SaaS BI will be big in 2010

Analysts predict on-demand business intelligence will outpace on-premise applications this year

Mounting evidence suggests that in 2010, the hottest segment in BI (business intelligence) software will revolve around offerings delivered from the cloud, thanks to increased product sophistication, strained IT budgets and other factors.

A new IDC report finds the SaaS BI market will experience triple the growth of the market overall, soaring at a compound annual growth rate of 22.4 percent through 2013, although actual revenue totals will remain small compared to on-premise BI applications.

There are plenty of good reasons to adopt SaaS (software as a service) BI, according to a new report from Forrester Research.

It can get BI tools to typically under-served users, such as front-office workers, a lot faster, analyst Boris Evelson wrote. The model may also become more attractive as enterprises turn to on-demand software for other needs, such as CRM (customer relationship management).

"The more applications (and therefore BI data sources) are moved into the cloud, the fewer reasons there may be to build and operate BI applications in-house," Evelson said.

But SaaS BI could be ideal for certain types of big companies as well. Forrester cites a retailer that does 90 percent of its business during the holidays. Most of the time, the unnamed company handles BI and reporting with an on-premises data mart, but turns to a SaaS vendor for an assist to crunch the flood of year-end numbers.

Overall, though, a sweet spot for SaaS BI lies in companies aren't ready to commit to a full-fledged BI platform and accompanying support organization, Evelson noted.

Distribution Market Advantage, a marketing cooperative for food distributors, seems to fit in that camp. The Chicago company first went live on SaaS software from PivotLink in 2004.

The company had looked at an on-premises implementation but decided against that move, said Jim Szatkowski, vice president of technical and data services. "We're not technologists at DMA. ... It wasn't something we felt would work for our business model."

A system integrator DMA works with handled the data preparation needed to move to PivotLink, he said. Now DMA's customers, which include restaurant chains such as Chili's, get easy access to reports and analytics.

As it turns out, DMA's customers are interacting with the system even more than the company itself, he said.

The main goal is finding cost savings in DMA's supply chain, such as by determining when excessive deliveries are being made and eliminating the redundancies, he said.

Of course, while the system can let users run a warehouse-level report, discover the warehouse made 14 extra deliveries one month, and then drill down and discover which stores the deliveries went to, "it won't tell you why," Szatkowski said. "But you can ask better questions. It can lead you to the water but you've got to drink."

DMA's systems integrator implemented row-level security, meaning that a customer can only see the data they are authorized to see, he said.

About 1,400 user-generated reports are now in the system, and most of DMA's customers "are blown away" by the capabilities, he said.

Other SaaS BI users report similarly satisfactory results.

Children's Choice, a chain of corporate child care centers, has been using a SaaS BI tool from Birst for several months, said Dan Lawler, chief financial officer.

Staffing costs are a key concern for Children's Choice. While regulations tend to dictate certain employee-to-child ratios at the centers, the company is always looking to avoid overstaffing, Lawler said.

It is using Birst to surface information from the company's custom-built time and attendance application, which tracks the comings and goings of both staff and children, he said.

Back at headquarters, Lawler can use Birst to monitor staffing trends at the centers. "This allows us to help [center managers], to send them little nudges and notes saying 'Hey, you may be overstaffed in this classroom," he said.

Like DMA, Children's Choice had little interest in hosting a BI application in-house, and worked with a partner on the implementation.

Security was a key concern. Birst is not extracting any personnel data regarding employees, nor other sensitive material, such as pictures of children who attend the centers, he said.

Birst should serve Children's Choice's needs over the longer term, according to Lawler. The company has 40 centers now and is hoping to add eight to 10 more each year.

"Our growth is not so aggressive that we don't think someone like Birst can handle it. We think they're going to meet our challenges," he said.

But it is far from guaranteed that every SaaS BI project will be successful or even appropriate for a company's needs.

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