Is SaaS a Good Fit for BI?

For businesses lacking in-house expertise, this nascent market offers fast, cost-effective analytics.

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DMA wanted to roll up invoice transactions, inventory and other data that its distributors log in a SaaS order entry application, and provide a dashboard through which each could analyze operational metrics and create forecasts. It used a service from PivotLink Corp., and Szatkowski says he had it up and running in about two weeks -- a far shorter time than what would typically be required for a similar, in-house project. PivotLink's service restricted access, allowing each distributor to see only its own organization's data.

Evolving Models

Even when resources are available in-house, BI as a service may be preferable when time to market is an issue. RBC Wealth Management already had a data warehouse and had BusinessObjects expertise in-house, but its IT organization had a three-year backlog of mergers-and-acquisitions work. So Shawn Spott, vice president and manager of marketing research and strategic analysis, hired SaaS provider Birst Inc. to deliver a BI dashboard to RBC's 2,300 brokers. Although the tool is still being rolled out, Spott says the company has already seen "an appreciable increase in revenue" from its users. The project worked in part because RBC had an extremely focused goal in mind, he says.

But most organizations are far from sold on the idea of hosted BI. BI as a service is still a nascent market -- less than 10% of enterprises are using the services today, according to Gartner Inc. (A recent survey of Computerworld readers put that figure at about 8%.)

Template-based functions and a shared, multitenant architecture on the back end are what make BI SaaS economical and easy to deploy. But such services typically can't handle as much complexity or customization as in-house projects can. Nonetheless, business decision-makers will trade complexity for simplification if it means faster time to market and greater utilization of their applications, suggests Kaplan.

The top concerns for business users are security, availability and the potential for bandwidth bottlenecks when transporting data. While vendors have made progress in these areas, particularly with security, Kaplan says, none of the concerns has been fully resolved.

At a minimum, the SaaS provider should be compliant with Statement on Auditing Standards (SAS) No. 70, which, among other things, establishes processes and procedures for proper security when using third-party service organizations, Kaplan says.

Users are also concerned about whether BI services will meet promised performance and availability levels, since they run in multitenant environments. Most vendors say they will provide service-level assurances, but the key is to have a detailed, measurable service-level agreement. "If your SLA is not well defined, you're probably heading into trouble," says Bill Hostmann, an analyst at Gartner.

At Allstate Insurance Co., Anthony Abbattista, vice president of technology solutions, oversaw the build-out of a sophisticated data warehouse and self-service BI infrastructure. Hosted solutions are "pretty cool," he says, referring to them as "good-enough BI." But he cautions that the key to good BI lies in how you pull the data together, linking schemas, tools and access strategies. "Just because you load the data into someone's BI environment doesn't mean you get value from it," he says.

At DMA, Szatkowski has no regrets. "We're getting tremendous results," he says. "It's a workhorse for us."

Next: Beyond CRM: SaaS slips into the mainstream

Copyright © 2010 IDG Communications, Inc.

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