With data stores growing exponentially, and competition at an all-time high, many organizations are discovering the advantages of business intelligence. Thanks to sophisticated computer algorithms and innovative software programs, yesteryear’s bits and bytes are now being converted into critical business insights. Armed with this information, companies are making pivotal decisions based on complex number crunching rather than simply gut feelings. What products are worth developing, which employees make the best candidates for career development, what time should an email blast be delivered for the greatest marketing impact – top-notch BI tools are helping to answer all of these questions with unprecedented accuracy.
“Businesses now want to make decisions based on data and that’s driving a huge demand for business intelligence tools,” says Southard Jones, vice president of product strategy at Birst, a San Francisco, Calif.-based cloud BI provider.
However, the challenge of BI is figuring out which tool is right for your organization. Although functions and features vary from product to product, the key decision comes down to whether to invest in an on-premise system or sign up for a cloud-based solution.
According to a cloud computing survey from Dimensional Research, commissioned by Birst, approximately 80 percent of respondents were highly satisfied or satisfied with the adoption of business intelligence in the cloud, versus 51 percent saying they were satisfied with on-premise business intelligence results.
Despite this preference for cloud-based BI, there are disadvantages to accessing real-time business data via a SaaS solution. Many companies continue to question cloud BI’s formula for total cost of ownership, limited customization capabilities and security risks.
Here are the 5 things you need to consider when weighing your BI options and what you can expect from both on-premise and cloud BI tools.
1. How soon do you need it implemented?
When it comes to deriving actionable insights from data, there’s little time to waste. As a result, many organizations turn to cloud BI tools for a high-speed implementation. In fact, the Dimensional Research study reveals that 83 percent of respondents believe cloud BI tools offer faster implementation than on-premises solutions, with 69 percent of cloud implementations taking three months or less.
“The value of a faster implementation means you get answers to your questions faster and you can get an immediate impact on your business,” says Jones, noting that on-premise deployments can take as long as 6 to 9 months to complete.
2. What are you willing to pay?
Eighty percent of respondents say on-premise solutions involve more administrators to successfully manage than on-premise alternatives, according to Dimensional Research. Unfortunately, these high-priced helpers can drive up the costs of deploying and maintaining an on-premise BI system. “They cost a lot of money,” warns Jones. “There might be upwards of ten consultants working to get a product up and running. Now you’re talking about a million-plus dollar” price tag.
What’s more, the on-premise BI vendor landscape is riddled with mergers and acquisitions. As a result, Jones says many of these products are more like patchworks of source code and capabilities, making it difficult for companies to “cobble these pieces together” during deployments.
But while cloud BI can help companies cut deployment costs and eliminate the need to invest in costly servers and other hardware, factors such as security and customization can drive up the cost of a SaaS solution. What’s more, some on-premise solutions pay for themselves in total cost of ownership over a five- to ten-year-period whereas cloud BI forces companies to commit to annual subscription fees for a product’s lifetime.
3. Are you looking to drive sales growth?
Whether the goal is to derive compelling business insights or enhance customer relationships, an October 2013 study by IBM revels that organizations that use cloud computing platforms for big data analytics, collaboration and customer relationship management are reporting nearly double the revenues and profit growth of those that are more cautious about using the cloud. In fact, the Big Blue study of over 800 enterprise IT decision-makers found that one in five organizations is ahead of the curve on cloud adoption and is gaining a competitive edge over laggards.
4. Are you a control freak?
There’s plenty of debate around whether it’s safe to go with a cloud BI solution or an on-premise system. On the one hand, housing data on on-premise servers using proprietary systems is far more likely to calm the nerves of today’s more controlling, safety-conscious CIOs. Plus, because access to SaaS apps like cloud BI is via the Internet, security risks abound.
However, if cloud BI is your preferred tool, there are ways to minimize the security risks. For starters, find a vendor that allows you to download and remove your data from their servers whenever you’d like for complete data ownership. Also, make sure a SaaS vendor isn’t co-mingling your data with that of a competitor’s. For example, at Birst, Jones says, “Every customer gets their own data treated as if it were in their own private cloud.”
Other things to ask about include encryption standards, trustee certification and compliance. And don’t be afraid to request a tour of a data center to see the layout with your own two eyes. “It’s not uncommon for some folks who have highly sensitive data, like financial services companies and healthcare providers, to ask to conduct a physical audit of a vendor’s data center.”
5. How important is customization?
There’s a freedom that comes with owning a system outright – the ability to tweak it endlessly until it’s tailor-made for your organization. Unfortunately, SaaS providers rarely accommodate such wishes. But there comes a cost with customization that companies need to carefully consider before deciding between on-premise and cloud BI. “You’re going to spend a ton of time and effort trying to customize and integrate on-premise BI systems,” says Jones, pointing to multiple sources of code and years of product blending.
Cindy Waxer- ITTOOL