RESEARCH & RESOURCES

The BI Revolution: Cloud BI Progress and Pitfalls

With so much written about cloud and BI in the last year, it would seem the intersection of these two hot IT trends must be a winner -- but is it?

By Brian Gentile, CEO, Jaspersoft

Much has been said and written this past year about cloud BI. Fundamentally, the intersection of two of the hottest IT trends must be a winner, right? Yes and no. Let me explain where cloud-delivered analytics will be a game-changer.

Cloud BI = BI for SaaS + BI for PaaS

A BI platform can at once be thought of as either an application or a tool -- potentially satisfying both a business user and a developer. Because the BI platform sits atop the database and middleware layers, but below the application layer, it occupies a unique position in the enterprise software stack. For this reason, there is much confusion about SaaS (software-as-a-service) vs. PaaS (platform-as-a-service) BI -- and it's all being called "Cloud BI," unfortunately. To sort this out, let's start with SaaS BI and the business user.

It's no secret that application software delivered as a service has been a hit with business users. Think Salesforce, NetSuite, Success Factors, and so on. Generally speaking, SaaS advantages over on-premises apps are well understood: the time to value is quicker and the simple, end-user experience is superior. Just assign your user IDs and go, with little or no training required.

Therein lies the main problem for SaaS BI. Business intelligence is not an out-of-the-box application; rather, it is a toolset to be customized to help solve a wide variety of business problems. BI delivered as a service for business user consumption requires significant customization and a certain kind of end user. Presently, SaaS BI is being used by early adopters: those with the requisite technical skills and an appropriate business problem that make cloud-based consumption a better alternative. These early adopters place a high value on the very low start-up costs of a cloud-based option (i.e., no software installation or infrastructure required). SaaS BI has a more limited audience.

It should be no surprise, then, that when referring to SaaS BI, Gartner says "Cloud offerings will make up just 3 percent of business intelligence (BI) revenue by 2013, as user adoption will lag far behind the expectations of vendors."

However, it won't lag behind the expectations of smart vendors.

I believe a reasonable market for SaaS BI will emerge, but I do not believe it will do so quickly or convincingly. Instead, I think most SaaS-based BI will be delivered in the form of analytic applications; that is, BI built into a SaaS application that solves some specific business problem for an end user who already understands the benefits of SaaS delivery. This is more properly called BI for SaaS (rather than SaaS BI) and successful examples of these analytic applications exist in many, many forms. One obvious example is Web analytics (e.g., Omniture, Google Analytics, etc.).

I've noticed that most analysts and journalists today do not distinguish (in their research and writings) between SaaS BI, BI for SaaS, and BI for PaaS. Typically, it's all called "Cloud BI" and it almost always means SaaS BI. This simplification adds to the confusion. To make these definitions extra clear, here is a summary.

SaaS BI = hosting a BI platform or application in the cloud and delivering business user functionality on demand

BI for SaaS = building BI functionality into a SaaS-based application for the purpose of delivering specific, data-driven functionality within that application

BI for PaaS = delivering a reporting and analytic service that can be easily built into PaaS-based applications and managed by the PaaS

BI for PaaS is important for several reasons:

  • The real market for -- and the most overlooked area of cloud BI -- is Platform-as-a-Service. In short, PaaS will do for software developers what SaaS has done for business users -- namely, create greater agility, reduce infrastructure and start-up costs, and deliver faster time to value through (among other things) a better user experience.

  • BI for PaaS is a set of modern BI components, built from purely Web-based and open standards, available as a set of reporting and analytic technologies that enable a developer to quickly assemble a modern "data-driven" application and then deploy and manage it in the cloud. The major PaaS players are now recognizing these BI building blocks as part of the next frontier for their cloud-based development platforms.

  • I predict we'll see more BI functionality making its way into these next-generation software development ecosystems, and I hope to see analysts and journalists writing more about the BI for PaaS trend in the coming months.

Cloud BI progress will most swiftly come in the form of BI for SaaS (analytic) applications and BI for PaaS, both of which help to avoid the pitfalls of their generic SaaS BI counterpart. Because this cloud BI definition is much broader than what is commonly reported, your thoughts and ideas are especially encouraged. My e-mail address is in the bio below.

Brian Gentile is the chief executive officer of open source business intelligence software company Jaspersoft. You can contact the author at bgentile@jaspersoft.com.

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