are their recommendations for all others who would like to secure their own market share in one particular segment of small and medium-sized businesses (SMBs) that has been underserved.
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Ways SaaS make sure they are ‘connectible’
There is no need to repeat over and over again that cloud applications require integrations. The market has been educated well enough by now to understand that most applications are not built to play together, yet have low value when used as standalone solutions.
Create your own marketplace…
Quite a few ISVs have created their own integration marketplaces to address the integration issue. Think Salesforce’s AppExchange or NetSuite’s SuiteApp.com, although “slimmer” companies started following in SaaS dinosaurs’ footsteps too. For example, last year Slack and Hipchat launched their AppDirectory and Hipchat Connect respectively — the platforms on which other SaaS developers can build and offer integrations with these chat clients. In one of his recent articles, Clement Vouillon, research analyst at Point Nine Capital, even marked the launch of these platforms as a new trend and reasonably predicted that more SaaS solutions are likely to follow the example of Slack and Hipchat in 2016.
… and build a network of implementation partners
Still, an ISV can only provide integrations to an X amount of third-party SaaS, but there are thousands of customers with hundreds of integration requirements. An ISV will have to outsource this kind of work into experienced hands eventually, in order to be able to concentrate on its actual core business — developing the software, adding new features, fixing bugs, rolling out software updates.
This is where implementation partners like e.g. of Zoho CRM, SugarCRM or Odoo ERP, come into play. The partners would carry out implementation and integration projects for ISVs and at the same time, ISVs would receive a certain portion of the revenue.
And now exactly these partners — call them implementation partners, or channel partners, or integration partners, — start shifting their own business models in a similar way as Slack or Hipchat did. From offering ‘standalone’ implementation+integration projects towards launching self-service integration marketplaces. Now here is why.
Quite a few SMBs remain largely underserved
It is true that SaaS market is becoming increasingly competitive. I’d say that the market of horizontal SaaS is already saturated.
But the market of the implementation/integration partners is becoming more and more competitive too. Zapier has just launched its multi-step Zaps, services like Pipemonk are springing up like mushrooms after the rain.
Yet SaaS implementation/integration partners have one significant advantage: they have a profound knowledge of the systems they deal with. They have been implementing these applications for years, and integrating them with their end consumers’ existing systems has been an inevitable part of this job.
Fully customized integrations are above average SMBs budget
Historically, implementation partners has been serving mostly the segment of companies with a yearly turnover being considerably higher than $1 million. The reason is rather obvious: the costs for an average implementation + integration project alone would lie somewhere between $10.000-$30.000, depending on the complexity, features needed and integration needs. And these are often only initial costs. Smaller businesses have considerably less budget to spend on fully customized implementation and integration. They would rather adjust their business processes to the options already available to them on the market.
This leaves us with a segment of small and medium sized businesses (SMBs) that has remained largely underserved. These are the businesses with 50–200 employees. Big enough to need more sophisticated implementation+integration solutions, but not yet ready to spend a good portion of their IT budget on a full-blown customisation.
Self-service integration marketplaces might be the answer
Working with various system integrators, we have seen a general trend indicating that they are trying to find ways to secure a market share exactly in this underserved segment of SMBs. The reasoning behind it is simple: small and medium-sized companies would need to eventually outsource the largest part of their integration projects in order to dedicate their own IT resources to business-critical tasks.
There was one common solution that caught our attention. In order to reach the underserved SMBs, implementation partners need to standardize common integration scenarios and consequently produce them on a large scale in order to be able to offer them to a wider range of end customers at lower costs. Basically, for implementation partners this means scaling their experience in systems integration with the help of self-service integration marketplaces.
At the same time, this enables system integrators to offload a considerable amount of workload that occurs due to repetitive integration scenarios.
A self-service integration marketplace is, therefore, a win-win situation for both B2B end customers and SaaS implementation partners alike.
“Mass-production” of integrations through a uniform infrastructure
One of the main challenges implementation partners face when starting a new project is the client’s infrastructure. The infrastructure per se doesn’t play any significant role, but the fact that every time this is going to be a completely new infrastructure means that with every new project, integrations have to be built from scratch.
This means that an implementation partner will have to spend, say, around one month on each next implementation+integration project, no matter how familiar the processes and steps are.
So, the first essential step toward production of integrations on a large scale is having a uniform integration platform.
With a uniform integration platform, implementation/integration partners have one consistent infrastructure for all integrations. Integration and configuration components need to be built only once.
Since building such an integration platform usually is not the domain of implementation partners’ expertise, we have seen that they usually revert to the offerings available to them on the market.
Traits that implementation partners are looking for
After talking to several system integrators, we have been able to gather a list of traits that are looked for in an integration platform for the purpose of integrations “mass-production”. Security was understandably mentioned in every case. After all, the end customers’ data will be processed within an infrastructure other than their own. So, it needs to be made sure that such an infrastructure is 100% secure.
Ease of use was also named frequently. I have mentioned before that delivering standardized integration solutions while reducing own workload involves building self-service integration marketplaces. Therefore, it is essential that an integration platform and the tools it provides are easy to use not only for implementation-integration partners themselves, but also for their end customers.
More interestingly, though, that another highly important aspect for implementation partners was to keep the customer ownership. In other words, it was highly desired to keep full control over customer relationship. Therefore, it was essential to have the integration platform under own corporate branding — a classic example of the white-labelling concept.
The full list of traits named includes:
- Standardized environment
- Keeping customer ownership/White-label
- Multi-step integration
So, what can you learn from Slack and Hipchat?
I’m sure that 2016 has a lot to offer in terms of new trends initiated by the SaaS business model, both for SaaS and for their partners. I agree with Clement Vouillon that on the side of SaaS businesses, we will see more of integration marketplaces / platforms like the ones launched by Slack and Hipchat last year.
Yet this is exactly why I also believe that SaaS partners too need to revisit their business models soon enough if they want to stay competitive.
Following the examples of Slack and Hipchat and building own platforms to offer pure integrations is one way to ensure this. In this respect, SaaS partners’ long-term experience with the implementation and integration of respective systems can be their golden goose.
(By the way, a case-study to this trend is on its way. Follow us on Twitter @elasticio to be among the first to read it.)