Integration and automation are a winning strategy for companies in the modern era. Leslie Joseph, analyst at Forrester, recently observed that “enterprises looking to win in the second epoch of digital must integrate automation and machine intelligence into an enterprise wide automation fabric.”
Early-stage companies have a choice – they can build their automation fabric now, or deal with tech debt later. But the argument is not just about tech debt; investing in the right platform can yield enormous short- and long-term benefits, not just long-term outcomes.
There’s a common misconception that the economics don’t make sense for an early-stage startup to invest in an Integration Platform as a Service (iPaaS) or an automation platform. Startup DIY ethos and small budgets usually mean one of several things:
- Hand-coding point-to-point integrations
- Crafting point-to-point integration code with the help of generative AI
- Using budget point-to-point integration tools or native integrations
- No integration is made, and systems (and data) stay siloed
It is suboptimal, but startup leaders counter that they don’t have enough budget, their processes are too immature, or their tech stack is too small to justify a high-performance platform. That couldn’t be farther from the truth. A powerful, low-code integration layer is one of the most important investments a company can make at any stage.
Gartner says that by 2024, 80% of technology products and services will be built with low-code/no-code by those who are not technology professionals. In other words, integrations and automations between apps are a form of technical debt. For this reason, Matt Ashare notes that “many enterprises are adopting low-code technology platforms to reduce the time and money spent servicing technical debt.”
Key insights at a glance
- Avoid tech and process debt: Without the right integration and automation foundation, future changes, data issues, or M&A integration problems are inevitable
- Boost business metrics: Business metrics can be vastly improved with integration; customer acquisition cost (CAC), sales-sourced revenue, and top-line and bottom-line growth
- Build governance now: Good architecture will pay dividends later by mitigating data and security risks
- Save costs: Savings and efficiency gains could come from reducing view-only access to systems by bringing data into one place. Additionally, integrations with key systems such as AWS allow integration spend to roll up into any budget
Processes are the new arena of competition
Business processes take shape in the early stages of a company. This is also where design is often overlooked. When Leslie Joseph says that automation is a critical competency in this new era, he is saying processes are the new arena of competition. Startups that craft great automated processes will punch above their weight. Processes that are designed for evolution and change will disrupt established competitors because their agility and nimbleness is supercharged.
This is why, when I see startup leaders custom coding integrations, or worse, leaving internal applications siloed, I advise them to rethink. That custom Python code to support a lead routing process from the website to Salesforce, or a DIY project management solution, can only get a company so far. In reality, what feels like the frugal choice is ceding ground to established competitors who are working relentlessly to digitally transform.
Taking the right approach elevates metrics across the business – because an integration layer is valuable to every function in the organization.
Business metrics that need integrated business architecture
Several business metrics need to be calculated using finance and sales data. For example:
- Customer Acquisition Cost (CAC): CAC measures the cost of acquiring a new customer. This metric requires both finance and sales data, as it involves both the expenses incurred in acquiring new customers and the number of new customers actually acquired.
- Sales-sourced revenue: Companies track sales-sourced revenue in order to understand the performance of their sales efforts and to identify opportunities for growth. This metric can be influenced by a number of factors, including the prices at which products or services are sold, the volume of sales, and the costs associated with producing and selling the products or services.
- Revenue growth: Measures the increase in a company’s revenue over a certain period of time. This metric can be influenced by both finance and sales data, as changes in pricing and the volume of sales can both impact revenue.
- Gross margin: Companies track the profit of each product or service. Gross margin requires both finance and sales data, as it involves both the revenue from sales and the costs associated with producing the products or services being sold.
- Return on Investment (ROI): ROI measures the profitability of an investment. This metric requires both finance and sales data, as it involves both the revenue generated by the investment and the costs associated with the investment.
Starting where it matters
IPaaS solutions typically provide a range of integration and automation capabilities, including data integration, application integration, and API management. The right iPaaS allows you to easily and quickly connect different applications and data sources, both within and outside the organization.
Integration and automation have been on a convergence path for many years. Massimo Pezzini, the well-known Gartner analyst who shepherded the iPaaS Magic Quadrant for many years, says, “automation and integration are, in my opinion, just two sides of the same coin: there is no automation without integration, and automation is a key use case for integration.”
This year’s MQ looks unlike any other – it has seen substantial change because platforms are now required to include automation capabilities. As the iPaaS market has expanded, it has subsumed many other categories – the convergence with automation suits startups perfectly. Our advice to startups is to look at cloud-native offerings for their integration layer.
Startups are laser-focused on their mission, so it becomes easy to put off decisions such as integration platforms and process optimization. But there are many company leaders who are one step ahead. In the modern world, processes are one of the key arenas of competition. After all, the advantage startups have is their agility. Agile, automated, connected processes – supported by the right tooling – can make all the difference. Harnessing data to drive growth and thrive in a tough market is something that every leader values. Building the right integration layer is the place to start.
A version of this article was originally published on Digital CxO. Workato is an Insight Partners portfolio company.