It was just a matter of time. Application service providers (ASPs) led the way with Internet-based hosted systems that provide an outsourcing alternative to in house application implementation. ASPs are now somewhat common, and their business model and entailing benefits are fairly well understood by the IT community. The latest wrinkle in the ASP market trend is that several vendors are now adapting data warehousing and business intelligence methodologies and technologies to the ASP model.

A new category of service provider – complete with its own acronym – is born. A business intelligence service provider (BISP) typically monitors its clients' Web sites, collecting information about activity on the site. The BISP transforms and loads the information into a database (perhaps in a multidimensional data model), and provides an analytic application or body of reports to analyze the data.

THE HURWITZ TAKE: Although this new category of provider is only a few months old, it already segments into types according to the focus of the analytic service:

  • Some BISPs specialize in B2C e-commerce Web sites, for which they collect information about customer behavior and structure the information for various types of customer analysis.
  • Other BISPs provide a similar service, but they filter B2B sites (like trading exchanges) to analyze business entities such as suppliers.
  • At the low end, some BISPs simply filter a Web site and provide analysis of its traffic in a general way, without relating traffic to specific entities like customers or suppliers. A few BISPs provide niche services such as recording/playback of customer online sessions or comparing the shopping experience on one site versus another.

The BISP concept is too new to have many users signed on, but Hurwitz Group believes that many companies will soon evaluate them because of their compelling benefits:

  • They offer easy integration with existing Web-based systems.
  • They require only weeks (even days) to get online with business intelligence.
  • Most are focused solutions that address specific business needs.
  • They let users "try before they buy."
  • They are considerably less expensive and far less risky than implementing an in house solution.

These are essentially the same benefits as a "traditional" ASP, albeit focused on business intelligence.
As with ASPs, users have concerns about BISPs, such as allowing a third party to host (even own) their valuable and sensitive data, depending on the Internet to be available with adequate bandwidth, and trusting that the BISP will not impact the performance or integrity of in house systems. Only time will tell if the benefits of a BISP will win against these concerns.

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