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SOA and SaaS synthesis working in ERP and CRM spaces

An on-demand ERP startup sees Web services-based SaaS in a service-oriented architecture (SOA) as the future of application integration and delivery.

If fusion of service-oriented architecture (SOA) and Software as a Service (SaaS) is the future of application delivery and integration then Workday Inc. might be the poster child.

Annrai O'Toole, CEO and founder of Cape Clear Software Inc., says that when he saw what Workday was doing with his company's enterprise service bus (ESB) the scales fell from his eyes and he saw the future of hosted, on-demand SOA. Stan Swete, Workday's CTO, says it was the other way around, O'Toole showed his ESB customer how SOA and SaaS could transform how ERP gets delivered, integrated and changed.

Whatever the symbiosis, Swete says, "A new business model has emerged, which is on-demand delivery for applications as services."

O'Toole says if you want to watch the new business model emerge, keep an eye on Workday. Swete cautions that all this is in its early stages at the two-year-old startup founded by former PeopleSoft founder and CEO, Dave Duffield, who is now CEO of Workday and its co-founder along with another former PeopleSoft executive, Aneel Bhusri, now president of Workday. The company launched its first on-demand Web-services-based human resources product this past November and currently has 12 customers.

They're excited to stick their toes in the water, but they are not swimming in [human] resources that are expert in building this type of integration.
Stan SweteCTOWorkday Inc.

Lest anyone get caught up in O'Toole's view of Workday as a visionary SOA company, Swete cautions that hosted SOA wasn't in the initial planning for Workday's SaaS products, but it has evolved.

"Annrai has always pitched the need to keep SOA simple," Swete said. "I think this drive for simplicity is what's getting him to look at the opportunity to host SOA. It's something that we absolutely are thinking about.

But not absolutely doing. Swete points out that many of Workday's potential customers aren't working with Web services yet. They are still running human resources management systems based on legacy hardware and software from the client/server era or even the age when mainframes and flat file databases were state of the art. SOA remains something of a holy grail.

"In the conversations we have with customers I think everyone sees the power and potential of SOA," Swete said. "But I think everyone admits that it is new technology and it is not expertise that they've got. They're excited to stick their toes in the water, but they are not swimming in [human] resources that are expert in building this type of integration."

Early adopters tend to be on the same cutting edge such as RightNow Technologies Inc., a provider of on-demand CRM products with 1,800 clients worldwide. "We are also very committed to working with SaaS vendors for our business applications," said Kevin Boylan, director of human resources at RightNow. "We've seen the benefits of on-demand solutions with our own customers, so it was an easy decision for us to pursue an on-demand provider for our business needs. Workday was an obvious fit."

Companies not on the leading edge take a more cautious view of what Workday has to offer, Swete acknowledged. There are customers who need to understand the value of an embedded ESB in the SaaS-based human resources applications they receiving from Workday.

"We've actually had two different kinds of conversations with customers," he said. "We have to explain what we mean by embedding an ESB. What benefits it offers. What challenges it offers. Typically the conversation is first to explain that integration to us is going to be through Web services and typically that is quiet well received because even customers that have not implemented some type of an ESB internally are looking at that as a way of doing their integration."

For customers interested in hosted SOA, but who already have an ESB, the conversation turns to interoperability and Web services standards, Swete said.

"There was so many ways to connect. They want to make sure you've got an open way to connect to whatever is in their enterprise," he explained. "The embrace of standards and our embrace of Web services in particular combined with what they know about ESBs assures them that we're not locking them out of any opportunities."

Swete hears from potential customers who say: "You use Cape Clear. I use IBM WebSphere is that going to prevent me from talking to you?"

This is where he explains that because Cape Clear and IBM adhere to the basic Web services standards, integration is not a problem. Workday might not have begun with a vision of hosted SOA via SaaS, but it did begin with a commitment to Web services standards, which Swete argues form the bedrock for its future with SOA and SaaS.

"The only way our applications talk to the outside world is via some XML-based conversation," he said. "That is true whether you're talking to our UI or whether we're talking to third party applications. We base everything on XML and in the case of third party products we want to base everything on Web services. We're always going to have the data in and out of our applications and anything touching our business logic be based on a Web service and not as, for example, a direct call to the underlying data in our database. We're encapsulating our business logic and only expose it to the outside world via a Web service."

The promise of SaaS combined with SOA is the ability to provide interoperability and integration, Swete said. In the case of human resources applications which have to interact with payroll systems, benefit applications, and the company's larger accounting software, the fusion of SaaS and SOA have advantages that customers are only now beginning to recognize, he added.

"What people are going to find is it's a strength of have SaaS combined with SOA," he said. "One of the things we can do as a SaaS vendor, while we're not going to get the granularity of Web services right the first time, we've just starting a long journey to interoperable applications, but as we start to hook up to more solutions from other vendors and from customers, we'll start to see what the right level of Web services is to interoperate these applications. So I think this marriage of SaaS and SOA is a very powerful notion for general interoperability, which I think you'll see play out within the industry."

Next Steps

SOA and SaaS: Where do the twain meet?

Special Report: How much is that SOA in the window?

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