Editor’s note: Steve Stone, SVP of MicroStrategy cloud strategy, will brief Wayne Eckerson, BI Leadership, on MicroStrategy’s Cloud BI offering. Join the conversation on December 13 at 4 EST.
Like most areas of software, business intelligence (BI) is heading to the cloud. By Cloud BI, I mean reports and dashboards that run in a multitenant, hosted environment which users access via a Web browser. The reports and applications can be packaged (i.e., software as a service or SaaS) or custom-built using platform-as-a-service (PaaS) tools. (See “What is Cloud Computing?”.)
Cloud BI eliminates the need to buy hardware and install, tune, and upgrade software. Consequently, there are no IT people to hire, pay, and manage. Applications upgrade automagically and can be scaled seamlessly. Customers pay a monthly subscription based on usage rather than an upfront licensing fee. Essentially, the cloud speeds delivery and drives down costs. What’s not to like?
However, some organizations are still holding back, concerned about the risk of moving sensitive corporate data outside the firewall or too ensconced in an existing on-premises environment. Others are experimenting with the cloud, using it to support ad hoc or temporary workloads or pilot new applications before bringing the systems in house. Others find the cost of Cloud BI is higher than they anticipated because BI is basically a custom development project.
Although Cloud BI hasn’t slowed the growth of on-premises BI software, it is gaining ground, according to a recent survey of the BI Leadership Forum, a global network of BI directors and other BI professionals. (See www.bileadership.com.) More than one-third of organizations are currently using the cloud for some part of their BI program, according to the survey as shown in Figure 1.
[singlepic=200,530,530,,center] Source: BI Leadership Forum, June 2011. Based on 112 responses. www.bileadership.com
Figure 1. Are you using the cloud for any part of your BI program?
Organizations that have embraced the cloud point to “speed of deployment” (30%) and “reduced maintenance” (30%), followed by “flexibility” (19%) and “cost” (11%). (See Figure 2.)[singlepic=201,530,350,,center] Figure 2. Motivating Factors
So far, Cloud BI users are happy campers. Almost two-thirds (65%) said they plan to increase their usage of Cloud BI in the next 12 months. Only 3% said they would decrease usage while another 16% will keep their implementation the same and 16% weren’t sure. (See Figure 3.)
Among respondents who are not using Cloud BI, 16% said they plan to implement Cloud BI in the next 12 months and 32% were not sure. So Cloud BI has momentum. However, it may take a five to 10 years for Cloud BI to reach the tipping point where it becomes a mainstream component of every BI program. Given Cloud BI’s benefits, this trajectory is inevitable.[singlepic=202,530,530,,center] Figure 3. Future Usage
Small Companies Lead the Way
A closer look at the data confirms what many pundits have said about the target market for Cloud-BI software: that it’s currently ideal for small companies with few IT resources, limited capital to spend on servers and software, and minimal to no BI expertise. Almost half of small companies under $100 million in annual revenues (46%) use Cloud BI in some shape or form. In contrast, large companies with over $1 billion in annual revenues are almost less than half as likely to adopt the cloud (29%), while medium-sized companies with between $100 million and $1 billion in annual revenues lag further behind with less than one-fifth using BI in the cloud (18%). (See Figure 4.)[singlepic=203,530,530,,center] Figure 4. Cloud BI Deployment by Company Size
Small Companies. For small businesses without legacy BI applications, Cloud BI services are a godsend. The economics and convenience are compelling. Instead of passing around spreadsheets, small companies can implement a Cloud BI service to standardize reports and dashboards and make them available to all employees anywhere via a Web browser.
“What’s refreshing for me is that I can go in at any time of day and [run a] report on any metric in our organization, such as item received delivered, inspected at the category, personnel, or employee level and track it by any time period,” says Wayne Deer, vice president of operations, at Gazelle, an electronics recycler, which uses GoodData’s Cloud BI service.
Large Companies. Interestingly, large companies are the next most prevalent users of Cloud BI services. Often, it’s a department head who wants to build a BI application quickly without getting corporate IT involved. Like small companies, departments at larger companies often have limited budgets and BI expertise, and most don’t want the headaches and expense of having to maintain servers and software.
But enterprise BI managers have assessed the potential of Cloud BI and like what they see. Unfortunately, many are hamstrung by legacy BI implementations. “I see us moving very slowly with adoption because of installed base and switching costs,” wrote Darrell Piatt, Director and Chief Architect at a large professional services firm based in Virginia, in a BI Leadership Forum discussion thread. “When and if we decide to replace our BI infrastructure, Cloud BI offerings will be seriously considered.”
Mid-Size Companies. According to Figure 2, medium-sized companies are least likely to adopt Cloud BI services. The reason is that most have already implemented an enterprise IT platform, usually Microsoft SQL Server, which bundles BI tools and applications for free. If the organization has assigned an analyst or IT administrator to build and maintain enterprise reports and dashboards using the platform, it likely has little bandwidth, incentive, or capital to change courses and introduce an alternative BI stack, unless it is having difficulty meeting user requirements.
Although the ramp up of Cloud BI services hasn’t been as fast as some anticipated, it’s clearly catching on. The BI market poses unique challenges compared to other SaaS market segments that automate operational business processes. That’s because BI applications are generally custom-built and require companies to integrate data from multiple sources. Cloud BI vendors have taken different approaches to “servitize” a custom application, which is a logical contradiction. Not all have succeeded, but those still in the market are making headway. The value of cloud computing is high, and the BI industry will eventually find a way to succeed with it.