SaaS analytics set to surge as cloud starts to shine

Make sure you're up to speed as web analytics set to takeoff

Business analytics delivered over the internet is set to become much more popular over the coming years.

Analyst firm IDC predicts that the market for software-as-a-service (SaaS) business analytics will grow at three times the rate of the overall business analytics market.

IDC estimates that the compound annual growth rate for business analytics as a whole will be 7.2 per cent between 2009 and 2013, with SaaS analytics set to achieve 22.4 per cent growth over the same period.

According to the analysts, the market for SaaS business analytics will grow rapidly from a small customer base but will, however, remain relatively small in terms of revenue compared to the on-premise market.

Brian McDonough, research manager with IDC, said that with cloud computing becoming a more viable and understood option for organisations, business analytics is one of the areas that could be increasingly delivered online.

He added that more software vendors are also likely to address demand for this kind of delivery model, further boosting adoption.

Alys Woodward, IDC programme manager for European business analytics markets strategies, told silicon.com that within business analytics there are two areas of growth: companies that are new to business analytics and those who want to expand their use of it.

SaaS business analytics are on the rise
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Software as a service works for both according to Woodward, as it allows organisations to experiment with the technology and decide whether it will work for them without committing too much money.

"Prototyping is really, really important in business analytics - the fact that you can pick something up, have a go, see how it's going to work for you and then turn around to the business and say 'look, this is where the benefits are going to come in' - and I think software-as-a-service aligns quite well with that," she said.

SaaS also has the benefit of being offered on a subscription basis - which will appeal to businesses who face budget constraints to their capital expenditure, as they can use their operational budgets to pay for the technology instead.

However, SaaS isn't going to be the preferred option for everyone...

"Some organisations - particularly bigger ones - are used to capitalising their IT systems and they're not necessarily going to change everything that they do. It's not something that everybody, everywhere wants to do but it's important and the worse the economy is, the more important it is really," Woodward said.

Difficulties in customising SaaS offerings could also hold back adoption in some quarters.

"While the SaaS share [of business analytics] is going to grow over the next few years, it's not ever going to be, in the foreseeable future, the primary delivery model for business analytics - just because you need to keep these different information feeds coming in and actually your business analytics is quite sensitive," she added.

Business analytics is increasingly integrating with other data sources including those focusing on businesses' online presence - another market which is enjoying growth.

Research from digital marketing and ecommerce community Econsultancy found the UK web analytics market hit £85m in 2009, a nine per cent year-on-year growth.

Econsultancy puts the increase down to businesses paying closer attention to return on investment from their websites and digital marketing.

Linus Gregoriadis, Econsultancy's research director, said in a statement: "2009 was a very big year for the web analytics industry, with the recession forcing companies to become more efficient and to take measurement more seriously."

He attributed this to the acquisition of web analytics firm Omniture by Adobe that put a "spotlight on the sector", as well as the increased availability of free tools from Google and Yahoo! which fuelled uptake and forced other players to improve what they offer.

While the web analytics market may be growing, challenges remain: according to Econsultancy, a lack of investment in skills and education is continuing to stop businesses from getting the most out of web analytics.

The rise of the mobile web also poses problems for web analytics, which are not easily adapted to the mobile web, Econsultancy said.