Editor's Note: For this special issue, we asked our columnists to cover a variety of e-business topics. Their insightful commentary provides a well- rounded outlook as to the benefits and challenges of the e-world. Regular column format will return next month.

Application service providers (ASPs) have been the recent leading edge of IT with their Internet-based systems that provide an outsourcing alternative to in-house application implementation. ASPs are now firmly established, and their business model and benefits are fairly well understood by the IT community. As a natural extension of the ASP, a few software vendors are now adapting data warehousing and business intelligence (BI) methodologies and technologies to the ASP model.

Where BI meets ASP, a new category of service provider has appeared: the business intelligence service provider (BISP). The vendors of BISPs apply a variety of names to their Internet-based services, including ASP, portal, content provider or extranet. Regardless of the vendor's moniker, a BISP does the following:

  • Collects data over the Internet and prepares it for analysis.
  • Provides access to an Internet-based analytic database (perhaps in a multidimensional data model, perhaps metrics oriented).
  • Delivers an Internet-based analytic application or body of reports to analyze the data.

B2C or B2B E-Commerce

A few BISPs tie into information systems behind a corporation's firewall, providing traditional data warehouse and analytic application capabilities, but hosted off site. The majority of BISPs available today, however, provide analytic capabilities for Internet-based e-businesses, especially e-commerce Web sites.

Some BISPs specialize in business-to-consumer (B2C) Web sites, from which they collect information about consumer behavior, structuring the information for various types of customer analysis (Tea Leaf and WebPartner). Other BISPs provide a similar service, but filtering business-to- business (B2B) sites (such as trading exchanges) to analyze business entities such as suppliers (Interelate, Tilion)

Most BISPs fulfill a specialized function and so reside in niches of the business intelligence market. For instance, a few BISPs provide data cleansing, matching and authentication, performed online to ensure high quality for data coming from Internet sources such as Web-page forms (Firstlogic's eDataQuality, HotData.com and Sagent's Centrus.com). Other BISPs focus on providing or enhancing online customer and business profiles to support the cross-sell and up-sell efforts of e-commerce Web sites (Acxiom Data Network, Dun & Bradstreet Family Tree and Engage Technologies). A few BISPs focus on Web site traffic analysis (Foveon, Searchbutton.com and WebTrends).

Vendors of analytic tools and systems are gearing up with special offerings that fulfill the technical platform requirements of a BISP (iQO.com, WhiteCross). Some of these offerings are marketed as extranet solutions (Acta, Brio, Business Objects). End users and IT organizations are getting into the act as well. Data warehouse practices in a few large corporations are extending their Web-based analytic applications and databases to customers and partners (Duke Energy, Owens & Minor). This way, the IT organization acts as a BISP to provide a value-added service for stakeholders.

A BISP platform must deal with Internet-based data collection, which is typically high volume, requires considerable processing and is loaded into databases that are both aggregated and highly granular. A BISP platform must also give its users access to this data through browser- based analytic tools, which entail Web-based queries, large multidimensional result sets returned via the Internet, and the high-performance and high- availability expectations of impatient Internet users. BISP implementers must be careful to choose hardware and software systems that are designed for the Internet and can address these issues.

Some BISPs dangle the integration ease and speed to deployment of Internet-based hosting as the lure that hooks their customers. A BISP certainly lowers barriers to evaluation and adoption. However, many customers want a BI solution in house for reasons of security, performance, liability or sheer paranoia. To satisfy both types of customer, some BISPs (following the lead of a few ASPs) architect their systems so they can be deployed in either ASP or turnkey models. When both models are supported, there is typically a migration path between the two. In other words, the customer begins with the hosted BISP as a convenient medium for prototyping, then installs the turnkey solution at a later stage.

Best practices for BISP pricing are still in flux. BISP vendors are currently experimenting with pricing models as varied as site licenses, named-user accounts, subscription models and models based on data volume or query load. It may be a while before vendors find a "sweet spot" for pricing.

Benefits

The BISP concept is too new to have many users signed on. But many corporations will soon evaluate BISPs because of their compelling benefits.

  • BISPs offer easy integration with existing Web-based systems.
  • BISPs require only weeks (or even days) to get online with business intelligence.
  • Most BISPs are focused solutions that address specific business needs.
  • BISPs enable users to "try before they buy."
  • BISPs are considerably less expensive and far less risky than implementing an in-house solution.
  • Centralized management enables the BISP provider to roll out new releases transparently, whether major or incremental, with zero administration (or close to it) for both provider and users.

These are essentially the same benefits as a traditional ASP, albeit focused on business intelligence.

Concerns

As with ASPs, end users and IT organizations have the following concerns about BISPs:

  • Allowing a third party to host (even own) their valuable and sensitive data.
  • Relying on the Internet to be available with adequate bandwidth.
  • Trusting that the BISP will not impact the performance or integrity of in-house systems.

End users are slowly getting comfortable with ASPs and BISPs, but only time will tell if the benefits will win against the concerns.

Eschew Myopia ­ Join an Online Community

Some business intelligence users want to see only their data, while others are interested in seeing their corporate performance in the context of a larger market. A BISP is communal by nature, such that there is the possibility of aggregating data across all subscribers. That way, users can see how they compare to other members of the community, even competitors. Aggregated communal data is one of the greatest potential benefits of a BISP, because it helps avoid the "data myopia" that is too often designed into business intelligence systems.

To enable the development of aggregated communal data, the people and companies of an online community should allow their actions (such as consumer shopping behavior or business-to-business transactions) to be recorded. Furthermore, that record should be available to members of the community ­ with the appropriate information aggregation and privacy issues satisfied, of course. This way, consumers and companies achieve an even broader view of relevant commercial behavior.

For instance, a mass consumer could see what purchases are made by people with interests similar to theirs. This helps the vendor up-sell and cross-sell, but it also helps the consumer discover nuggets they would have missed. In a B2B scenario, a manufacturer can see how its suppliers perform with other manufacturers. Also, this fosters the ability to rank suppliers based on their performance across the community, as well as a supplier's performance with just one manufacturer.

Most ASPs, Internet- based portals, Internet trade exchanges and other types of dot-coms are well- positioned to collect and add value to data representing the online behavior of the members of their online consumer communities. Yet, most of them are just now discovering this opportunity for adding value to their offerings.

End users contemplating a subscription to an Internet-based community should ensure there is an analytic component that helps them avoid myopia and discover opportunities. Likewise, providers of online communities should give their customers added value by including the analytic capabilities of a BISP, whether built by the community's vendor or supplied from a partnering BISP.

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