My colleagues and I have just completed yet another (among dozens recently) engagement with a large client who was undergoing a to be or not to be decision: whether to move their BI platform and applications to the cloud.

It’s a very typical question that our clients are asking these days, mainly for the following two reasons:

  1. In many cases their current on-premise BI solutions are too inflexible to support the business now, much less in the future.
  2. Relative success of cloud based CRM (SFDC and others) solutions may indicate that cloud offers a better alternative

These clients put one and two together and make a reasonable assumption that cloud BI will solve many of the current BI challenges that cloud based CRM did solve. Reasonable? Yes. Correct? Not so fast – the only correct answer is it depends.
Let’s take a couple of steps back. First let’s define applications or packaged solutions vs. platform (because BI requires both).

Packaged solutions

  • Subscribe to a solution like CRM
  • Provide standard business functions to all customers (which makes it different from “hosting” – see next section
  • Difficult to tailor to specific needs
  • Usually are used synonymously (but incorrectly, see next section) with Software as a Service (SaaS)

Platforms for building solutions

  • Subscribe to tools and resources to build solutions like CRM
  • Provide standard technical functions to developers
  • Contain limited if any business application functionality
  • Usually labeled either Platform as a Service (PaaS) or Infrastructure as a Service (IaaS)

Now, let’s define cloud. First of all, the term is used very often synonymously with SaaS. But SaaS is just a business model and many on-premise solutions today (open source BI, financed/leased BI platforms, etc) already use that. So let’s define what cloud based SaaS is:

  • Application hosting. There’s nothing new here. BI vendors (IBM, Oracle, SAP, MicroStrategy, SAS, Information Builders and others) have provided hosting options for their single client BI on-premise BI platforms and apps for many years.
  • Managed service/application hosting. Again, nothing radically new. Leading consultancies (IBM, HP, Accenture, CapGemini, CSC, TCS, Wipro, Infosys and others) also have been hosting and managing BI platforms and applications.
  • IaaS. This is highly standardized selective computing functionality — such as compute power, storage, archive, or other basic infrastructure components — provided over the public Internet through a utility pricing and delivery scheme. The underlying computing resources are shared among a large number of users and hosted by the IaaS provider. There’s nothing BI specific in these IaaS providers - Amazon EC2, Google App Engine, Microsoft Windows Azure – but anyone can take their on-premise BI platform and application and host it on an IaaS platform. Some partners of the leading BI vendors are already doing so and some native cloud BI platforms, such as Gooddata and others are based on such public IaaS platforms.
  • PaaS. Represents a complete preintegrated platform offering for the development and operations of general purpose business applications. This is the least mature segment with only a few emerging vendors. Open source vendors like Jaspersoft are forming alliances PaaS vendors like RedHat to add BI PaaS functionality to RedHat’s OpenShip PaaS. Or native cloud BI vendors like GoodData are in the business of offering prebuilt analytical applications to the business users or BI development platform to professional developers who don’t want to deal with their own BI infrastructure.
  • SaaS. Pertains to standard software application functionality delivered over the public Internet and provided through a usage-based pricing model. The underlying application resources are shared among a large number of users. There are hundreds of domain and industry specific apps such as SFDC for CRM and ADP for payroll.
  • BPaaS. Business Process as a Service. Involves the provisioning of highly standardized end-to-end business processes delivered via dynamic, pay-per-use, and self-service consumption models. Today this is mostly limited to specific domains such as customer data cleansing provided by vendors like D&B, Axciom, HarteHanks and others.

So … when we at Forrester talk about cloud BI we usually mean a combination of cloud BI SaaS and PaaS. Now that we have defined what it is, let’s drill into the “it depends” statement we made at the beginning of this blog.
As demonstrated in our numerous research documents, BI is unlike any other enterprise software or application (like CRM or ERP) because:

  • It is difficult to define requirements up front – business users may only know 20% or less of what reporting and analytical needs they will have in a few months
  • It is difficult to put down BI requirements on paper in a standard requirements definition format. Business users often say “show me what it’ll look like and I’ll tell you what I want or don’t want”
  • Build it and they will come baseball field analogy directly applies to BI. Only when business users see a report that they can touch and feel, that’s when the real requirements start pouring in.
  • As much as we like to be proactive, BI applications and platforms have to be very reactive, because change is the only constant in the world of BI.

These are the main reasons why one can’t compare BI to CRM (or any other enterprise app) and make a conclusion that cloud BI is a panacea to all BI challenges. Having said that, the move to the cloud is happening, it’s just happening much slower than in any other enterprise software segment. Here’s the state of the market:

  • There are hundreds (or probably thousands) of domain or industry specific cloud based BI applications. These are not BI platforms and are mostly used by small businesses or departments within large enterprises which have highly commoditized functions (procurement or HR analytics, for example). We expect these cloud based applications to continue to pop up all over the place.
  • Leading BI vendors (Actuate, SAP, MicroStrategy) are offering cloud based versions of their on-premise platforms. While these are indeed BI development platforms, they provide only a small subset of these vendors’ full on-premise functionality. We expect more leading BI vendors to enter this space and for the BI PaaS functionality to mature in 2-3 years.
  • Startups (GoodData, Birst, Bime, Alteryx, others) will continue to enhance their functionality and narrow the gap between their offerings and the offerings of the leading BI vendors. This is a perilous road, though, and only a few best will survive (we’ve seen plenty of failures in this segment already)

I hope this blog did not sound too negative about the cloud BI market – it is indeed one of the top current and future BI trends that we predicted and currently track. I only intend to separate hype from fiction and help our clients make more informed to cloud or not to cloud BI decisions.

As always, I more than welcome all comments.

This blog originally appeared at Forrester Research.

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