Staying profitable as a systems integrator in the cloud

Systems integrators (SIs) are getting squeezed, according to analysts who track the industry. The combination of cloud computing and as-a-service providers means that traditional SI business customers find they can meet their needs through other ways. SIs can however continue to be profitable by adopting a different strategy for cloud computing.

Business IT is changing

Cloud computing is becoming the new normal. Recent reports by RightScale andCompTia have shown that businesses are increasingly adopting the cloud. The RightScale survey showed that 93% of businesses are using cloud solutions. In addition, the price of enterprise computing services has been dropping in the recent years, with Amazon and Google repeatedly dropping prices.

What is changing in the SI’s world?

The traditional IT world that enabled SI’s to grow is changing.

• The value of integrated ERP software is being re-evaluated, e.g., the trend towards postmodern ERP, and organizations are looking for applications that address their requirements specifically and quickly.
• Divisions and groups within business can buy cloud apps with a click, and shadow IT is growing.
• Companies that are looking to transform into digital business often consider the cloud for best-of-breed solutions.
• New as-a-service platforms are automating many aspects of IT and application management processes.

Opportunities in the cloud for SIs

For SIs searching for new services in cloud computing, there are several opportunities.

• The RightScale report showed that 82% of businesses surveyed were using hybrid cloud; implementing and maintaining hybrid cloud solutions have some specific challenges.
• The CompTIA survey showed that initial migration and integration involved in cloud projects posed the greatest obstacles to smooth cloud operations.
• Cloud solutions are updated far more often than traditional on-premise software, the resulting integration challenges add to the pressures on IT and business.
• Another finding in the CompTIA survey is that of secondary migration, with 44% of companies moving either infrastructure or applications from one public cloud to another, 25% moving from public to private cloud, and 24% moved from public cloud back to an on-premise system.
• Helping businesses set up citizen integration projects. According to CompTIA, while over 60% of IT departments still control decisions about cloud technology, over 40% offer a self-service portal for general business users, with a further 41% planning a portal.

SIs can therefore create new business by providing services to address the following integration challenges of modern enterprises.

• Enable organizations to migrate from on-premise to SaaS.
• Provide the expertise to assist in cloud migration and integration.
• Integration and application interoperability are issues that will grow in importance in the cloud, mobile and Internet of Things world, so businesses will need to address integration requirements seriously.
• In order to provide a lower total cost of ownership and speedier implementation, which is increasingly expected in cloud projects, SIs will need to make use of agile, cloud-based integration tools.

How to re-equip for cloud

• The ERP trend of the 1990s and early 2000s opened opportunities for SIs, but cloud migration and implementation will be next big wave.
• SIs can keep their current skills in change management expertise, but re-orient from on-premise ERP projects to cloud and SaaS.
• SIs should change from on-premise integration, and custom integration, to the more efficient and cost-effective integration platform-as-a-service (iPaaS). By continuing with the old custom development and integration projects, SIs increase project delivery time and cost, and so run the risk of being undercut by other more flexible and agile competitors.

Using an iPaaS an SI can:

• build IP around common or industry-related integrations. Juniors can learn on existing integrations and support, advanced staff can work on new integrations and more complex projects,
• curate integrations in a central catalog or repository in the cloud, providing faster time-to-market and scope for international groups to collaborate and share more easily.

What to look for in a iPaaS

When evaluating an iPaaS, SIs should consider the following criteria.

• What pre-built connectors are available, and the variety of controls and connections for integration.
• The iPaaS should be not be code heavy. Using a graphical, model-based console makes developing integrations and managing orchestrations easier, and eliminates the problem of spaghetti code.
• Can the iPaaS scale to take advantage of changing data management and analysis needs.
• How can the iPaaS handle “many-to-one” functionality. With the emergence of Big Data and the Internet of Things, comprehensive, automatic integration is crucial for effectively managing and utilizing large volumes of data from a variety of sources.
• Compression and encryption of data flows to reduce costs of data transfer and ensure security.
• Integration lifecycle development: integrations can start as ad hoc, citizen integrator activities which over time migrate to a formal IT project. The iPaaS should be able to move between these two sides of the lifecycle.

2016 is being forecast by analysts to be the year that SIs experience their own disruption. As their business customers are looking at business transformation, SI’s should start looking at how they can remain profitable in the cloud by developing a strategy to provide as-a-service integration.