It’s gaining momentum, but SaaS BI in the cloud isn’t for everyone

Before making an investment, businesses need to analyze why a cloud-based BI application is not only attractive but necessary.

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Six years ago, RBC Wealth Management’s business intelligence (BI) centered on the home office assembling data in Microsoft Excel spreadsheets and then emailing the information out to more than 2,000 brokers. That changed in 2007 when the financial advisory institution began investigating other BI options, which included a secure public cloud application.

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“The primary drivers were the kind of usual suspects you talk about when you talk about cloud-based BI tools,” said Shawn Spott, vice president and manager of corporate intelligence and research for the Minneapolis, Minn., company.

With RBC’s small IT department, a cloud BI application had allure -- it could alleviate some of the up-front costs and maintenance associated with on-premises tools. Before plunking down money, Spott considered why a BI in the cloud product was not just attractive but necessary.

“We needed a tool that was going to have good visual appeal,” Spott said. “But we needed to be able to get into some very sophisticated, under-the-hood calculations and algorithms.”

Spott eventually selected a Software as a Service (SaaS) cloud BI product from San Francisco-based Birst Inc. He suggests other businesses follow suit: Analysis before investment.

“You have to look at why you are going to cloud-based implementations versus on-premises,” he said. “What issues are you trying to resolve? Do you have technology constraints either on resources or on hardware?”

His recommendation is shared by analysts who believe SaaS BI in the cloud is a good fit for the right use case but also caution against false impressions and buying in to the trendiness.

SaaS BI in the cloud is not for you
Boris Evelson, a principal analyst for the Cambridge, Mass., research group Forrester Research Inc., suggests businesses start by asking why deploying BI in the cloud makes sense. Doing so will help ferret out where the current BI program is failing and overcome a common misconception: Customers, he said, tend to see the success of Salesforce.com and customer relationship management (CRM) as an analogy for what’s possible with SaaS BI in the cloud.

“Unfortunately, that parallel is not correct,” Evelson said.

Because customers are essentially renting, not building, the software -- and it’s usually the software rather than the platform or the infrastructure -- they need to define their requirements up front. That might work for CRM but presents a challenge when it comes to BI, Evelson said.

“BI is different from any other enterprise application because BI is not an application; it’s an environment that often changes on a daily basis,” he said. “Having control over that environment is very important.”

Plus, while a cloud-based BI application may be a good option for smaller businesses, the challenge facing larger companies is data integration: Combining sales, financial, point-of-sale and social media data across the enterprise for a unified, complete view of the business.

“You can’t just give that to someone in the cloud,” he said. “Even if you did, who is going to do the data integration? It still has to be done.”

SaaS BI in the cloud is for you
But there are cases when SaaS BI in the cloud warrant a closer look -- such as when businesses need more compute power for faster analysis. Here, businesses have an on-premises BI system but rely on the elasticity of the cloud to handle the spillover when necessary.

“This is the cloud on demand: When I need it, I use it,” Evelson said.

RBC’s cloud BI provides a similar scenario of the same use case, one that’s becoming common. The company uses its cloud-based tool to give its brokers and financial analysts dashboards, which are relatively static on the back end, in conjunction with its on-premises BI program. The dashboards don’t require frequent coding updates or introduce new data sources often, which means RBC can set it and forget it.

“Cloud-based BI is most successful if you can tighten down the bolts and you don’t have to make a lot of mid-flight corrections,” said Spott.

Using the cloud to offset a BI program is not unusual. According to a recent survey by the Stamford, Conn., consultancy Gartner Inc., only 17% of organizations replaced or plan to replace part of their core BI capabilities with a cloud-based product. But nearly one-third of organizations, like RBC, already use or plan to use SaaS offerings to enhance those core functionalities.

Cloud-based BI still maturing
The survey results indicate cloud BI is growing, and according to Cindi Howson, a BI consultant and the founder of the technology evaluation website BIScorecard, it’s also maturing.

“A number of forces are influencing the acceptance of cloud BI, not the least of which is the maturity of the Software as a Service concept,” Howson during said The Data Warehousing Institute’s recent webinar presentation “BI in the Cloud: Blue Skies or Storms.”

Howson said the success of vendors like Salesforce.com has made running mission-critical applications in the cloud more palatable. Plus, vendors are able to offer new features, which bolster cloud BI’s reputation. In the past, businesses that wanted to analyze their cloud data would need to upload additional data sources to the cloud. Today, some vendors allow businesses to leave their data on-premises. (Though, as Evelson points out, they’ll still have to pay for bandwidth.)

But the increased acceptance of cloud BI may also hinge on the increased acceptance of BI in general, which has placed growing demands on IT departments.

“It’s almost forcing IT to take stock of what skills they need to keep in-house,” Howson said.

That could lead businesses to consider cloud deployments that bleed into the lesser-known Infrastructure as a Service and Platform as a Service offerings.

Although rare, some businesses are pushing the BI development platform into the cloud, Evelson said.

“That addresses the need of developers who want full control of the software but don’t want to deal with data servers or upgrades.”

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