Friday, April 18, 2014

Cloud Integration (iPaaS) Analysis & Trends

 
This work by Marcelo Bernardes (@marcelobern) was originally posted on LinkedIn.

From vendor fragmentation and acquisitions to open source, the activity level in the cloud-based integration market, is indication that we are about to experience deep changes, similar (or bigger) than those experienced when software as a services (SaaS) was introduced (Forbes).

Note: please check Wikipedia for details on what is cloud integration, also known as infrastructure platform as a service, or iPaaS.

This article is a short compilation of the cloud integration market, vendors, and trends.

iPaaS market

The iPaaS customers can be segmented as follows:
  • Individual and start-up customers: these customers are cost sensitive, so vendors targeting this segment generally have a freemium (Wikipedia) business model, and their prices go up to USD100/month. Zapier, IFTTT, and Cloudpipes are examples of vendors in this group.
  • Enterprise customers: these customers are looking for global footprint, scalability, and performance. Vendors in this segment may offer a free 15-30 day trial followed by a paid service, with prices starting in the USD1,000/month range. Dell Boomi, Informatica, and MuleSoft are examples of vendors in this segment.

Individual and Start-up focused vendors

Current Focus: For these vendors, the focus has been in either breadth of SaaS integrations (e.g. Zapier with 250+ integrations), or niche market (e.g. IFTTT which unlike others, includes home automation capabilities).

Entering the market: In this segment, new entrants may use an opportunistic approach, for example, by employing an invitation only marketing approach to pre-screen potential customers, and prioritize development cycles (this seems to be the approach being employed by Cloudpipes).

Growth opportunity: Due to growing number of vendors in this segment, we might see companies looking to carve their own niche with a purpose-built approach (The Agile Entrepreneur), going forward in this segment.

Enterprise focused vendors

Current focus: Due to the growing market opportunity and currently decentralized fashion in which iPaaS is being consumed by line of businesses, a significant discrepancy of capabilities exist between vendors, in part fuelled by the fact that current buyers are not accounting for the enterprise-wide needs, and not driving such enterprise requirements back to vendors.

Entering the market: In the recently released 2014 Magic Quadrant for Enterprise iPaaS (complete the form to download), Gartner analysts indicate that the current growth in the iPaaS market is leading to a "free for all" where:
"... growth will attract investments from startup companies, established on-premises middleware players, providers of other forms of PaaS ..., and SaaS providers all eager to get a piece of the pie..." (2014 Magic Quadrant for Enterprise iPaaS)
Growth opportunity: In this segment, disruptive innovation, and exclusive partnerships could be explored to carve a niche through a purpose-built approach (The Agile Entrepreneur). Examples of such approach are a vendor focused on telecom integrations, due to its unique partnerships in this industry; or a business process focus, where a vendor specializes on customer service integrations across multiple industries.

Other noteworthy developments

There are some specific approaches being explored which could significantly impact the course of events.
  • The availability of open source iPaaS options (e.g. Bip.io) opens the possibility for vendors to primarily operate an open source iPaaS solution, much so along the lines of web hosting using Apache.
  • Some iPaaS vendors are allowing users to build their own connectors (check out Zapier), which could lead to a crowdsourcing created advantage difficult to be matched by late entrants.
  • Other vendors still are using crowdfunding as a way to gauge user interest and spread initial development cost over a number of potential customers.
  • SaaS and enterprise software vendors are leveraging iPaaS rather than developing native integrations (e.g. Podio announcement).
I am working on a more detailed iPaaS vendor comparison, and if there is enough interest, I would be glad to share it with you. So, feel free to use the comment box below to let me know which vendors you might be interested in.

And please follow me if you would like to be automatically notified when I publish the iPaaS vendor comparison or other new articles.


 

(Image courtesy of KROMKRATHOG - FreeDigitalPhotos.net; Post updated Apr/11/2014)