iPaaS to become the fastest-growing application integration approach

by Sohini Bagchi    May 24, 2013

cloud ipaas

Integration Platform as a Service (iPaaS) is expected to witness a phenomenal growth over the next few years. A recent report by Ovum reveals that cloud-based integration platforms will grow at a compound annual growth rate (CAGR) of 31 per cent between 2012 and 2018, reaching $3.7bn by the end of 2018 and iPaaS will be the fastest-growing application integration technology in this segment.

iPaaS can be defined as a suite of cloud services that enable users to create, manage, and govern integration flows connecting a wide range of applications or data sources.

According to Saurabh Sharma, Senior Analyst, IT Solutions at Ovum, iPaaS is emerging as a suitable option for a wide range of integration needs. In the report, he states that the emergence of integration-as-a-service, the first truly cloud-based integration approach, marked the start of the “middleware-as-a-service” era. These solutions focused on enabling SaaS integration in a shorter time and at a lower total cost of ownership (TCO). iPaaS in that sense is an extension of the functionality provided by integration-as-a-service.

Sharma states that iPaaS is a good fit for on-premises-to-on-premises integration, situations for which organizations have used the extensive approaches such as service-oriented architecture (SOA). iPaaS was initially thought of as a “good enough” approach for SaaS integration that could help organizations overcome the limitations of traditional integration approaches. Over time, however, iPaaS solutions have gained capabilities to be able to meet the mix of on-premises, cloud and business-to-business (B2B) integration. However, experts opine that iPaaS will not replace SOA. In fact Sharma too suggests the use of traditional SOA for complex integration scenarios such as low-latency messaging and data-intensive transactions within and between enterprises.

iPaaS is emerging as a suitable option for a wide range of integration needs. It is the first truly cloud-based integration approach, marked the start of the “middleware-as-a-service” era.
-Saurabh Sharma, Senior Analyst, IT Solutions at Ovum

Last month, research firm Gartner also predicts that by 2016, at least 35 per cent of all large and midsize organizations worldwide will be using one or more iPaaS offerings in some form. The research showed that currently most organizations are looking at cloud services integration (CSI) to address their problem of integrating cloud-based systems. But Gartner researchers also believe that as organizations require a more agile approach and faster time to value than traditional application or data integration initiatives, iPaaS can be apt to address this specific challenge. 

The emerging platform will also require organizations to plan for an incremental development of their integration team’s organizational structure, methodologies and governance processes.

According to senior researcher Massimo Pezzini, organizations take to deploy iPaaS, they should establish a separated strategy for CSI causing ineffective duplication of efforts, technology infrastructures and skills, higher costs in skills and technology infrastructure, and technical and organizational complexities.

Gartner too predicts that iPaaS will complement, not replace, the traditional on-premises integration middleware (such as, enterprise service buses, B2B gateway software, and managed file transfer). Therefore, dealing with the coexistence and federation of iPaaS and on-premises integration platforms will be the norm for most IT leaders, said Pezzini.

As per the Ovum study, regionwise, cloud-based integration platforms will account for over 20 per cent of the global integration middleware spend by 2018. The global spend on cloud-based integration platforms is expected to increase from $732m in 2012 to $3.7bn by the end of 2018. During this period, spending on cloud-based integration platforms in the Americas and EMEA regions will grow at CAGRs of 27 per cent and 34 per cent respectively. Spending on cloud-based integration platforms in the Asia-Pacific region is expected to grow at a more rapid rate from about $73m in 2012 to $646m in 2018. While in the Asia-Pacific region growth will increase from 11 per cent in 2013 to 17.5 per cent by the end of 2018, whereas that of the Americas will decrease from 67 per cent to 58 per cent over the same period. North America (US and Canada) will remain the single largest regional market over the forecast period.

The geographic difference shows that the iPaaS segment that will drive the growth of cloud-based integration platforms and will show maximum adoption in the Asia Pacific region. It will also create a huge opportunity for cloud computing vendors and solution providers to come up with innovative iPaaS solutions and services to cater to their customers.