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Business analytics SaaS expands

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This article appears in the issue January 2008, [Vol 17, Issue 1]
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While business analytics SaaS is expected to grow from a small base in 2006, the market will also be inhibited by several factors, such as:

  • The ability to receive the necessary level of ongoing software customization. Unlike operational applications, such as CRM, which continue to shift to the SaaS model at a rapid pace, business analytics solutions usually require iterative development and ongoing changes to already deployed solutions. This means that the service provider must be able to provide highly customized services to each customer—a requirement that would break the one-to-many model of SaaS. Business analytics consists of two primary use cases—exploratory, ad hoc analytics used by analysts and broadly deployed reporting, dashboarding and embedded business intelligence functionality for other decision makers, including front-line employees. IDC believes that most of the short-term success in the business analytics SaaS market will come from pre-built analytic applications for the "average" analyst or as embedded components in other SaaS operational applications. General purpose reporting, OLAP, data mining and statistics software is less likely to migrate to SaaS in the short term.
  • Competing business analytics software offered for on-premises deployment will continue to hinder expansion of business analytics SaaS. The traditional method of deployment will be the most popular over the next five years. Additionally, newer software offerings from both established and emerging vendors that demonstrate significant benefits will spur investment in them, even though they have higher upfront costs than for SaaS contracts. Examples include new low-cost or open-source query and analysis tools and certain DW appliances.

Essential guidance for users

While the business analytics SaaS market is small, a number of solutions are available to suit reporting, ad hoc query and process analysis for a variety of cross-industry needs, such as supply chain analytics or credit risk assessment. Business users will likely turn to SaaS offerings to solve problems not adequately addressed by IT. Fighting adoption to retain control over IT policies will ultimately be unsuccessful, but IT departments can be more involved in the selection process for new SaaS offerings.

Organizations considering adoption of business analytics SaaS offerings should consider the following:

  • Service level agreement. Business users may not be aware that SaaS offerings could be made unavailable through both scheduled and unscheduled outages. Reviewing and explaining the service level agreement to business users will ensure their expectations for availability and support are in alignment with reality.
  • Departmental adoption. Business analytics SaaS will most likely be adopted based on the specific needs of individual departments. The risk of proliferation of business analytics offerings with their own unique data models, data
    definitions and restricted access can cause confusion when cross-departmental decisions need to be made. Strict policies on technology adoption may be too difficult to enforce, but they can deter some potential offenders. Involving multiple departments in any purchase decision can slow adoption but also create consensus for a particular solution.
  • Business analytics as a complement to other SaaS applications offerings. Adopters of CRM SaaS may find the reporting and query functionality lacking for their needs—especially if adoption was a grass-roots effort that has since expanded to catch the eye of other departments, such as finance, which now require reports from the system for compliance and planning purposes. Business users will seek out partners of SaaS operational applications already in use (e.g. CRM) to provide additional functionality (such as business analytics). The IT department must be involved in making sure add-on functionality can meet the requirements of other corporate stakeholders.
  • Financial control. It might be necessary for stricter financial controls to be implemented to prevent line of business managers from making operational purchases of SaaS. That can cause political problems but may be necessary as technologies proliferate throughout the enterprise.
  • IT strategy communication. Business users may opt for SaaS offerings because they are unaware that IT is already working on solving their problems. Constantly updated communications on IT strategy can help make business users aware of the projects slated for solving business problems through technology adoption.

There is no doubt that business analytics SaaS will gain traction. Users should further investigate the mix of new entrants that were established from the ground up as SaaS providers and established business analytics vendors that have added SaaS offerings to expand their
on-site licensed software delivery options. Those larger, established vendors have moved to provide SaaS capabilities through acquisitions or in-house development.

Vendors in the business analytics SaaS market include A3 Solutions, ADVIZOR Solutions, BlinkLogic (formerly DataJungle), Business Objects, Cloud 9 Analytics, Cognos, DreamFactory, ForceLogix, Host Analytics, Informatica, LucidEra, Lucidics, Oco Inc., Oracle, QL2 Software, SAP, SAS, Seatab Software, Verix and Visual Mining, among others. Looking for leading SaaS providers in other software market segments may also reveal additional appealing business analytics SaaS providers with specific industry or business process expertise.

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