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Published on June 20th, 2013 | by Danny Roberts


SaaS Fragmentation and the Opportunity to Integrate

The move to Software-as-a-Service (SaaS) has been incredibly lucrative for software developers, who are now charging monthly fees for the sort of products that used to cost a single up-front fee. And because of that money-earning potential (and also because there seems to be an increasing interest in software development generally), there are more services available on the market every day.

In a sense, this is great news for businesses. Whatever problem you have, there’s likely to be a slick solution for it out there somewhere. Where previously you might have had to hire a consultant to find a fix, or develop one yourself, now you can just click subscribe. Boom. Problem solved.

And that’s wonderful, of course, but the proliferation of these issue-specific SaaS services has begun to create a new problem: none of them can talk to each other. There are a million different SaaS solutions out there, with the result that many businesses are using one for payroll, a different one for CRMs, a different one for marketing, etc. And that creates a lot of problems. For example:

  • Your data is spread out through a variety of different platforms, and those systems are difficult to integrate.
  • Solving problems with services becomes more difficult because each service will have its own standards with regard to customer service.
  • Because different SaaS services work differently, you can no longer train your employees on one system. You may either need to teach all of them all of the systems or hire specialized people to deal with each specific system.

All of these issues can be incredibly time consuming, and the first can be an absolute killer if it gets to the point where employees are trying to manually integrate platforms that don’t integrate naturally by typing out the same data over and over again.

The solution, obviously, is vertically-integrated software solutions that can help companies keep all their data in the same place by integrating various SaaS products into a single platform. Of course, the old guard of megacorporations already offers software solutions that integrate data across business segments, and those work well for some businesses, but they have not even come close to taking advantage of relatively new trends like big data and cloud computing.

That means there’s a significant opportunity opening for entrepreneurs who are either gutsy enough to attempt to develop a new product from scratch that integrates data and information across business segments, or well-connected enough to acquire a number of the existing SaaS platforms that businesses are already using for specific business segments and then work to get all of them integrated into a single platform so that data can be passed easily from one to the other. Building a new service from scratch is probably easier in some ways, but acquiring and integrating existing services would have the advantage of immediately bringing each original service’s users into the fold as potential customers.

The rewards for successfully creating a properly-integrated service are likely to be immense, but the risks aren’t insignificant. Developing an integrated platform that provides a turnkey solution for businesses that addresses almost all of their needs rather than just one specific one is a complex, expensive task, and one that a major corporation is likely better staffed and funded to address than any given startup entrepreneur. But the opening is still there, and though the big guns are almost certainly working on integrated solutions of this sort, there’s no killer app yet. The ultimate winner could be the entrepreneur who has the guts to stick his or her neck out far enough to really take advantage of this opening.

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