The connected apps model is transforming how SaaS applications are built. By separating the application code from data, connected apps allow customers to maintain control of their data and eliminate data silos. At the same time, vendors benefit from better margins and reduced friction in the sales cycle. In this article, we’ll explore what connected applications are, the advantages they offer, and how vendors can experience their benefits.
What Is a Connected Application?
Connected apps store and process customers’ data on the customers’ data platforms rather than on the SaaS vendor’s own. They’re called connected applications because they connect to external data platforms instead of loading data into the SaaS vendor’s managed data platform.
To better understand the connected application model, let’s contrast it with how traditionally managed applications work. Prior to the broad adoption of cloud data platforms, big data capabilities rested solely with SaaS application providers because customers weren’t able to provide the scale and speed required to manage big data workloads. The SaaS application provider had to do the heavy lifting, ingesting their customers’ data so it could be processed using their own highly performant data platform. The managed service model lacked data sovereignty since customers were required to allow their data to leave their environment. Especially for companies handling sensitive or highly regulated data, this arrangement created an uncomfortable level of risk.
Modern cloud data platforms provide businesses with highly scalable and cost-efficient storage and compute capabilities previously only accessible to large vendors. Now that customers have their own cloud data platforms, SaaS providers can build apps that connect to those platforms. With the connected app model, providers focus on maintaining the application code, allowing customers to leverage powerful B2B SaaS apps without having to surrender control of their data.
How Connected Apps Benefit Customers
Connected apps offer customers several advantages over managed apps. Here are six of the most valuable.
Customers retain control over their data
When companies maintain control of their data, they can ensure that their governance policies are consistently applied. Some SaaS vendors delete records, such as access logs and financial transactions within a few months, causing issues for customers with compliance guidelines that require they be retained for a longer period of time. Connected apps allow businesses to implement their own retention and storage policies.
Creates a single source of truth
Managed applications create a fragmented data landscape that can hinder a company’s digital transformation and data-driven goals. The connected app model allows a single data source, with each app connecting to the customer’s data platform. This eliminates silos, promotes collaboration, and puts customers in control of their data.
Eliminates the need to build and maintain API integrations
Many managed applications provide access to customer data via an API, requiring them to build and maintain a separate API pipeline for each application. Most modern businesses leverage numerous SaaS applications, resulting in multiple pipelines, long integration backlogs, and data sets that are never centralized. Connected apps eliminate these issues.
Improves application performance
With managed apps, companies have limited control over low-performing SaaS applications. However, with the connected application model, they can make performance adjustments to their own cloud data platform to help realize improvements such as faster searches and accelerated dashboard performance. With connected apps, data latency is eliminated as the apps are closer to the data sources.
Supports custom analytics
With data from all SaaS applications centralized in their cloud data platform, business users can easily analyze data sets across applications. This allows a diverse group of users to run cross-application analytics that would be difficult to perform across multiple API interfaces.
Enhances reporting capabilities
Connected apps provide superior reporting, allowing data to be accessed through standard tools such as Tableau and used in enterprise BI reports. Since data lives on the customer’s data platform, there’s no need for them to be tied down to the basic dashboards provided by many SaaS applications.
How Connected Apps Benefit SaaS Providers
Advances in the underlying cloud data infrastructure powering app development and data processing technology present SaaS vendors with opportunities to better meet the needs of existing customers and attract new ones. Here’s how.
Fewer customer concerns with data security and vendor lock-in
The connected app model clears away two common customer concerns: security/compliance and ownership over data. The connected app model offers superior security since sensitive data remains in the data platform, subject to customer-set governance. And with the connected app model, the SaaS vendor does not take ownership of the company’s data.
Increased profitability
Modern data platforms offer a consumption-based pricing model, allowing providers to pay for compute at per-second pricing. The connected app model improves the app providers’ margins because the consumption and associated costs are incurred on their customers’ systems rather than their own. Additionally, integration with the customer’s data platform is typically a quick, straightforward process that saves vendors the time and expense of a re-platforming project.
Connected Apps and Managed Apps Are Not Mutually Exclusive
While the benefits of connected apps are clear, SaaS providers don’t need to choose between offering connected apps or managed apps since the models are complementary. Some providers choose to offer both. Some customers appreciate the convenience of delegating the data processing and storage to the vendor. To target both demographics, vendors can deploy the connected app model for customers who have or are planning to set up a cloud data platform, while simultaneously offering a managed app model for customers who prefer a turnkey approach.
Fast-Track App Development with Snowflake
Snowflake enables SaaS providers and their customers to realize the promise of connected apps. The Powered by Snowflake program guides members in designing and implementing applications that run on Snowflake, and after launching their joint solution, helps partners raise awareness among Data Cloud users.
Learn how to unlock access to technical experts, go-to-market benefits, and partner support to help grow your business with Powered by Snowflake.