Today I received a Research Alert from Saugatuck Technology Research containing an article about Cloud “Rip and Replace” Deals. What I found most interesting was the table showing the application category with highest percentage of firms worldwide indicating they would purchase a SaaS solution in the next 12 months was BI and Corporate Performance Management at 57%. This is very different to the perceptions and intent from just a few years ago and represents a significant and disruptive market shift. It is reasonable to ask why the large percentage, what it means for some of the large legacy BI vendors and what it means if you have already made an investment in a traditional on-premise BI solution.
I believe the reasons for such a strong movement to SaaS BI and Performance Management Solutions are:
- the cost-effectiveness of SaaS, particularly when information is required by large numbers of users to enable them to make better operational decisions;
- the viability of SaaS solutions that incorporate enterprise-class capabilities, very intuitive user interfaces and innovative technology advances specifically designed for a SaaS environment;
- the suitability of the SaaS model for today’s business environments where supply chains, demand chains and delivery chains span multiple companies that need to collaborate and easily share information;
- the limited IT resources available for implementing and maintaining on-premise products and toolsets makes a SaaS solution very attractive.
There seems to be an inherent rule that the larger the software vendor, the more difficult for them to innovate, particularly when it involves a fundamental business model change such as moving to SaaS. In the same way that salesforce.com undermined the market position of Siebel, I believe the young innovative SaaS BI and performance management companies will undermine the market position of the legacy BI vendors. Of course these legacy vendors are large and have significant purchasing power so there may be another wave of consolidation in the BI market space in a few years time – this also seems to be an inevitable cycle in the software industry.
So if you haven’t yet made an investment in a BI or performance management solution it seems clear that the best approach is to ride the wave and carefully examine SaaS solutions to determine if they satisfy your requirements rather than embarking on a lengthy, difficult and costly on-premise implementation.
If you have made an investment in an on-premise BI product, I don’t believe a “Rip and Replace” is warranted in most cases, although there are cases where a SaaS solution is cheaper than the ongoing maintenance costs for an on-premise product and so it could make financial sense to do a replacement. It may be more prudent to leverage the investment already made, and augment the on-premise product with a SaaS solution that extends the availability and usefulness of information to many more people in the organization.
Traditional BI was primarily focused on a select few business analysts who sliced and diced data to provide supporting information for strategic decisions. While this is important, the business results are impacted not only by strategic decisions made by executives but also (and maybe more so) by the collective sum of all of the operational decisions made by many people within the organization on a daily basis. A SaaS solution is viable, cost-effective way of ensuring all of these decision makers have access to relevant, timely data they can interact with and analyze in order to make better decisions, more quickly.
It seems the SaaS revolution is well underway and it is great to see BI and Performance Management leading the charge!
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