Three drivers for cloud-based business intelligence

27 Jan 2012

New Gartner research suggests that almost one-third of organisations use, or plan to use, cloud-based BI. Why is the cloud seen by some as the best place to slice and dice corporate data?

Almost one third of organisations either already use, or plan to use, cloud or software-as-a-service (SaaS) offerings to augment their core business intelligence (BI) functions, says new research from IT market research company Gartner.

The company’s survey of 1,364 IT managers and business users of BI platforms suggests that they are turning to cloud offerings to expand their analytical capabilities, rather than to replace existing capabilities. Only 17 percent have replaced or plan to replace parts of their core BI functions with cloud/SaaS offerings, but 27 percent already use or plan to use cloud/SaaS options to augment their BI capabilities for specific lines of business or subject areas in the next 12 months.

“Business users are often frustrated by the deployment cycles, costs, complicated upgrade processes and IT infrastructures demanded by on-premise BI solutions,” said James Richardson, research director at Gartner. “SaaS and cloud-based BI is perceived as offering a quicker, potentially lower-cost and easier-to-deploy alternative, though this has yet to be proven. It’s evident that, despite growing interest, the market is confused about what cloud/SaaS BI and analytics are and what they can deliver.”

In order to provide some clarification, Gartner has identified three major drivers for the adoption of cloud/SaaS offerings for BI, analytics and performance management:

1. Time to value: The use of SaaS BI may lead to faster deployment, insight and value, particularly where IT is constrained by existing work and/or limited budget, so that it cannot respond to demands for information and analysis as quickly as the business requires.
2. Cost concerns: The cost dynamic differs between on-premise and SaaS models. Software purchased as a service can usually be expensed, rather than capitalised, on the balance sheet. “Buyers often think that SaaS is cheaper, but the reality is that this is unproven,” says the Gartner report. In fact, the company’s cost models show that SaaS can be cheaper over the first five years, but not thereafter. The long-term benefits lie elsewhere, say the company’s analysts, in terms of cash flow, reduced IT support costs and so on.
3. Lack of available expertise: SaaS analytic applications offer pre-built intellectual property that can help firms work around a lack of the skills needed to build their own analytic solutions.

Instead of disrupting the enterprise BI platform and corporate performance management suite market, a more likely scenario is that SaaS and cloud-based offerings will tap into new opportunities, according to Gartner. Examples might include a focus on mid-market companies that have yet to invest in BI or analytic capabilities for specific industry sectors.

“If their operational business applications are in the cloud, organisations should consider pursuing cloud BI/analytics for these domains,” said Gartner’s Richardson. “However, they must assess risks on an ongoing basis and ensure their chosen cloud provider has appropriate business skills to provide a viable outcome. They must also ensure their BI strategy outlines how to ensure that data lows to and from these solutions in order not to become yet more silos of analysis.”

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