How does a global, decentralized enterprise draw enough intelligence from all of its brands to make informed decisions? With a business intelligence Software as a Service, or BI SaaS solution. How does a growing midmarket, concerned that it doesn't have the money for an on-premises BI package that costs several hundred thousand dollars, do likewise? Same answer.
In fact, with the economic downturn, all kinds of businesses will be adopting a BI SaaS solution in the next five years, according to a report on the BI SaaS market from research company IDC in Framingham, Mass. IDC expects the business analytics SaaS market to grow more than three times as fast as the total business analytics software market, with a compound annual growth rate of 22.4% through 2013.
Of all the apps moving into the cloud -- email, customer relationship management, disaster recovery (DR) and so forth -- BI is the one causing the most commotion. That's because traditional BI vendors got too comfy with their six-digit contracts and forgot to innovate, experts say. Meanwhile, upstart BI SaaS solution vendors are coming out with on-demand services that combine BI with data integration, forcing traditional vendors to purchase quickly what they did not sow.
The result is a wealth of BI SaaS offerings that are giving distributed enterprises, such as D&M Holdings Inc., and upper-midmarket companies, such as Shaklee Corp., the data they need to be agile in product development and operations.
At D&M, BI SaaS is music to the ears
Based in Kawasaki, Japan, D&M Holdings manages a portfolio of high-end audio and video equipment suppliers, including Denon, Marantz and Boston Acoustics; and employs 2,500 employees among the various brands. "We have a collection of companies that have decentralized systems," explained CIO Lalitendu Panda.
After evaluating some of the traditional BI vendors, such as Oracle Corp. and SAP AG, Panda chose Oco Inc.'s BI SaaS solution, which uses SAP's BI technology on top of Oco's data warehouse product. The distributed nature of D&M made a cloud solution attractive, but more importantly, "the monthly payment and initial installation cost is substantially less expensive than hosting one of the big solutions in-house," he said.
D&M's 12-week installation began in November 2009 with the process of extracting programs from the various business units, normalizing the data, testing and validating Oco's system, and designing reports, Panda said. The information goes into a proprietary database from which company executives can draw conclusions about such topics as sales and margin trends. Before it turned to Oco's BI SaaS solution, D&M drew information from different databases and tried to collate data in Excel.
If he had it to do the BI SaaS project over, he would have spent more time understanding the needs of each region, and designed a broader set of reports from the start, Panda said. "It's a balance between trying to get something done quickly, and also comprehensively addressing everyone's needs," he said. Even so, the system has "made a difference."
At Shaklee, BI SaaS was a natural fit
Lower cost also was a driving factor in Shaklee's selecting San Francisco-based PivotLink Corp.'s BI SaaS solution. Like Mary Kay Inc. and Avon Products Inc., Shaklee has built a distribution network by word of mouth for its multivitamins and natural cleaning products. The Pleasanton, Calif.-based company does hundreds of scientific studies on its products every year, and had generated so much data it was having trouble seeing the forest for the trees.
As important as lower costs, however, was the ongoing relationship with a BI SaaS solution provider, said Shaklee CIO Ken Harris. "The on-premises tradition is a contract -- then it's over. They may provide maintenance once a year, but if they don't ever see you again, that's great. It's the opposite DNA for SaaS, where you're crafting a long-term relationship," said Harris, who also has been a CIO at Gap, Nike and a half-dozen Pepsi companies.
Because of the technical challenges involved in securing data in transit, Harris recommends that CIOs ask about a BI SaaS vendor's DR plan, and how often they test it. A failover DR site is required, but its location is flexible: It could be at the vendor's site, the site of a third-party supplier or the customer's own site. CIOs should find out what the vendor's contract says about DR; and while they're at it, CIOs should negotiate a service-level agreement that includes economic incentives for the provider to stay up 99.9% of the time, he advised.
Once those essentials are in place, CIOs can worry about the provider's ability to deliver the information they need in a timely manner. Harris tested PivotLink's BI SaaS solution by coming up with complex queries from the sales, marketing, finance and international teams, then giving PivotLink one financial quarter's worth of data from which to mine the answers. They proved their competency within a week, Harris said.
A cultural change in decision making
The competitive value of business intelligence and analytic solutions is growing, according to another recent IDC study. This study of the use of "pervasive" BI to improve corporate decision making included in-depth interviews with 22 companies and a survey of more than 1,100 additional organizations in 11 countries. It found that making BI available throughout an organization means much more than distributing reports to all stakeholders. In some cases, BI solutions are deployed to automate an existing way of making decisions; in others, BI solutions are deployed to change the way decisions are made -- on the basis of fact, rather than opinion.
Just because companies are making BI SaaS solutions available to employees, however, doesn't mean the job of evangelizing is done. "It takes some time to get people off Excel," Panda admitted, lamenting that such flat reports are not interactive. "Now you're talking about interacting with the database and building questions that take you to the next level. That changes the way people work, and it doesn't happen overnight."
Let us know what you think about the story; email Laura Smith, Features Writer.