Why embedded integrations are table stakes for software vendors
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“Embedded integrations”–integrations that software vendors offer with their own products to end customers’ other software tools–are table stakes for vendors and services teams. Embedded integrations are a non-negotiable requirement for building a successful product, attracting prospects, closing deals, and retaining customers. Today, the average enterprise uses more than 250 different cloud applications. And reports suggest that spending on new technology will continue growing with an increasing focus on hosted and cloud-based services, up to 26% of an organization’s overall IT budget. Your prospects and customers expect seamless API integrations between your software product and the other tools in their technology stack, right out of the box.
Hosted and cloud-based services are making up an increasing share of overall IT budgets. Image courtesy Spiceworks Ziff Davis.
For example, let’s say your product is an accounting platform such as QuickBooks or Xero. Your customers likely want to connect your product to their enterprise resource planning (ERP) platform such as NetSuite or SAP. Not offering built-in integrations with other relevant products potentially diminishes the value of your product to your customers. In addition, not offering integrations can limit your total addressable market (TAM) as your company misses out on new business from valuable prospects who need integrations you can’t provide. In this article, we’ll cover why integrations are table stakes for your end customers, and why it’s crucial for you to be able to deliver them.
SaaS proliferation makes connectivity crucial
Some years ago, successful firms such as Salesforce kicked off what has become known as the “SaaS explosion,” a massive proliferation of cloud-based software apps. Most businesses are arguably still living in the wake of the explosion, acquiring dozens, hundreds, or even thousands of applications that execute core functions as point solutions, but don’t “talk to” each other properly.
Having many point solutions that aren’t connected to each other has increased the need for integrations in modern business. However, the pandemic has also caused many businesses to accelerate their digital transformation (DX) efforts. Companies around the world went remote for safety reasons, and quickly rediscovered the urgent need to migrate from on-premise systems (as their pricey on-premise software sat unused at workstations at the office). The answer, of course, was to load up on even more cloud SaaS tools to enable distributed teams to continue working even outside the office. Of course, the pandemic ended up being extremely profitable for quite a few SaaS vendors. And Gartner projects continued annual growth of cloud-based SaaS to the tune of about 20% annually going forward, up to $917B by 2025.
Cloud-based SaaS will continue to grow for the foreseeable future. Image courtesy Gartner.
However, more apps in play means an even greater need for integrations across them. As businesses acquire more cloud SaaS tools, each new app, especially those lacking robust integrations to other popular tools out of the gate, potentially becomes a new headache and a new source of technical debt.
A lack of integrations hurts your end customers
Your customers are feeling the pain of not having integrations. They’re trying to manage an ever-growing tech stack that silos data within individual apps–which means they have to resort to painful and time-consuming manual workarounds. Like your company, they’re attempting to sell more of their products and services, edge out their competitors, and keep pace with changes in the market. As organizations across the globe continue to pursue digitization, they’re finding integration issues to be a top 5 challenge. 39% of organizations report challenges integrating technology as a top operational concern.
39% of organizations struggle to integrate new technology into their core tech stack. Image courtesy Statista.
Not having integrations across their tools leads your customers to invest additional time, money, and effort into transferring and manipulating data across them. A recent survey of knowledge workers saw more than 90% of respondents resorting to manual spreadsheet work, hacking together a jury-rigged solution, or utilizing their own company’s limited IT resources to build something internally.
To make matters worse, the same report found that more than 60% of respondents spent more than three hours per week on manual data workarounds (with 26% spending more than five hours per week). In other words, your customers may be spending countless frustrated hours having to compensate for your product’s lack of integrations, rather than engaging productively with your product and gaining value. Which is why, instead of using their own resources to bridge their gaps, customers are increasingly expecting interoperability between your software products and the key components of their tech stack, right out of the box.
More than 60% of knowledge workers spend at least three hours per week on manual data workarounds.
A lack of integrations is costing your organization dearly
When your end customers request that your company build an integration from your product to their tech stack, your organization must make a conscious choice. Building an integration internally means diverting precious engineering resources and budget away from your roadmap, and away from developing a best-in-class product.
The trade-off may be worth it today to retain a high-value customer account, but your IT teams may feel the cost tomorrow. When your organization makes the call to send developers to build a one-off integration for a customer request, it’s also taking those developer resources away from strategic IT projects such as information security and your own company’s DX initiatives. The average IT project backlog is already three to 12 months long. As your customers acquire even more technology for which they may eventually request integrations, the backlog will continue to expand and take valuable resources away from more-strategic objectives such as product launches and enhancements, infosec, and DX.
Worse still, building end customer integrations isn’t a one-and-done job. Over time, various apps within your customers’ tech stacks will update their APIs, causing your homegrown integration to break. Which means your customers expect your company to maintain the integration you just built in perpetuity. And you can multiply the maintenance burden by however many integrations your customers are already (and will continue to) ask for.
Not to mention the increased risk that comes from manually building integrations from scratch. The entire process, beginning with planning, analysis, and design followed by development, implementation, testing, and maintenance, can take anywhere from 1 to 6 months to get right. As skilled as your dev team may be, humans make mistakes. The error-prone nature of manual work can put your integration – and your customer's data – at serious risk, resulting in unhappy customers and more work for your already overworked team.
IT teams are already burdened by high-priority projects, DX, and infosec. Image courtesy Spiceworks Ziff Davis.
A better alternative to internal builds: Embedded integrations
Fortunately, there are now alternatives to building out end customer integrations (and being on the hook for endless maintenance). Third-party vendors have offered integration platforms as a service (iPaaS) for some years to help individual firms connect their own applications at the API level. And now, there are embedded iPaaS (EiPaaS) platforms that give services teams and software vendors the power to rapidly deliver end customer integrations, without having to devote significant amounts of developer resources. The best EiPaaS solutions actually offer a visual, low-code interface that product and IT teams can use to literally drag and drop together end customer integrations, so they can initially stand up, test, implement, and iterate on customer integrations significantly faster. They also perform API upkeep for various services to significantly reduce the burden of maintenance. Learn more about low-code embedded integrations platforms now.