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What is a connected app or a warehouse-native app? How is it different from a managed app? And what is leading to such a paradigm shift in the way B2B SaaS tools are built?
Omer Singer has an insider view of how the warehouse-native paradigm is taking shape and is here to answer these questions.
We also got him to share some tips on how to evaluate vendors of connected apps.
Let’s dive in:
Q. What exactly is a connected app or a warehouse-native app?
A connected app is a SaaS solution that lets the customer bring their data platform of choice, and so the vendor is bringing the work to the data.
Q. Why are connected apps also being referred to as warehouse-native apps?
It's talking about the same thing, and I think it's this idea that there's been so much progress in data warehouse technology that what's possible from the SaaS integration perspective has changed, and from a Snowflake perspective, we're calling it connected applications as to differentiate from managed applications. Traditional SaaS solutions always cared about data.
If you look at the traditional, maybe the first really famous SaaS solution being Salesforce, Salesforce has a very significant database under the hood and all that data about customer opportunities and all that's stored within Salesforce. That model, we call the managed application.
Now to differentiate from that, we have the connected application and that's where the SaaS solution says, "Look, we're gonna focus on the app, and for customers that want to, they can connect us to their existing data warehouse, data platform and we will use that," and it's an exciting space. We're seeing more and more companies embracing that, and for our customers too, this is becoming a direction of choice. Customers are really preferring this model and it's helping them to be more successful.
Thanks for explaining the difference between the connected app paradigm and its traditional counterpart, managed apps.
Q. What is leading to such a paradigm shift in the way B2B tools are built?
I think this shift couldn't have happened a few years ago before all the progress in cloud data platform technology. It used to be that applications needed a backend that would handle the data and different structures, et cetera, and they had, of course, demands on how reliable it would be, how powerful it would be, so they needed to own it and to be responsible for that back end, end to end. They couldn't count on whatever database technology the customer was using 'cause maybe customers don't have the same power in their data platform and the same reliability in their data platform.
I focus on the cybersecurity space and security teams often would use technologies like Elasticsearch to collect a bunch of log data to it, and a lot of vendors use Elasticsearch under the hood of their application too, but the vendor couldn't count on the customer's Elasticsearch cluster to be 24/7 available, to be scalable, and fast enough to handle large amounts of data, so then the vendor had to own the data on their side and maybe they exposed it to the customer through an API so the customer could maybe get access to some of their data through that API. With advances in the cloud data platform, I think what Snowflake has really pioneered is this cloud data platform that is very robust and consistently powerful and reliable, basically putting the vendors and their customers on the same footing.
Now for the first time, the customer can bring their SaaS solution to the data platform, and in that way, they avoid a silo, avoid having the vendor own the data and then trying to get, the customer getting the data through the APIs.
Q. Can vendors of connected apps also cater to customers that don't really have a data warehouse in place?
Yeah, actually the vast majority of connected app vendors that I work with also have a managed app option. It's not either-or. We even wrote a post at Snowflake about which deployment model is better, and it turns out, it depends on the customer, and there are customers that, for them, a connected app is gonna be better, and for others, yeah, maybe if they're a smaller shop and they don't yet have their own cloud data platform and they'd rather the vendor just own the data, then the vendors have that option.
It's definitely not exclusive and the nice thing is once the app is built to support Snowflake or whichever cloud data platform, data warehouse, it's gonna be consistent. You build the application once and then you can support both options.
Q. What are some key benefits for companies to adopt connected apps over managed apps?
Yeah, oh my God. Bunch of benefits. I see customers seeing so much success with this. I think the more that data is at the core of everything that that team is doing, I'm speaking to security teams and they're tasked with protecting the enterprise, reducing risk, detecting threats.
It's all about data, and unfortunately, it's been the case that security teams have been working with a very fragmented data landscape. Their data's been all over the place and a lot of their effort goes into trying to piece together what's happening across these different data silos.
The connected app model means that the silos are avoided and the security team doesn't need to go through the effort of piecing together these disparate data sets because their solutions are all pointing to the same single source of truth. That's been this kind of mythical thing, the single source of truth for the security team. It never existed before this model, at least for the security teams that I spoke to, and we do have customers now. I'll give you an example, they're speaking at our user conference next week, TripActions.
They have a great product. I use it whenever I go on a business trip. I use TripActions and their threat detection product is Hunters. The Hunters solution points to the TripActions Snowflake and it's the same Snowflake they had before the security team started using it. This is this trend where the security team is joining the rest of the company on this unified data platform.
Hunters enables the threat detection response, what used to be covered by SIM solutions. Now they also wanna do compliance automation. Great. The compliance team's not starting from scratch. They deployed their tool of choice, anecdotes, and that product points to the same single source of truth where a lot of the data is already residing, and so very quickly they can get to compliance automation.
I think it's a huge benefit for the security team. It also gives 'em flexibility. If they have custom use cases, they can implement them because they own all the data. They have no disadvantage to the vendor, in the fact that they have access to all the data in an analytics platform so they can analyze it the way they want and they can share insights across the enterprise because the enterprise BI tool of choice, if they're using Tableau or Power BI, whatever they're using, that's already pointing to their Snowflake, so any kinda team in the company can get access to the insights that they need.
Q. What's in it for vendors to embrace the connected app paradigm? Doesn't it, in some ways, limit their revenue potential?
No, I don't think it limits their revenue potential. In fact, the more that this trend picks up pace and the more that teams, like security teams but also marketing teams and sales teams, see the importance in having a data-driven strategy, the more that they are going to embrace vendors that make it possible and that take an open approach and give them the freedom to own their data and to do with it whatever they want.
What we're seeing is vendors that are adopting the connected application model and support it are in a position to disrupt their entrenched competitors by saying, "Look, here's a new way. These big legacy vendors, they don't support this. They're gonna require you to send your data out to them and they'll hold onto it and they'll make you jump through hoops just to get access to some of it.
We'll meet you where you are," and that's very attractive, and so we are seeing our connected app partners growing very quickly. Snowflake Ventures has actually invested in a few of these partners, so we do have that perspective of seeing their growth and I can tell you that it is very substantial. I think more vendors are gonna see the benefits there and lean into it.
Q. Snowflake offers a program for vendors looking to embrace the connected app paradigm or when they're looking to build connected apps. Can you briefly explain what that entails?
Yeah, yeah, I'm very proud of this program. It's called Powered by Snowflake and it was created within our partner organization from an understanding that when somebody builds their product to run on Snowflake, they have different needs than the traditional enterprise that uses Snowflake maybe as a data warehouse, and that might include solution architect guidance for getting started.
How do you design? How do you build this? How do you think about your multi-tenancy model in a connected app world?
There are all sorts of interesting questions around that. How do you take advantage of unique features like Snowflake data sharing, Snowflake support for Python in Snowpark? All these different things that Snowflake's doing, ideally our partners are taking advantage of that. They're getting the guidance. They're learning from the experience that we've had in helping others to build within this model, and then also when the thing is ready, how do we help them to sell into our customers? How do we do launching the GTM and co-marketing and co-selling, helping our sellers to know what's out there?
They want to understand what they're introducing their customers to, so it's really a great program. It also includes additional support 'cause we wanna make sure that if there is an issue, that we have very fast support and that support is familiar with the application, what it's supposed to do and all that. It's a great program and I think it is easier than ever for vendors to add connected app support if they want to.
Q. What are your thoughts on the impact of connected apps on CDP and reverse ETL vendors?
Yeah, so you know my focus is on security, but I do see the connected app model taking off across the board. It just makes sense, it just makes sense, and I think there will continue to be a need for reverse ETL as long as many of the most important sources don't support the connected app model. There needs to be a way to get the data into the data warehouse and then to take action on it and to make changes in other systems based on what you see in the cloud data platform, but I think it'll evolve.
I think the role of reverse ETL vendors will evolve and I'm excited to see how they accelerate connected applications and how they actually make it more and more possible. There's one startup that I'm excited about. I've been talking to their founding team and I think it's really cool what they're working on.
They're called patch.tech and what Patch are doing is they're building kind of a foundation layer for warehouse-native applications, and I think it makes a lotta sense because why start from scratch? And I think that could be the direction for reverse ETL so that it becomes a project of hours or days instead of weeks or months for a SaaS vendor to add support for the connected application deployment model.
Q. Last question — can you share some tips on what companies should look for when evaluating vendors of connected apps?
That's a good one. I haven't been asked that before. It's a good question, and the more that we see leaders at Snowflake's customers really starting from the position of, "This is gonna be the home for our data, now which vendors will support that?"
I think it is important to have this guidance out there, so I'm glad you asked it. I think any customer evaluating a connected app vendor should get an understanding of how full is the connected app integration. Because this is a new category, you may see certain vendors implementing it partially and maybe they'll make some of the data available in your ownership as the customer while they'll still force you to pull other data from them through an API, that kind of thing.
You really ask the vendor about what is included in the connected application and what is not, and also ask about discounts, because by taking on the role of owning the data, storing it, paying for the compute of analyzing it, you as the customer, you're offsetting quite a bit of COGS for that vendor. They should be giving you a discount, right?
Otherwise, they're benefiting from it twice, once with you as a customer, second, when you're paying for the compute power that their application requires, so definitely ask for that discount and see if you can get a nice one, and then I'd say the last thing is ask if they have content that you can take as a starting place when you're analyzing their data in your data platform, because what the connected application model says is you have all the vendor's data that it would, it's actually your data, but it's traditionally the vendor's data and it's in your control.
Maybe they have some views or some models that you can use to get value from it faster and to report on it faster and self-service BI, et cetera, so ask about that, the data schemas and any content that they can give you so that you get to value faster from having this connected application deployed.
You can also tune in to the episode on Spotify or Apple Podcasts.
Thanks for reading – let’s beat the gap! 🤝
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