One factor limiting the more widespread adoption of SaaS applications may be their redundancy. Much of what SaaS vendors offer is functionality that most businesses already have.

“A lot of SaaS is redundant software, so a lot of companies figure, why change?” observes John Casey, business development director for Pivotlink, a SaaS-based business intelligence software firm in Seattle. “If these SaaS vendors were truly disruptive and offered new functionality, these companies would switch.”

But by far the deepest pitfall that continues to concern many large companies kicking the tires of SaaS for mission-critical applications is the looming integration challenge it poses. “The question I hear over and over is, ‘How do I integrate it with the rest of the SaaS world and with my legacy applications?’” says Treb Ryan, CEO and cofounder of OpSource, which provides online billing, support, integration, and other services for SaaS vendors.

“Integration will be a problem with a vast majority of your customers when they try to integrate SaaS,” says Rick Nucci, chief technology officer and cofounder of Boomi, an on-demand SaaS application integrator, and a panelist at the conference. “The integration problem is twofold,” Nucci explains. “First, when the SaaS application is sold, usually there are one or more databases that are behind the firewall, and second, the SaaS company has to solve that problem over and over again with each customer,” he said. 

Panelist Leonid Igolnik, engineering director at the SMB division of Taleo, an on-demand talent management vendor, agrees, adding, “The APIs (application programming interfaces needed to connect different systems) are a very tricky part to get right.” 

And a third panelist, Simon Peel, senior vice president of strategy for Cast Iron Systems, a maker of integration appliances, asserted that once the SaaS has been sold, the customer then learns about the various integration issues surrounding synchronization of data contained in various databases. “We are only just beginning to attack the SaaS integration problem,” Peel said.  

Of course, the bigger a SaaS application gets, the thornier the integration thicket it becomes connected to. The Typical SaaS application starts out small with maybe 20 users,” says panelist Dave Rosenberg, CEO of MuleSource, an open source SOA infrastructure provider. “But later on, when there are more users, you have to apply some more ugly mainstream IT to it.”

A special problem companies can encounter when using SaaS is the complexity of trying to integrate different databases. “The odds of two companies have the same database, or even the same version of the same database, are so slim,” Rosenberg says. “Integration of customer databases behind the firewall is tricky.”

“The customers I see—even non-IT customers like HR users—are asking questions about integration of SaaS,” Igolnik says. Adds Nucci, “There is a perception problem having to do with false promises related to delivery times for integration.”

In conclusion, Peel noted, “Do not try to do this yourself at home—use an integrator.”