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Cloud BI and Performance Management Part 1 of a 3-Part Series on Business Intelligence in the Cloud

Originally published May 6, 2013

According to Gartner and Forrester, the percentage of business intelligence (BI) applications deployed in the cloud is lower than 3%. Why is adoption so low and will the trend last?

In 2006, BusinessObjects, then an independent vendor and the BI market leader, enthusiastically introduced CrystalReports.com. This was its "on-demand" version — the word “cloud” had yet to become a mainstream term — of its reporting environment. A few weeks later, Cognos, the number two player in the market and also an independent at the time, followed suit with the acquisition of Celequest.

That was seven years ago, when the cloud BI market seemed at the dawn of a bright future, especially since the market’s main leaders had anticipated its launch. But its expected heyday never came, despite the fact that during this time the cloud had managed to take other business application market segments by storm. These segments included CRM with 36% of its applications being delivered on software-as-a-service (SaaS) infrastructure (according to Gartner) and 70% of organizations expressing interest in such a delivery mode (according to Forrester); and human resources, where SAP and Oracle made an almost $6 billion investment between the two of them, not only to take over the already wide customer base of the two rising stars, Success Factors and Taleo, but to also try to protect their existing base from Workday’s spectacular ascent.

So, why did business intelligence remain on the sidelines of this evolution? Was it a matter of time? We could reasonably think as much in light of recent developments, both in terms of supply and demand.

The market seems to be opening up to three BI sub-segments. In order of maturity, they are: performance management applications, the focus of this article; departmental BI applications, which will be discussed in the second article of this series; and finally, even though this segment is the least mature of the three, enterprise BI and big data, the subject of the final article of this series.

Performance Management: Renewed Interest

In many companies, performance management (or EPM for enterprise performance management) is a discipline in itself, separate from business intelligence. It is generally implemented by the office of the CFO in order to cover key processes such as budget planning, "fast close," statutory consolidation, and cost and profitability analysis.

But EPM does not apply only to finance. It also helps implement best practices for forecasting, simulation, planning, analysis, strategy management, and regulatory and management reporting. And these practices are relevant across all business activities. For example, sales managers need to plan their sales targets, define sales territories and then assign those territories to the sales force so that they are as balanced as possible. They then need to measure the objectives achieved by each of their sales representatives. Marketing needs to plan campaigns and ensure its return on investment, and human resources needs to plan payroll expenses and then define a performance measure framework that will apply to a majority of employees. Unfortunately, these increasingly time-consuming activities are often performed using barely formalized processes and Excel.

Several factors single out the cloud as a suitable model for implementing performance management applications. First, the current EPM market revolves around three leading players that account for 70% of market share when it comes to mature solutions. This low competition in the market creates opportunities for innovative start-ups that naturally opt for the software-as-a-service (SaaS) model to penetrate the market. Second, EPM applications are process-oriented and, by nature, closer to software package solutions than development platforms. Moreover, they are usually chosen by functional departments rather than by IT, which is another one of the many appealing attributes of SaaS solutions. Finally, EPM is an application that is relatively isolated from the rest of the information system. Exchanging data with the core information system is indeed necessary, but the amount of data involved is relatively small and rarely requires real time sharing, making this cloud limitation irrelevant in this context.

All of these favorable conditions explain the emergence of numerous EPM SaaS solutions. Some, such as Anaplan, Host Analytics, Adaptive Planning and Tidemark, offer a generic platform that can be adapted across business activities. With its recent EPM on-demand announcement, SAP has also jumped on the bandwagon. Others, like CallidusCloud for sales, have chosen to focus on one specific activity. This category of highly specialized players is currently the target of the market’s major providers, as evidenced by recent mega-vendor acquisitions of those players that have developed the performance management feature of their offerings. This includes SuccessFactors by SAP and Taleo by Oracle for human resources, Ariba by SAP for spend performance management (purchasing), Eloqua by Oracle for revenue performance management (marketing) and Varicent by IBM for sales performance management (sales and incentive compensation management).

For this solution segment, though, the main drawback of the SaaS mode is that it accentuates the dividing line between performance management and business intelligence. And regarding specialized applications for HR, sales, marketing, etc., the SaaS model also strengthens activity-based silos. Let us point out that the offerings mentioned in this respect cover more than just performance management; they are often selected for a wider scope that encompasses process execution, planning and optimization.

Security is another frequently mentioned concern. But most of the mentioned offerings, some of which are already mature, include solid security infrastructure. Besides, performance management is no more a delicate matter than customer relationship or human resources management, segments where cloud adoption is now a popular practice.

The next article in this series will look at the use of the cloud for departmental business intelligence.

  • Jean-Michel FrancoJean-Michel Franco
    As Innovation and Solutions Director for Business & Decision, Jean-Michel Franco designs and markets value propositions on an international level. Franco has dedicated his career to developing and broadening the adoption of innovative technologies in companies. He started out at EDS by creating and developing a new business intelligence (BI) practice. Franco then joined SAP EMEA to develop the business in the areas of BI and ERP solutions and later became Director of Marketing Solutions in France and North Africa. He may be contacted by email at jean-michel.franco@businessdecision.com.

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