Cloud-based business intelligence (BI) tools may offer some benefits but enterprises still need to determine if these outweigh the potential challenges, say industry analysts, who note that demand for such services is still "incredibly low" compared to the market hype generated.
Cloud BI allows organizations to access business intelligence capabilities without worrying about the underlying technical infrastructure required to support such functions, said John Brand, vice president and principal analyst of CIO group at Forrester Research.
He said cloud BI offerings can be broadly divided into three categories: software-as-a-service (SaaS), platform-as-a-service (PaaS), and infrastructure-as-a-service (IaaS).
Ian Bertram, Gartner's managing vice president, pointed out that cloud BI, just like on-premise BI, is "less about the tools or technology, and more about skills and competency" needed to generate analysis and reports.
"[So in the case of] cloud BI, the real question is can I get my reports done in the cloud?" he noted in a phone interview.
Benefits to be had, but also challenges
The main benefit of adopting cloud BI is that capital expenditure can be moved to operational expenditure, said Bertram, but noted that this is only a minor advantage.
"From a feature and functionality perspective, there is no real benefit with cloud BI. And from a total cost of ownership perspective, it costs just as much if not more than on-premise BI," he explained.
He said the decision to adopt boils down to whether a company is willing to devote time and resources to move its data onto the cloud, as well as set up the necessary security measures and contingency plans in case something goes wrong.
Brand said the benefits of cloud BI typically are not immediately obvious as organizations will initially look at such tools to either provide rich user-interface when accessing and navigating reports as well as have the ability to analyze their own data in the cloud; or to tap high-performance computing resources to support intensive analytical workloads.
However, the Forrester analyst noted that companies eventually will see greater efficiency because the various business units within the company as well as its business partners can access the same data, eliminating any duplication.
"There is greater efficiency to be gained by storing the data in a single location and providing the capabilities for all involved organizations to slice and dice from that one location--that is the cloud--than it is to continue to replicate the data, which will only introduce complexity and poor data quality into business processes," he explained.
Hence, with BI tools that run on the cloud, companies have a way to reduce data volume and data complexity, and still gain highly valuable insights from the data, he noted.
That said, Brand acknowledged there are challenges with cloud BI deployment such as managing the volume of data and moving all of the data into the cloud. Ensuring data security, residency, sovereignty and governance will also prove to be challenging, he added.
No strong business case
Bertram advised that businesses must determine if they have good enough reasons to implement cloud BI. This space currently still lacks a strong business case, despite "a lot of hype from vendors" pushing cloud BI, according to the Gartner analyst.
"Whenever you invest in a technology, you've got to look at your own business environment and ask if it is a business driver, and if it is going to help save cost. We can't see [this for cloud BI] today. There's no one business driver for it.
"You can do it if you want to be leading edge and get some benefits. But you'll be buying into a vendor's story here; not because the market is demanding it. There isn't this mad rush toward cloud BI," Bertram said.
He added that cloud BI adoption is "incredibly low" today, accounting for less than 1 percent of the overall global BI market. And while the figure will increase, Gartner does not expect this to be more than 3 percent even by 2014, he revealed.
Forrester's Brand also observed that uptake of cloud BI is currently low, but argued that adoption is growing "significantly" as end-users become more particular and demanding about the types of features and functions they want in their BI tools. They are also increasingly dissatisfied with traditional vendor approaches to BI, he added.
He highlighted that whether cloud BI adoption takes off is less important than where it is being applied, and how such tools are "creating a new generation platform that satisfies the next generation of users".
For instance, if a company is already using hosted versions of business applications such as enterprise resource planning (ERP) and customer relationship management (CRM), it makes very little sense to maintain an on-premise BI solution, Brand explained.
Hence, as more organization take their applications to the cloud, a new generation of cloud-based BI tools will likely start to gain more prominence, he said.
Mark Koh, Asia-Pacific senior industry analyst of ICT practice at Frost & Sullivan, also noted that for many organizations that are just getting started with BI, the functionalities provided are sufficient to meet their current needs.
But as data continues to increase, business insights will offer a critical competitive advantage, and accessibility to data anywhere becomes increasingly important, which would make cloud BI more attractive as an option, Koh said.