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On-Demand Business Performance Management and Business Intelligence Not Just for Small to Medium-Sized Businesses

Originally published May 13, 2009

With the presence of on-demand movies, games and ring tones on the rise in the consumer products and services world, it is helpful to take a fresh look at how this trend has impacted the enterprise software and solutions business. Many have recognized and applauded Salesforce.com’s rise up the leader board in the customer relationship management (CRM) market, and this has been achieved with success at small and large companies alike. The historical concern of not wanting to have sensitive information hosted off premise seems to have lessened as thousands of companies allow their client/prospect lists, pipeline and sales forecasts to be available at an off-premise data center. As a matter of fact, in the 2009 BPM Pulse Survey of nearly 800 users of performance management and business intelligence (BI) systems, nearly 33% of respondents said that they would buy an on-demand performance management or business intelligence solution, 18% said outright that they would not due to data security and cost concerns and the balance said that they are still undecided.

Although, counter to the wishes and opinions of some of the more significant on-demand software vendors, I do not think that on-demand software solutions have reached the “tipping point” and are now the de facto standard implementation approach. However, I definitely feel that any organization should at least consider on-demand solutions as an alternative that you should evaluate against competing offerings to assess the best fit with your documented business requirements.

In addition to a healthy crop of “best of breed” packaged applications to service this market, each of the big 3 performance management vendors (IBM, Oracle, SAP) have some play in the performance management/business intelligence area that is delivered on demand. Starting with the packaged application providers, companies like Adaptive Planning (budgeting, planning and forecasting) and myDials (interactive dashboards and reporting) have strong platforms worthy of consideration. Even in the enterprise resource planning (ERP) area, which supports financial and operational transaction systems, companies like NetSuite are dedicated to delivering their solutions on demand. Elsewhere in the performance management market, packaged application providers Clarity SystemsLongview Solutions, SAS and Tagetik all have some form of on-demand solution, although it may not be the primary offering in their product line. For the larger vendors, SAP has been steadily growing its on-demand business intelligence portfolio with SAP BusinessObjects BI On Demand. Oracle/Hyperion has furthered its offer of Oracle EPM and BI on Demand (as well as additional partner offerings like HyNote), and IBM/Cognos continues to offer IBM Cognos 8 Business Intelligence in a hosted environment (also additional partner offerings) and IBM Cognos Now! (appliance hosted in a secure data center).

So how do you know if on-demand solutions are right for your business? What are some of the benefits and shortcomings in this growing area? First, as with any performance management or business intelligence initiative, you should start with written documentation and prioritization of your business needs, even before talking to any of the technology vendors. What is the business pain you are trying to solve? Which business processes are “working” in house, and for which will your organization be open to considering external best practices? Who are the primary users of the solution, and what kind of support is available in house for these users? This is not intended to be an exhaustive list of questions, but more of a starting point for your internal conversation.

With your requirements documented, now is the opportunity to consider some of the alternative approaches to address your business needs. The benefits for on-demand solutions have not changed much over the past years. One of the primary benefits is that organizations can treat software costs as operating costs versus capital expenses. You typically pay on a per-user basis just for the software you need for as long as you need it. Some charge additional application access fees. There is no need for dedicated IT support staff or a hosting environment for your platform – so real cost savings in that category. Upgrades are the burden of the service provider, and you can have reasonable confidence that you will be running the current version at all times. The solutions are typically easier to use than their competing predecessors, and the on-demand organizations have done a good job of making training available online and through traditional help desk services.

Although the list of benefits is significant, there are still some challenges that have delayed the mass adoption of these on-demand alternatives. The first is that some organizations are emotionally reluctant to store detailed financial data off premise. Although in some cases a company’s own internal security systems are not as robust as that found through the on-demand service provider, that emotional barrier is significant. Second, the functionality available on demand may not be as deep as that which is required to support complex global requirements. If existing business processes and workflow to support the processes are mature and unique to an individual company, it may be a challenge to customize an on-demand solution to your detailed, unique needs. Finally, if organizations consider costs over an extended time frame, and existing infrastructure and technical support staff are already in place for your organization, the net present value (NPV) of an on-demand versus traditionally purchased solution may favor the traditional solution over a 5-7 year period (typical deployment life of a business performance management/business intelligence platform). This is not the case in all situations, but a worthwhile consideration.

In conclusion, on-demand solutions should be given serious consideration as an alternative to traditional deployment approaches. As these offerings continue to expand, we can expect more and more competitive solutions in this area, enhancing the experience for smaller organizations, but also breaking ground with solutions for the larger enterprise.

  • John ColbertJohn Colbert
    John, Vice President of Research and Analysis at BPM Partners, is responsible for market trend analysis, services development and technology vendor relationships at BPM Partners, the leading independent authority on business performance management (BPM) solutions. Prior to BPM Partners, John was Senior Director, Product Marketing at Hyperion Software, responsible for directing Hyperion's OLAP Business Analysis financial software products. Earlier in his career, John was an end user of performance management solutions while a product manager at Raychem Corporation, a Fortune 500 company that has since been acquired by Tyco. John has contributed to many publications including the New York Times, BPM Magazine, Information Week, Business Finance and eWeek, and he is a regular presenter at performance management related conferences and web seminars.

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Posted May 15, 2009 by Bharath Kashyap mybizmailers@gmail.com

Hi John -- This is a great post on on-demand BI. From a "Technology Utilization" perspective, we are seeing that there is a great potential and majority of SME's in Retail sector are opting for on demand BI. There is a lot of change in On demand model. We (www.biretail.com) have provided on demand BI solution to many retailers in India, UK, Middle East and it has gained a lot of foothold against on-premise BI model's from 2008.

The main point we stress up on is no harware and software licenses cost and this I think is a great advantage for our customers.

To know more about us, visit http://www.biretail.com/solutions.aspx

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Posted May 14, 2009 by Ken Rudin krudin@lucidera.com

Hi John -- This is a great post on on-demand BI.  I'd like to add one important topic to the discussion, which is that the transition to on-demand BI is not just about moving the management of the BI solution from the customer'data center to the vendor's data center, but it's equally about moving from tools and a "build it from scratch" mindset to prebuilt analytic applications with best practices built in.

Historically, since BI solutions required significant IT resources, they were sold to IT.  That meant that the feature set evolved to meet the needs of IT, resulting in tools that let IT build customized solutions.

However, with on-demand BI, IT resource requirements are much less significant.  This means that BI can (and should) be sold to the business users -- the people who really need the insight and information.  So, the feature set of on-demand BI solutions is evolving to meet the needs of the business users.  Since most business users aren't expert analysts, they are looking for solutions that will help them pinpoint the metrics that matter.  They don't just want answers; they also want guidance on what are the right questions they should be asking.  Because of that, on-demand BI vendors are delivering prebuilt analytic applications focused on particular roles in companies, like marketing, sales, or finance.  This means that the business users can get a huge amount of value very quickly.  Of course, these prebuilt analytic applications need to be configurable, but that takes a fraction of the time it would take to build something from scratch using a traditional BI tool.

So, the transition to BI on-demand is partially about the hosting aspect of the solution and the benefits that come from that, but also very much about a renewed focus on the business user's needs.

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