Things might have been a little different had somebody predicted the advent of such ruthless economic fluctuation. The importance of ‘predictions’ was thus felt and understood, by all types of companies, during the recession.  And, it was no surprise that the BI market grew during this period, when most IT markets fell. As a tool that helps organizations take informed decisions and forecast things, BI has a larger role to play.

Interestingly, the same factors like strained budgets and need for improved efficiency, are driving a new trend in the BI market-SaaS BI. IDC predicts that this new market will experience triple the growth of the overall BI market, at a CAGR of 22.4 % through 2013. However, the agency further clarifies that the actual revenue totals will remain small compared to on-premise BI applications.

Cloud has proven to be an attractive option for application hosting as well, since the services are based on the Cloud’s “unlimited” scalability and the ‘pay-as-you-go’ approach.

Mukund Deshpande, Senior Architect, Business Intelligence Competency Center at Persistent Systems says, “We are gung-ho about BI on the cloud, especially in the Indian market. There are multiple reasons for us to be buoyant about this market. Setting up a BI infrastructure is a strategic decision and it requires management as well as executive backing. We have found that Indian companies here are more tactic-focused. Besides, setting up a technical team for BI is no mean task, especially because every domain has its unique needs. SaaS BI has the potential to solve all these issues.”

In addition, the cloud model helps companies in avoiding huge capex investments in BI.

“For many organizations today, the conventional on-premise approach is increasingly becoming impractical and less attractive on an ongoing basis, as this has begun to entail heavy investments. Especially in non-critical areas where data security and criticality concerns are fairly low-key, organizations are beginning to find that a cloud-based environment is a more viable option to create data marts, data warehouses, and BI solutions on-demand.

“Cloud’s scalable and usage-based fee structure provide the perfect foil for the kind of space and run-time required by data warehousing and business intelligence solutions,” N. Veeraraghavan, Senior Vice President, Data Warehousing, Business Intelligence & Performance Management Practice, Cognizant.

Another major driver for SaaS BI is the concept of pervasive BI and its importance in the current scenario. As BI becomes a critical component of businesses today, companies are now trying to take it beyond the ‘IT power users’ and also make it available to some of the more traditional under-served users like the front office. Additionally, data warehousing and BI environments typically involve large volumes of data and thus scalability is a vital consideration. Cloud is an effective way out as it provides an unlimited pool of computing resources virtually. As a result, it makes for a favorable BI and analytics environment, enabling enterprises to analyze their data faster and cheaper.

Companies would also consider SaaS BI because of the increasing need for specialization in applications and the ability to improve overall quality in analytics.

“Specialization is a critical factor in BI as it helps companies to align technology with their business goals. However, specialization is not an easy thing to do for many companies as it requires more investment and technical expertise. SaaS BI would allow companies in acquiring these specific BI applications at a much lower cost, without having the need to invest heavily in areas that are not their core competencies,” says Heman Goswami, CTO, Infogain.

“Apart from improving ROI for all BI investments with reduced upfront investments in infrastructure, SaaS facilitates new consumption behavior for BI reports and dashboards,” says Veeraraghavan of Cognizant. Saas BI also enables businesses to implement short-lived projects (such as a one-time analysis need), in addition to allowing them to leverage large computational resources on-the-go to carry out more sophisticated and detailed analytics.

Another key reason for the expected opportunities in the BI-Cloud space is the interoperability it offers to users.

“The ability of cloud-based service providers to create built-in communication, application and data portability between multiple providers greatly enhances the users’ confidence in this new form of architecture thinking. Seamless interoperability will assure the users that an investment in one service will not mean a complete lock-in with that provider.

“This is especially important in the BI environment where every organization has a plethora of technologies, solutions, and stakeholders,” says Cognizant’s Veeraraghavan.

Anil Menon, VP-Software Group Channels, IBM says, “This trend is increasingly driven by the fact that Cloud computing is massively scalable, provides a superior user experience, and is characterized by new, internet-driven economics.”

Intelligent Coexistence

Though BI on cloud seems to be one of the hot topics, adoption of this model has not really picked up. Most of the companies in the field today are in the stage of exploring this concept and understanding whether it would make business sense to them.

“Companies have already gone for the basic level of automation and have their ERP and CRM systems in place. The next step would be the adoption of BI and we do see a lot of play around SaaS BI,” says Maneesh Sharma, Head-Business User & Platform group, SAP India.

Vendors however like to believe that there would not be a complete transition to BI on cloud and only some ‘small pieces’ of BI will go online in the initial stage. The change is definitely going to be incremental and not sudden, according to the industry experts.

“We do see the possibility of analytics tools going to the cloud. Companies that have already invested in BI or analytics tools would definitely evaluate their further investments in the cloud context. In that case, we would increasingly see on-premise and cloud BI co-existing,” says Goswami of Infogain.

A survey conducted by the CIO magazine confirms these trends. The survey, conducted among 335 IT leaders whose organizations use BI and analytics tools, found that one in five respondents (23 %) expect cloud or software as a service to be their main BI solution within the next three years.

Presently, 93 % of respondents use on-premise BI tools for their businesses, and 77 % expect to continue with in-house solutions during the next one to three years. This again points out to the possibility of on-premise and cloud BIs co-existing.

“While certain applications would move on to the cloud, companies would continue with on-premise BI for requirements like real-time monitoring,” adds Sharma of SAP.

There are dissimilar opinions as well. “In the next 2-3 years, cloud-based BI products will grow at the expense of the on-premise market. In 2009, SaaS-based offerings really came to the fore and this was further proven by the significant uptake among customers and increased market visibility,” opines Veeraraghavan of Cognizant.

Though the future is unpredictable, most of the leading BI vendors are preparing for the new trend. Apart from the traditional BI players, the market is going to open doors for many niche cloud BI players.

Some of the leading on-premise BI vendors today have already made their entry into the cloud space. SAP recently launched its Business Intelligence on Demand and they have already managed to get 260,000 subscribers worldwide.

IBM’s Smart Analytics Cloud helps companies create a standard private cloud business intelligence solution at the on mainframe capability.

SAS, though does see better growth areas other than SaaS BI, has already invested in setting up an infrastructure for offering solutions through the cloud.

In other words, SaaS BI is where the concept of cloud computing was three years ago — spoken about widely and yet to become a reality. And if we can go by history, it’s only a matter of time before SaaS BI hits it off.

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