Business Intelligence That`s Easy on the Wallet

For a company to remain competitive, there’s nothing more important than knowing what your customers want, how efficient your processes are, where to focus your marketing dollars and which projects to spend R&D funds on. In most cases, that means implementing, running and maintaining a business intelligence system—a costly and complex endeavor that requires in-house expertise and constant diligence.

In some situations, it makes more sense to offload that responsibility. Short of having a third party host your BI solution or outsourcing the entire application and management—both costly endeavors—the on-demand approach to BI has merits. For smaller companies, which often don’t have database administrators or BI specialists—and which have standard data sets, processes and applications—it can be an enticing choice.

Unlike packaged BI solutions, which are difficult to manage and maintain, on-demand BI is a subscription-based model that is accessed online. No IT is required by the customer, and there are usually no upfront costs. What’s more, the vendor is responsible for upgrades and application and infrastructure management. Many vendors are offering this approach, including Business Objects, NetSuite, Inetsoft, BlinkLogic, LucidEra, Oco and Cloud9 Analytics.

“Traditional BI systems are complex and often are bigger than smaller companies need,” said John Hagerty, an analyst at AMR Research. “That’s one of the nice things about on demand: It lets you have a standard package without having to have it customized to your situation.”

On-demand BI works best in environments where most software and processes are standardized and where little customization is needed.

“When you go with BI on demand, you are relying on a third party to build a data model and provide a specific set of reports,” explained Boris Evelson, an analyst at Forrester Research. “Some degree of customization is possible, but 90 percent of what you’ll do will be according to what that BI on-demand vendor has created.”

If, however, loss of control is an issue, significant customization is needed, the IT department is against the idea, data is too sensitive to be released outside a firewall, or your company runs the risk of outgrowing the application, go with a more traditional approach, Evelson said.

If on-demand BI is right for your company, this is the due diligence you should perform:

• Make sure you know what you’re getting: how many upgrades are included, how the vendor backs up the data, what the response times are, and how tight the security is.
• Decide upfront if you are comfortable with the company installing plug-ins on your desktops, or whether you are looking for a zero-footprint approach. Both exist.
• If you have a lot of traveling employees, make sure the vendor offers a desktop plug-in travelers can take to work offline with a subset of data.
• Make sure the system offers adequate production reporting.
• If you want to be able to ask the system quick questions, make sure the system has an ad hoc reporting or search feature.
• To look for patterns, make sure the system has a slice-and-dice function.
• Make sure it includes a dashboard, which can help executives visualize large sets of data.

Also, decide what type of approach you want—a niche product that does one thing well, or a more broad approach. Examples of niche vendors include Cloud9 Analytics, which focuses on pipeline analysis—the day-to-day changes in the business—or Oco or LucidEra, which offer demand analysis by industry. These vendors are best for companies looking to solve specific problems, Hagerty said.

And don’t get locked into a multiyear agreement, especially if this is a new approach for your company. Instead, go with the minimum period—usually a year, Evelson said.

“Businesses grow, so you might need to change your approach over time,” he said. “So keep your options open.”