The concept of business intelligence can be hard to get your head around at the best of times, and ‘cloud BI’ is even more challenging. Just as the term business intelligence means different things to different people, and absolutely nothing to some, so does the term cloud BI. It can mean BI Software as a Service, traditional BI apps hosted in the cloud, SaaS or on-premise BI tools being used to analyse data that is being stored in the cloud, and on demand or on-premise BI apps being used to analyse cloud-based activities and trends (aka behavioural analytics and custom analytics) – along with the implied differences in delivery models and the underlying infrastructure. FSN contributing editor, Lesley Meall looks at the tensions in this rapidly emerging market.
Even the model for BI SaaS pure-play’s is evolving. In the early days, these providers had to invest in their own infrastructure (with all of the associated technical and financial constraints and risks), but this has changed, and they can now rely on providers of public cloud-based infrastructure, such as Amazon’s Elastic Compute Cloud (EC2) – though BI applications and data centres can be located in public clouds, private clouds and hybrid clouds. So new possibilities are emerging all the time from BI SaaS pure-plays, as well as traditional providers offering on-demand and on-premise versions of their BI apps, and true BI SaaS offerings (of which more, later).
It remains to be seen if the failure of BI SaaS pioneer LucidEra in 2009 had more to do with funding problems than the underlying delivery model (where a simple payment can result in instant access to a fully-functional BI solution), but according to research from IDC, Forrester and Gartner, uptake of BI SaaS grew during 2009-2010, and will continue to do so. According to Brian McDonough, research manager for the business analytic solutions research service at IDC: “The business analytics SaaS market is poised for rapid growth as more organisations turn to cloud-based computing and alternative deployment options,” to both deploy and access BI SaaS.
In its Worldwide Business Analytics Software as a Service 2009 –2013 Forecast, IDC predicts that the number of business analytics SaaS users will expand rapidly, at three times the rate of the total business analytics software market. This growth will come partly from BI SaaS pure-plays and partly from the SaaS offerings of established BI vendors, and be driven by the following:
- Capital expenditure policies and budget constraints making SaaS offerings more attractive as they enable departments to subscribe to software services using operational budgets;
- Control of technology decisions falling into the hands of business users, as IT resources are strained and there is insufficient time to build, buy, or evaluate specific solutions for various business problems;
- Additional software functionality built on new platforms being suitable for SaaS delivery, as best practices can be configured, not customised, through a flexible platform to suit most business needs.
A state of flux
At the moment, the top five BI vendors are SAP/BusinessObjects, SAS, Oracle/Hyperion, IBM/Cognos, and Microsoft, and according to Gartner, between them they control 75 per cent of the market, but their dominance could be under threat. The research note that accompanies the Gartner 2010 Magic Quadrant for Business Intelligence Platforms suggests that some BI acquisitions and consolidations in 2007 and 2008 created vulnerabilities that smaller, innovative vendors have been quick to exploit. “Pure-plays are leveraging business user impatience with enterprise BI systems,” says analyst and co-author Rita Sallam, by delivering “alternative easy-to-use-and-deploy architectures, alternative business models, and a strong customer focus.”
Gartner found the BI market in 2009 defined by a “David and Goliathan struggle” between resilient BI pure-play vendors and “ostensibly omnipotent mega-vendors”, but it also found some customer dissatisfaction with what it described as “the often messy post-acquisition digestion process”. Based on analysts interactions with customers and the research conducted for the report it stated: “There is significant, if not euphoric, satisfaction with, and accelerated interest in, pure-play BI platforms,” and in particular, those that can “fill the needs left unmet by the larger vendors”.
Forrester research analyst Boris Evelson doesn’t anticipate a stampede to replace traditional BI with SaaS alternatives, but he is seeing growing interest in the latter approach: “Slowly but surely, with lots of criticism and scepticism, the business intelligence Software as a Service market is gaining ground,” he observes. Nonetheless, organisations should look beyond the immediacy of BI SaaS before making any leaps of faith: in its latest research report on BI in the Cloud, Forrester suggests that businesses make sure that BI SaaS is right for them, and that they are ready for BI SaaS, before committing.
Knowledge is power
The research company Forrester recommends a structured approach: organisations should begin by mapping their BI requirements and IT culture to one of five BI SaaS use cases (see below), then evaluate and consider scenarios where BI SaaS may be a right or wrong fit, and follow up by selecting the BI SaaS vendor that best fits their business, technical, and operational requirements.
The five BI SaaS use cases identifed by Forrester are:
1. Coexistence case: on-premise BI complemented with SaaS BI in enterprises.
2. SaaS-centric case in enterprises: main BI application in enterprises committed to SaaS.
3. SaaS-centric case in midmarket: main BI application in mid-sized businesses.
4. Elasticity case: BI for companies with strong variations in activity from season to season.
5. Power user flexibility case: BI workspaces are often considered necessary by power analysts.
Forrester also analysed the types of criteria which determine whether BI SaaS is a right or a wrong fit for any particular situation, including: the customisation level of data sources and where a BI project sits on an internal IT priority list, as well as considerations relating to security, risk, regulation and privacy.
When you have done all of this and are ready to move on to vendor selection, there seems to be quite a lot of common ground between the perspectives offered by Gartner and Forrester. “The first sensible step for anyone seeking a BI SaaS solution is to check with their enterprise BI vendor on their SaaS offering,” suggests Evelson, though with a few exceptions, you should expect to be disappointed, because most of the leading BI vendors are offering hosting rather than true SaaS. “This is precisely why there's a plethora of small BI vendors addressing the need and the opportunity in the market left largely unaddressed by the mainstream BI vendors,” he adds.
But with the list of BI SaaS vendors seems in a state of constant flux, this is a diffuclt judgement call. So if you are going to dip a toe into this particular pool, you will need to exercise some caution: thoroughly reading the research material, vendor scorecards and so on provided by IDC, Gartner and Forrester is a good place to begin – and the latter has some particularly sound advice to offer.
“The appeal of a BI SaaS application may be irresistible: You can subscribe and deploy it today, you don't need to go through the capital expenditure approval process, and you can even sometimes bypass cumbersome internal IT standards and protocols,” says Evelson, “but there are risks,” and Forrester “strongly recommends” the following risk mitigation steps and strategies:
- Perform due diligence for security, backup and disaster recovery
- Do not overlook BI SaaS pricing and contract matters
- Evaluate true long term cost of ownership
- Double-check whether you may require additional source data licenses
- Plan for the worst
As well as meeting your business requirements, all of the the possibles on your BI SaaS shortlist will need checking for financial backing, management strength, reputation, and stability, and you will probably need the support of a subject matter expert who really understands the underlying technology.
The need to deploy BI solutions immediately, and adapt rapidly to changes in business, global and local economics, and regulations, may call for the sort of nimble agile BI architectures and rapid response times that traditional BI providers have so far struggled to provide, but this situation is changing (witness the recent SAP BusinessObjects BI On Demand), and BI pure-play’s are increasingly unlikely to be the only BI SaaS option, as the barriers to developing SaaS BI offerings are increasingly few for traditional BI providers as well as start-ups.
So, although IDC, Gartner and Forrester are all predicting increased uptake of BI SaaS, and they all have “good things” to say about the offerings of pure-plays, it remains to be seen which providers will emerge as the market leaders in BI SaaS (and which pure-play is going to follow LucidEra down the slippery slope). So any decision on which approach to take to BI in the cloud should be heavily coloured not just by your immediate needs, but your appetite for risk – or your aversion for it.