Cloud, SaaS Offerings Bolster Business Intelligence Market: Gartner

Gartner identified three major drivers for the adoption of cloud/SaaS offerings for BI, analytics and performance management.

Nearly one-third of organizations either already use or plan to use cloud or software-as-a-service (SaaS) offerings to augment their core business intelligence (BI) functions, according to a report from IT research firm Gartner. According to a survey of 1,364 IT managers and business users of BI platforms in the fourth quarter of 2011, only 17 percent of organizations have replaced or plan to replace parts of their core BI functions with cloud or SaaS offerings. However, almost a third (27 percent) already use or plan to use cloud or SaaS options to augment their BI capabilities for specific lines of business or subject areas in the next 12 months.

"Business users are often frustrated by the deployment cycles, costs, complicated upgrade processes and IT infrastructures demanded by on-premises BI solutions," said James Richardson, research director at Gartner. "SaaS- and cloud-based BI is perceived as offering a quicker, potentially lower-cost and easier-to-deploy alternative, though this has yet to be proven. It's evident that, despite growing interest, the market is confused about what cloud/SaaS BI and analytics are and what they can deliver."

Gartner has identified three major drivers for the adoption of cloud/SaaS offerings for BI, analytics and performance management: time to value, cost concerns and lack of available expertise. The report said the use of SaaS BI may lead to faster deployment, insight and value, particularly where IT is constrained by existing work and/or limited budget so that it cannot respond to demands for information and analysis as quickly as the business requires.

The company also noted the cost dynamic differs between on-premises and SaaS models. Software purchased as a service can usually be expensed, rather than capitalized, on the balance sheet. Buyers often think that SaaS is cheaper, but the reality is that this is unproven. Gartner's cost models show SaaS can be cheaper over the first five years, but not thereafter. The long-term benefits lie elsewhere-in terms of cash flow and reduced IT support costs. Meanwhile, SaaS analytic applications offer prebuilt intellectual property that can help firms work around a lack of the skills needed to build their own analytic solutions.

The report also projected that instead of disrupting the enterprise BI platform and corporate performance management suite market, a more likely scenario is that SaaS and cloud-based offerings will tap into new opportunities, such as with small to medium-size businesses (SMBs) that have yet to invest in BI, or by offering domain-specific analytics.

"If their operational business applications are in the cloud, organizations should consider pursuing cloud BI/analytics for those domains," Richardson said. "However, they must assess risks on an ongoing basis and ensure their chosen cloud provider has appropriate business skills to provide a viable outcome. They must also ensure their BI strategy outlines how to ensure that data flows to and from these solutions in order not to become yet more silos of analysis."