On-Demand Business Intelligence Takes Off
Information Management Special Reports, July 7, 2009
In a challenging year, more organizations are looking to on-demand business intelligence to help chart a course through choppy waters. According to Gartner’s “Business Intelligence Ranked Top Technology Priority by CIOs for Fourth Year in a Row” report, CIOs continue to rank BI a top business priority. The new twist is that more of them are turning to on-demand solutions for business intelligence that is cost-effective, easy to use and quick to deploy. Speed is of particular importance – if you want your business to benefit from better decision-making this year, you need solution that is deployed in enough time to make a real difference.
On-demand (or software as a service) solutions are particularly attractive to midmarket companies or enterprise departments that have limited budgets and limited IT resources. On-demand solutions are delivered as a monthly service, so they offer a low-risk opportunity to get BI without high costs, onerous commitments or high resource requirements.
As a result of growing customer demand, a proliferation of offerings has become available. Three general approaches to on-demand BI have emerged. How can you determine which one is best for your business?
Why On-Demand BI Makes Sense
Companies are increasingly demanding an easy‐to‐build, easy‐to‐use analytics solution that can quickly deliver real business value to multiple constituencies within the organization. On-demand BI has emerged as a strong solution to these problems.
An on-demand BI solution resolves the traditional BI challenges by reducing the technical complexity of implementation and by automating simplifying the deployment and analysis process, while also offering significant business benefits to the customer. These benefits include:
Rapid time-to-value. Results are delivered in weeks rather than months or years, putting valuable analytics in the hands of business users who can have the greatest impact on revenue and profits.
More affordable implementations. Results are delivered at less cost, because both the software and services components are dramatically reduced.
Greater flexibility. Dashboards and reports can be made accessible to business users who initiate and complete their own analysis and report creation, so the system can keep pace with ever‐evolving business needs.
On-demand savings can be compelling. For example, one marketing consulting company was spending more than $10,000 per month just to print and distribute reports generated by their outdated and inflexible in-house reporting system. A modern, on-demand BI solution with electronic report distribution not only gave them greater analytical power and flexibility, but it could be purchased for less than their monthly printing costs alone. The ROI in this situation is not only high, it is instantaneous. This new value proposition is drawing customers to on-demand solutions.
Ultimately, on-demand BI can offer more flexibility at lower cost, making BI more accessible to more users in companies both large and small.
Three On-Demand Approaches
As on-demand BI gains momentum in the marketplace, competition is heating up, and three categories of vendors are beginning to emerge, each with their own benefits and challenges.
The ASP Approach. These vendors take existing BI software develop custom solutions for their customers and deliver it online as a service, often employing standard data models to accelerate the deployment process. These vendors reduce the cost and deployment time of the solution by providing BI expertise using standard data models and absorbing hardware costs for their customers. The monthly service billing approach also enables customers to move the cost from being considered a capital expense to being considered an operating expense, which makes it easier to fit in most budgets.
However, this approach involves some limitations, as shown in the late 1990s and early 2000s when this model was employed for customer relationship management and enterprise relationship planning systems. While these early application service provider providers hoped to realize economies of scale and operational efficiency in standard deployment, those benefits proved elusive in practice. This difficulty arose because most customers required more configuration than originally expected, and the commercially available CRM and ERP applications the vendors employed made customization a time-consuming process, dramatically increasing project timelines and ultimately costs. ASP vendors in the BI space may face similar challenges as they try to meet the needs of customers who want to configure their applications and include additional data sources.
For customers, the ASP approach is appropriate in situations where standard functionality is desired from what is essentially a hosted version of an on-premise software solution. Customization may be limited, however, and require deployment times comparable to on-premise installations, limiting the value proposition.
Pre-built application approach. The second group of on-demand BI vendors has approached the problem differently. Instead of applying traditional tools and labor to address customer needs, they have built targeted applications for known data sources such as Salesforce.com or Oracle Financials.
These vendors aim to lower deployment time and cost by prebuilding integrated applications or sets of reports, thereby enabling multiple customers to benefit from a single application or report set. Due to the high cost of building such a solution using the proprietary databases and open source BI tools, these vendors are forced to focus on developing one application at a time. Because changing these prebuilt applications is time-consuming, these vendors must also minimize the customization for each customer if they are to deliver value quickly and affordably. Custom data within your operational system may not be included in the analysis and reporting, and combining data from multiple operational systems or databases (such as combining information from marketing, sales and financial systems) may not be included.
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