Software companies must include integration as part of their development budgets -- Ashok Santhanam, Bristlecone

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The New Integration Mandate

Software companies must include integration as part of their development budgets or risk losing sales opportunities – and interest from potential acquirers -- Ashok Santhanam, Bristlecone

Consolidation is rampant in the software industry. The product “stacks” at the major enterprise software vendors grow taller and wider by the week, even as emerging vendors with new models work to steal share from an increasingly demanding and impatient set of corporate CIOs.

The need for enterprise software applications and infrastructure products to work together seamlessly is greater than ever before. Yet software companies continue to place integration capabilities on the back burner during a new product release, preferring instead to work on adding new speeds and feeds.

Customers and investors will not stand for this “development in a bubble” much longer. The new integration mandate dictates that vendors must incorporate integration and certification as a strategic part of their development process or risk becoming sidelined in the new, interoperable enterprise software ecosystem.

The Back Story on Integration
It was only a few years ago that software companies would assign a certain percentage of their R&D budgets to ensuring that their product would work seamlessly on all major hardware and database platforms. In fact, Oracle beat Sybase and Informix in the database race not by introducing brilliant new features but by ensuring their product ran well on all major operating systems on the market.

Today, integrating with the large enterprise software suites holds the same potential for strategic advantage. Yet too many ISVs are performing integration work on a case-by-case basis. Resource constraints have relegated integration to a nice-to-have feature – something that is tackled when trying to close a deal with a big customer.

Very few software companies take a strategic approach to determining which products they should integrate with, what impact that integration would have on overall sales and what portion of their budget should be devoted to integration – even if it means “back-burnering” some of the nice-to-have new features planned for the next release.

The Integration Challenge
Customers no longer accept that an enterprise software product will not integrate out of the box with their other major installed enterprise application platforms – specifically, SAP and Oracle. CIOs are more demanding than ever and speeding time-to-value is critical for this group to prove their project successes internally.

The traditional model of enterprise software which involved paying a seven-figure sum for the application, then seven-figures to a systems integrator to put it together, then a healthy six-figures back to the vendor for annual maintenance is a thing of the past, unless you’re one of the big guys. Many vendors today will provide an upgrade for free but require customers to pay integrators and maintenance fees to keep things working together.

CIOs are wise to these ways and are actively working to shake off these chains where they don’t add value. Many are turning to new vendors with new models, such as software as a service (SaaS) and open source. But the need for these new vendors to deliver products that seamlessly integrate with major installed software platforms is just as critical.

This is no easy job. Optimizing integration requires a deep knowledge of the functional and technical configuration of these ERP systems. And as the SAP and Oracle stacks have grown over the years, developers have had a difficult time keeping up.

Many ISV’s like to flaunt their “certifications.” Unfortunately, we all know that these are only as valuable as the paper they are written on if the software does not truly integrate out of the box. The companies that I see pursuing the certification route tend to be more tentative about their integration commitment, and are happy to leave the integration headaches to their professional services organizations or their partners. But software vendors who have a clear integration strategy and have done the hard work to ensure out-of-the-box operability are the ones who truly deserve that certificate.

The New Integration Mandate
I would urge software companies to consider the following framework for ensuring interoperability. This “New Integration Mandate” will help ensure vendors’ success with customers and investors in the new enterprise software ecosystem.

A Strategic Imperative. Integration must be part of the initial product development planning process and the overall software strategy. Having a product that integrates widely at launch is more important than having the final 10 or 20 percent of functionality.

No Bubble Mentality. If you are starting an enterprise application company today, you must be interoperable with Oracle and SAP. Even an emerging vendor with a large market share like Salesforce.com must interoperate with the products of other major vendors. For SaaS vendors, in particular, integration is mandated. Customers choose SaaS products specifically to avoid major upfront investments and integration work. SaaS products – and products from open source, Enterprise 2.0 and other emerging vendors – are expected to interoperate out of the box, no excuses.

A Focused Approach. As the major ERP stacks continue to grow, application vendors are smart to carefully choose the areas in which their products can add value. Integration with these key areas should be the focus rather than attempting to integrate with the entire stack.

No Time-to-Market Delays. Incorporating integration into the R&D process should not extend the timeline for release. It should be included in the same way that testing is included: regardless of the time it takes, it must be done.

A Line for Help. If development teams are severely constrained, it is also possible to outsource the integration development and testing. Many software companies are opting to go to specialists for integration work because of the high degree of knowledge required. The key is to include integration specialists as part of the strategic planning process – not as an afterthought.

A Modular Approach. If you go back to the days when people had porting groups in their development organizations, we worked on connecting our APIs to the target platform’s APIs, for example. Best practices dictated a modular approach. Today we can use services to achieve the same integration goal. This modular approach saves money and speeds integration efforts.

An Owner. When integration is incorporated into product planning, there must be a single person responsible for the effort. There must be a project manager to determine what kind of effort must be directed at the integration challenge and to manage and measure progress throughout the development process.

A Meaningful Certification Process. Rather than just integration and testing, software vendors should seek recertification from ERP vendors for the functionality of their products. This would be a truly valuable form of certification that would have meaning to customers.

The Acquisition Opportunity. Software IPOs remain a rare event. Venture capitalists are investing in startups with an eye to acquisition as an exit strategy. Building products with extensive interoperability improves the chances that major vendors will be interested in acquiring the startup. If you want acquisition to be part of your company’s available strategic options, then a strategic approach to integration is critical. What better way to ensure your company’s survival as part of the new software ecosystem?