In recently published CIO surveys conducted by Morgan Stanley (see below), Gartner, and Forrester, BI consistently scores high as a must-have solution and likely to experience little or no cuts in the current environment.
After participating in discussions on new BI solutions (here and here) I walked away thinking that while the interest in on-demand BI solutions is increasing, the SaaS delivery model for BI is not yet broadly accepted. Five issues are perceived as obstacles to the adoption of on-demand BI:
- Data security. Because BI can involve the analysis of sensitive data, e.g., personnel data, companies hesitate moving this data outside their firewall.
- Total Cost of Ownership (TCO). The TCO of on-demand BI solutions is not significantly lower than that of corresponding on-premise solutions.
- Application uptime. On-demand BI applications are not as reliable as their on-premise counterparts to support operational decision-making.
- Data uploading speed. State of practice communication infrastructures don’t allow large quantities of data to be uploaded to the cloud fast enough to enable, through the use of BI tools, the creation of necessary insights in a timely manner.
- Application sophistication. The on-premise reporting tools, e.g., Cognos, Business Objects, provide richer functionality than their on-demand counterparts.
As the data from a recent Goldman Sachs CIO survey indicates (see below), the first three of these issues (security, TCO, and application uptime) are customer concerns for every other on-demand application, and are not specific to on-demand BI.
Data uploading speed impacts BI solutions more specifically since such solutions are by nature data-intensive and, in order to be effective, applications such as price optimization, markdown analysis and others require quick turnaround of data. Finally, functionality comparisons between on-premise and on-demand equivalents have been offered as arguments against the use of any type of on-demand application, from word processing to ERP.
Yet all these issues have not slowed down the rapid adoption of SaaS applications. For example, the growing popularity of Human Capital Management SaaS applications, like Workday and Success Factors, indicate that the companies of every size are satisfied with the ways such application providers address data security. Similarly, the growth of on-demand ERP systems, such as NetSuite’s, points to the customer acceptance of the uptime performance of these mission-critical applications. Successful on-demand price optimization applications, like DemandTec’s, show that uploading large data sets is being addressed effectively by at least some on-demand BI vendors. It is true that certain power users of on-premise reporting and analysis tools may find that the on-demand BI tools lack some functionality. However, the majority of the users will find that the on-demand BI tools have all the functionality that is necessary to enable them to work effectively.
More and larger companies are increasingly relying on SaaS applications to run critical parts of their businesses. The adoption trends we initially observed with on-demand CRM and productivity applications and later with ERP applications we are now starting to see with on-demand BI applications. In the next post I will discuss the value and uniqueness of on-demand BI and of the areas that are impacting the TCO of such solutions.