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IDC Predicts Strong Growth for Cloud-Based Analytics

The market for SaaS business analytic technologies is set to surge, according to a new report from research firm IDC

• By Stephen Swoyer
• February 3, 2010

Industry watchers have long looked for the software-as-a-service (SaaS) market to take off. However, last year BI pros saw several events that belie that expectation. For example, the business intelligence (BI) segment's most prominent SaaS player, LucidEra, ceased operations, the victim -- industry experts and SaaS principals rushed to reassure BI consumers -- not so much of a flawed model but of a brutal economic climate. The latter claim was bolstered by the rise of a number of SaaS vendors, including PivotLink and GoodData.

The salient point, observed TDWI director of research Wayne Eckerson, is that the SaaS BI model addresses bona-fide pain points. For this reason, and in spite of grousing by (some) established players that SaaS is nothing more than a flash in the pan, SaaS BI fills an indisputable niche.

"BI for SaaS offers a lot of promise to reduce costs and speed deployment but only for companies whose requirements are suitable to cloud-based computing," wrote Eckerson on his "Wayne's World" blog. "Today, these are companies that have limited or no available IT resources, little capital to spend on building compute-based or software capabilities in-house, and whose BI applications don't require significant, continuous transfers of data from source systems to the cloud."

Eckerson's opinion is bolstered by fresh research from market watcher IDC. IDC researchers say the market for certain kinds of SaaS BI solutions -- namely, SaaS business analytic technologies -- is set to surge. All the same, IDC researchers stress, SaaS isn't set to supplant -- much less to seriously put a dent in -- its on-premises predecessor.

"The business analytics SaaS market is poised for rapid growth as more organizations turn to cloud-based computing and alternative deployment options," said Brian McDonough, research manager for IDC's Business Analytics Solutions research service, in a prepared release.

According to McDonough and IDC, uptake of SaaS-based business analytic services will grow three times faster than will conventional business analytic products or services. IDC calls it a nothing-to-something growth pattern: at the end of IDC's survey period, the market for on-premises business analytic products and services should still be much larger than that of SaaS business analytic solutions.

What's driving SaaS business analytic uptake? Players such as PivotLink like to cite economic forces, a category that includes both fiscal (as in IT budget dollars) and practical (as in limited IT or human resources) aspects. IDC researchers agree, noting that cuts in both IT budgets and IT resources have shops giving SaaS alternatives second and even third looks. Call it a case of the SaaS segment having benefited from a harsh global economic climate.

"There's this perfect storm of high levels of transactional data from systems that haven't yet been integrated into a data warehouse or business intelligence strategy," commented Dyke Hensen, chief marketing officer with Pivotlink, in an interview late last summer. That's to say nothing of shops that -- because of budget cutbacks or a lack of resources -- simply don't have the ability or wherewithal to develop their own business analytic practices, Hensen continued.

The rub for such organizations is that the business challenges they're faced with are arguably more daunting than ever. Hence, per Hensen's and Pivotlink's argument, the need for SaaS analytics.

"The economy has actually helped us in the respect that there is no lack in the requirements to do data analysis," he concluded. "In the area that we work in -- [and] we're mostly in the data analysis segment, as opposed to the classic operational data store, [or] data warehouse [segment] -- these problems are front and center."