Evolution of On-Demand BI

So I have been seeing a lot of the “On-Demand Business Intelligence” marketing term being tossed around. Just to validate the infectious nature of the term, right or wrong, try doing a quick Google search on the phrase “On Demand BI”. For me it returned 9,120 results in less then 0.27 seconds. When I looked at the top 50 results, they ranged from written articles to software vendors to some topics inappropriate for the DIG blog space. (As a side note, I think I found a new feature for Google to add, or I have missed it. I would like to be able to go to the end of the search results. I was curious to see what was at the bottom of the list).

So I filtered out the software vendors, since the purpose of my search wasn’t to evaluate the technologies available, although it is something I would like to do in a future post. Instead, I wanted to see what the “experts” were saying about business intelligence on-demand.

The first observation is that less then 15% of the results were from the past year. I can conclude that one of three things occurred. One, the marketing dollars are starting to dry up and there is only so much that can be spent on certain buzz words. Second, the industry has moved on to a different set of marketing terms that will help create hype cycles along with fear, uncertainty and doubt. Or third, and what can only be the real reason in the drop of web content over the past 12 months, we have finally arrived. BI on demand is a reality and there is no reason to discuss it anymore (insert sarcasm here).

So what is “on demand BI”? Simply put, it is hosted business intelligence solutions or “Software as a Service”, SaaS for short. The most successful and well-known SaaS vendor is Salesforce.com and their AppExchange platform.

The first question I asked myself was “So what are the benefits of on-demand business intelligence”? I started back to the earliest Google results I could find from 2006. Here are some of the highlights that I found in different articles selected at random.

In a Computer World posting back in October of 2006, Jerri Ledford made the following points on the topic:

“…it's business intelligence when and where you need it, without all of the difficulties of building the solution yourself, or hosting it yourself, or even maintaining it yourself.”

“on-demand BI is gaining ground, because it's appealing to smaller companies that can't afford to invest in a full-blown BI solution”

“…the benefits become clear (usually). For example, on-demand BI usually means you have the answers to your BI questions when you need them (and where you need them) without having to devote an entire army of IT professionals to pulling those answers from mountains of data.”

Another posting on TechLink by Amit Kesarwani in December 2006 had this to say:

“On-Demand BI provides much more benefits than operational Software as a Service due to the complexity and high cost of BI systems. On-Demand BI providers can easily offer economies of scale and shared cost using multi-tenant architecture but without jeopardizing security”

Mr. Kesarwani goes on to compare “Traditional BI Deployments” to “On-Demand BI Deployments”. Here are a couple of the comparison points.

“Traditional BI Deployments: Complex to use and deploy, Expensive Customization, Long Project Life Cycle, Lack BI best practices, High Risk”

“Usability for On-Demand BI Deployments: Easy to use and deploy, Low Cost Customization, Rapid time to market, Provides best practices, Low Risk”

And finally, this post from Darren Cunningham on the SuccessForce Community Blog:

“I think the renewed focus on simplicity in the BI market is accelerating the shift from on-premise to on-demand solutions and this will ultimately help drive greater end-user adoption and improve organizational decision making.”

So, let’s jump ahead to some more recent postings in 2007 and 2008. The first was from a research report by the Aberdeen Group on what is driving BI user adoption. Here are a couple of the highlights:

“This benchmark study finds that organizations falling into the ‘Best-in-Class’ category are addressing the skill set shortage by establishing training programs, contracting with 3rd party consultants and solution providers, or implementing On-Demand options such as hosted BI, SaaS (Software as a Service), and BI appliances.”

And finally, I found the following on CIO.com. This article was posted 4 days ago!

“The oft-cited concerns regarding on-demand and SaaS applications (integration, customization, security) typically don't emanate from the business side of an organization. Typically, they come from IT groups already under intense pressure from project backlogs and a lean number of staffers, who most likely don't have BI development skills.”

“With easy-to-install on-demand applications, IT's role as gatekeeper is minimized, say analysts. By 2012, Gartner's Schlegel predicts that emerging technologies such as on-demand and SaaS BI tools will make users ‘less dependent on central IT departments to meet their BI requirements.’”

“One major sticking point for IT usually involves the security of corporate data as it moves outside of IT's control. But executives and analysts say that the potential business benefits of quicker access to BI data, coupled with the robustness of third-party providers' security mechanisms, may outweigh concerns.”

So what can we glean from these articles? What are some common themes? What has changed over the course of three years?

There are some pretty big promises being made with a lot of the positive rhetoric. Promises like fast deployments, higher user adoption and elimination of your IT organization. Okay, I made that last one up but I was just checking to see if you were paying attention. If you peel away the SaaS vision and happy talk, there are some key themes that should be takeaways, for both on-demand and on-premise BI deployments.

First, user adoption is a significant issue for BI applications. So what is driving low user adoption? The issue that continues to bubble to the top is complexity of the tools. Does SaaS solve this problem? Possibly, but BI systems still comprise of complex tools to answer complex questions. The advantage of SaaS is the total cost of ownership will be significantly less, since the per user license cost is lower and if you only have a handful of people actually using it, then you would hope you only pay for those users. This will be much cheaper then predicting you will have 1000 users for on on-premise solution and paying all of those users before you have the software installed.

Second, the simple and easy deployments seem to popup consistently. I do agree that removing the complexity of hardware and software procurement will reduce some upfront angst, but do we really think that the primary reasons why BI applications go amuck (i.e. poor data, inconsistent agreement to business requirements to name a few) will magically disappear? I am not a pessimist by nature, but instead a realist. These issues need to be address no matter how you physically deploy your BI solutions.

Finally, security of data is a consistent concern associated with hosting a BI application. It was pointed out in 2006 and 2008 and I will predict it will be a concern in 2012. That being said, how many organizations have had data compromised when it was behind their own firewalls? Maybe it will be safer if someone else takes care of it for you.

So who should consider on-demand BI? The quick answer is everyone. It is a viable approach and a majority of the software industry is moving to SaaS architectures. But to be more specific, I would say there are three considerations when selecting the type of BI deployment. The first is the size of your organization. Smaller organizations that currently have no BI solution and the economics make more sense should consider an on-demand deployment. For those firms that have limited business intelligence skills in IT, should also consider BI SaaS. Finding talented BI skills has been a lingering issue for years. And finally, consideration should be made on the security of your data being hosted externally to your organization. As I said earlier, it may be more secure when you don’t host it!

To read some additional thoughts beyond my rants, check out Timo Elliot's BI blog posting on the topic.

What are you thoughts? Are you using or considering on-demand BI? If so, what made your deployment successful versus an on-premise deployment (assuming it was successful)?