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Analytics: Cloud Computing as an Equalizer

Originally published April 19, 2011

In the past, the high cost of building enterprise analytic systems has meant that only large enterprises could afford to build sustainable enterprise analytics capabilities. In effect, this put world-class analytics out of reach for small and mid-sized enterprises that would have benefitted from the competitive edge these capabilities can provide.

Now, as cloud computing gains traction, it has become an equalizer – one that is providing vast opportunity for smaller enterprises to benefit dramatically from a caliber of analytics that previously were available only to the largest of enterprises. As cloud adoption becomes more widespread, analytics will assume an even more important role in understanding what’s happening in the business.

Let’s take a look at some of the barriers to enterprise analytics for the small and mid-sized enterprise.

Barrier #1: Competencies in processes and technologies. Analytics solutions involve multiple specialized technologies like ETL and data integration, parallel processing, data modeling, statistical analysis, and data mining. Expertise like this is hard to find – not to mention the need to successfully hire, train and retain teams with the knowledge and skills to effectively use these technologies.

Barrier #2: Packaged or outsourced enterprise applications. Many, if not the majority, of horizontal and vertical applications for small and mid-sized enterprises are packaged or outsourced. Although packaged applications typically bundle some reporting and analytics capabilities, coverage is generally limited to the bundled applications and not extensible to integrated data to build enterprise views.

Barrier #3: Scalable business intelligence (BI) hardware and software. Desktop analytics software has long been both affordable and accessible, but the price point of enterprise ETL, database, reporting and analytics hardware and software has been a barrier to adoption. Even though BI and data warehouse appliances have brought some degree of commoditization, entry prices are still out of reach for many companies.

Cloud Computing Breaks Down Barriers and Enables Change

Emerging cloud computing technologies and services are beginning to break down these barriers and change the landscape. Let’s look at how some of the different components of cloud computing are driving change:

Breakthrough #1: Multi-tenant platforms. Sharing the cost of analytics hardware, software and services across companies can lower the entry price by an order of magnitude. As long as the platform can preserve data privacy and security, sharing these expensive assets can open analytics to the small and mid-sized market. Multi-tenancy also makes it possible to leverage investments in people and processes, and to standardize processes across customers – something that even the largest enterprises sometimes struggle to achieve.

Breakthrough #2: Web services interfaces for importing and exporting data. Interfaces for importing and exporting data are becoming commonplace in enterprise applications. Data import services make it possible for clients to migrate to the service, while data export services address clients’ concerns about lock-in and enable integration with other services. As more applications move to the cloud, cloud-to-cloud data integration services offerings are also emerging.

Breakthrough #3: On-demand capacity and utility billing. A large percentage of data integration, data mining and reporting workloads are batch oriented. Cloud analytics platforms can start and stop resources to match the workloads, providing high computing power during peak workloads, and releasing unneeded computing resources during periods of low demand. The ability to economically spread the cost of spare computing power is possible when the pool of clients is large enough and diverse enough to average out the peaks and valleys.

An Array of SaaS-Based Point Solutions Heading Your Way

We should expect to see an explosion of SaaS-based business applications in the next few years. A new generation of cloud-based companies will build point solutions across virtually all business functions. The affordability and accessibility of these point solutions will help level the playing field between small and mid-sized enterprises and their larger cousins.

Of particular interest is the model of “Managed Analytics,” in which a business process is architected and then outsourced and delivered in a software-as-a-service (SaaS) model. The solution will scale as the business grows, offers flexibility to meet changing business demands, does not require infrastructure investment, and cost-effectively spreads the cost of building the platform and data infrastructure across customers to bring the price point down for all. This is a win-win for everyone, but especially so for the resource-constrained small and mid-sized business.

A More Competitive Marketplace, Too?

For those of us in the business intelligence and information management space, cloud as an equalizer and enabler for a much broader marketplace for our products and services is of course a good thing. It heralds the industrialization of analytics and managing information as a core business competency. It also marks another step in the journey toward the democratization of enterprise information. This evolution will change market dynamics as the competitive landscape equalizes.

  • John BairJohn Bair

    John is Chief Technology Officer at Ajilitee, a consulting and services firm that specializes in business intelligence, information management, agile analytics, and cloud enablement. John’s technology career includes leadership positions at companies such as HP, Knightsbridge Solutions, and Amazon.com. He has decades of experience building complex information management systems and is an inventor on six data management patents.  

    Editor's Note: Find more articles and resources in John's BeyeNETWORK Expert Channel. Be sure to visit today!

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