Over the past few years, many small companies have emerged offering fully-hosted business intelligence systems. Customers, who didn’t have the needed IT resources to devote to the installation and maintenance of their BI environments, jumped on the bandwagon rather quickly. In response, even the larger BI vendors began offering on-demand versions of their applications, making the market for BI solutions delivered via a Software as a Service (SaaS) model increasingly competitive.
So, which approach is better when it comes to BI?
The truth is, there are pros and cons to each deployment method.
For example, SaaS solutions minimize burden on IT staff, since all software and hardware components are installed and administered by the third-party provider at an off-site location. Additionally, on-demand BI is more budget-friendly, since it doesn’t require the large initial expenditures that on-site reporting tools do. Companies pay a reasonable monthly fee, typically based on the number of users or level of system utilization. But most importantly, hosted business intelligence can be rolled out more rapidly, since many of the technology components have already been deployed at the provider’s site.
But, companies choosing SaaS-based BI do need to have some concerns. The first is security. When opting to have their business intelligence environment hosted by a third-party provider, a company is undoubtedly relinquishing a certain amount of control – particularly when it comes to protection of the data associated with the application. The vendor determines where the hardware is located, who has access to servers, and how data governance and regulatory compliance policies are enforced.
Another potential issue is the lack of vertical expertise among third-party BI solution providers. In order for business intelligence to be most effective, those who oversee the environment must have in-depth insight into the industry, as well as the horizontal business function, that the application will support. That’s why analyst Ventana Research recommends that companies closely evaluate each SaaS vendor’s knowledge of their industry, as well as specific business processes and technology best practices, and select one that can address reporting needs as effectively as internal staff would be able to. Some experts even go as far as to say that companies looking for hosted BI solutions should seek out a provider that has already implemented data models specific to their particular sector.
Yet another drawback is total cost of ownership. While initial costs are much lower with hosted software, the total expenses incurred over the cost of the application’s lifetime can be significantly greater. This is especially true if the company will be renting the SaaS solution for a period of five years or more.
And, perhaps the greatest problem is lack of integration. SaaS-based software of any kind can never be integrated into an existing technology infrastructure in the same way that an on-site solution can. In the case of BI, this can hinder the end users’ ability to report directly against real-time operational data.
All in all, no one can say for sure whether on-site or SaaS-based business intelligence is better. The fact of the matter is that what is right for one company may not work for another. Before selecting a deployment approach, companies should be sure to carefully evaluate the pros and cons of each, and determine which method makes the most sense for them.
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