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Dresner Study Reveals Current Realities in Cloud-Based Business Intelligence

By September 24, 2012Article

Cloud business intelligence (BI) is the concept of delivering business intelligence capabilities “as a service” using cloud-based architectures. The promise: lower costs, faster deployment and greater flexibility compared to traditional BI solutions. Over the past five years, business intelligence has seen less adoption in the public cloud than other applications. But our recent 2012 Wisdom of Crowds Cloud Business Intelligence Market Study® of 859 respondents found current strong investment in cloud-based BI and growing interest in tapping into the cloud’s benefits.

It’s still early days in the cloud BI market dynamic, but 32 percent of the study respondents stated that it is “critical” or “very important” in their organization.

Small organizations now do most of their work in the cloud. It levels the playing field, allowing them to compete with larger organizations. It also resonates with business people in larger organizations because, in many cases, they don’t have an appetite for waiting around for IT.

Interestingly, the study clearly shows a “new breed” of business intelligence users, as evidenced in our question asking respondents to prioritize 16 initiatives strategic to BI. Mobile deployment, social media analysis and collaboration ranked high in priority.

However, questions around their cloud BI architectural feature requirements found that most respondents are concerned about traditional data issues such as integration, relational database support and connections to on-premises applications and data.

Data integration

Twelve percent of the respondents stated data integration is a barrier to cloud BI adoption.

There are differences between the concerns of IT and the business functions. IT is much more internally focused, and the business people are more externally focused. The business folks are all about cloud application connectors (such as Salesforce or NetSuite) and cloud database connectors. It makes sense. IT is concerned about things like relational database support and functions that are more traditional in nature, as well as connectors to on-premises applications.

When I talk to vendors, more of them talk about integration with on-premise data structures and integration with cloud apps and cloud databases. But there’s not enough standardization.

Data integration is a big deal. These problems in the cloud are really the same problems that we faced with on-premises applications. Historically organizations have focused on integrating data from multiple applications, home-grown applications, CRM, ERP, supply chain, etc.

But now that we’ve taken the data to the Web and also need to integrate with external sources, the issue is pressing. Most BI activity in the cloud typically utilizes data that the company uploads. It’s on-premises data that already has been integrated and now companies upload it to the cloud to do the analysis. Moving forward into the future, if the cloud is where organizations will do most of their work, we’ll need connectors. And organizations will do a lot of data virtualization, which is not the norm today. So that’s going to change.

People will have to deal with many of those issues that we’ve already dealt with regarding on-premises data and applications (or should have dealt with). At least now we have a better understanding of how to do it.

Security matters

More than half (56 percent) of the survey respondents stated security and privacy issues are the top barrier to adoption of cloud BI. So there is still a great deal of trepidation around cloud. Cloud software companies are making progress, but I don’t think it’s as dramatic as anyone would have expected or hoped. It’s just hard.

In addition, IT is concerned about loss of control. Often when we see strong interest in cloud on the part of IT, they’re talking about private cloud. That’s really an architectural discussion; the data is still on the premises. Our survey question about barriers to adoption found a small, but notable, minority who listed loss of control; they were predominantly IT professionals.

The truth is it’s a much bigger issue. A lot of the concern around security, privacy and data integration is a smokescreen. IT has a tremendous fear about loss of control. These other issues aren’t artificial; they are real issues. But the cloud fundamentally changes how organizations provide information services to the users, and that’s a real concern for IT.

Surprisingly, despite the majority of respondents stating security is a barrier to cloud BI adoption, 21 percent reported that they have no requirement for cloud security. Some of that is an education issue. I think that there needs to be a great deal more education around cloud in general and cloud business intelligence specifically. But that’s a long-term process.

The “real” issues around security in the cloud are improving. But it’s evolutionary, not revolutionary. A year from now, I think it will be modestly better than it is today. If we were to fast forward five or 10 years, I think it will be profound.

Data visualization

The survey revealed several areas of contrast among IT, finance, and sales and marketing respondents regarding their requirements for cloud BI features. But all three groups reported that data visualization ranks high as a requirement.

There’s no question that an analyst wants something that is more dynamic, more exploratory in nature. There’s also no question that various vendors that offer data visualization have been very effective in influencing users to buy it. But most users aren’t analysts and don’t care about surfing the data and trying to get a real sense of what’s going on. Most users just want a dashboard with data relative to their metrics.

Most of the value for business intelligence is traditional reporting, dashboards and similar mechanisms for giving users a visceral sense of what’s going on in the business, what’s related to other things and which things are in line or out of line. When you host BI in the cloud or do it from a mobile perspective, you’re still looking at the same things; but you have the advantage of making the information more accessible to more people than before.

Because vendors have been so successful in marketing around data visualization, this functionality is not going to go away. I suspect we’ll see more and more organizations adopting this style of business intelligence.

Other findings

A notable finding is that the majority of respondents did not rank the pay-per-use model for cloud BI as a high priority, even though this pricing model is clearly a reason why many organizations move their work to the cloud.

Respondents in small organizations, which are the early adopters of public cloud applications, reported more interest in pay-per-use pricing and doing an online purchase. But organizations with more of a traditional IT mindset reported they prefer to buy cloud BI through a direct sales force and prefer an on-premises option with a perpetual license.

Surprisingly, there was only nominal interest in the hybrid model for cloud BI. This model is a great way for IT to get their toes in the water. It may be too early for hybrid, but at some point it will make a lot of sense for cloud BI. With the hybrid capability of bi-directional connectivity with data and applications in the cloud, it will be relatively easy to manage the environment.

Respondents’ mindsets around cost showed some contrast. While many see it as a key benefit for cloud BI, others see it as a barrier. Cost becomes a barrier or limitation when looking at migration or transitioning from an on-premises model to the cloud. But if an organization starts with a green field, there is a huge cost advantage in terms of actual cash outlay and also in terms of time to action.

Pace of adoption of cloud BI

Adoption rates, when viewed across industries and geographies, vary widely. In some ways, for some industries, cloud BI is a little like cell phones in third-world nations. The mindset has been not to lay down landlines because it’s too expensive; they just jump to the next-generation phones instead. I think cloud BI offers that potential for certain industries such as healthcare and education, which have never been aggressive with business intelligence.

Interestingly, a lot of the findings around advantages and barriers in our cloud BI study mirror the adoption of cloud in general. Cloud is very disruptive in terms of architecture, existing investments in technology, staffing, etc. Adoption of cloud BI will be driven by pockets in the marketplace rather than occurring broadly — just as it’s currently happening with other uses of the cloud.

The cloud is going to be consistent and persistent, and it will be a relatively slow path forward compared to mobile. But ultimately, the cloud is where business intelligence will end up. The more that organizations move their operational applications to the cloud, the more adoption we’ll see of BI in the cloud. Once the data is in the cloud, there will be no resistance to doing the BI analysis up there.

The 58-page report on the 2012 Wisdom of Crowds Cloud Business Intelligence Market Study® is available on in paperback. The report includes information on 36 characteristics of cloud BI, current and future plans for cloud-based BI, vendor ratings and cloud buyer’s guide by features and security, plans for public and private cloud BI by function, cloud BI feature requirements, cloud BI feature prioritization by function, industry capabilities for cloud BI,  and more.

The Wisdom of Crowds Cloud Business Intelligence Market Study® was conceived and executed by Dresner Advisory Services, LLC, an independent advisory firm, and Howard Dresner, its president, founder and chief research officer. Howard Dresner is one of the foremost thought leaders in Business Intelligence and Performance Management, having coined the term “Business Intelligence” in 1989. He has published two books on the subject, The Performance Management Revolution — “Business Results through Insight and Action,” and “Profiles in Performance — Business Intelligence Journeys and the Roadmap for Change.” Prior to Dresner Advisory Services, Howard served as chief strategy officer at Hyperion Solutions and was a research fellow at Gartner, where he led its Business Intelligence research practice for 13 years.

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