SaaS BI and data warehousing 'finally' stepping out of the shadows

You might think SaaS BI and data warehousing as a service is a recent phenomenon, but vendors like 1010data and Kognitio have been at it for years.

Software as a service (SaaS) business intelligence (BI) has certainly been getting a lot of buzz lately with a

new product release from SAP last week and recent encouraging words from industry analysts.

But while interest in all things SaaS BI may be new, the technology itself is hardly a recent phenomenon. BI and data warehousing technology delivered via the cloud has actually been around for years, with a number of smaller vendors taking the lead, while more traditional vendors either shunned the SaaS model or made fitful attempts at harnessing it.

"If … BI SaaS options from large vendors seem skimpy, your impression is correct," wrote Boris Evelson, an analyst with Cambridge, Mass.-based Forrester Research, in a recent blog post. "That's precisely why there's a plethora of small BI vendors addressing the need and the opportunity in the market left largely unaddressed by the mainstream BI vendors."

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 Among those vendors is 1010data. Founded in 2000, the New York-based company sells BI and data warehousing as a service, both of which it hosts in its own data center, according to Sandy Steier, 1010data co-founder and vice president.

Value of SaaS BI and data warehousing lies in its service

The value proposition of SaaS BI and data warehousing as a service is simple, Steier contends, but the sub-market has been overwhelmed by BI mega-vendors and their enormous marketing prowess. "BI took kind of a detour along the way, in my opinion," he said.

After taking into account monthly licensing fees, customers can expect to spend around the same amount of money for an in-the-cloud data warehouse as they would for an on-premises deployment, Steier concedes. The difference is the second 'S' in SaaS -- the service.

While companies can purchase just BI as a service, 1010data not only hosts most of its customers' BI and data warehouse installments, but manages them as well, Steier said. Customers send their data to the vendor, which then normalizes and integrates it. 1010data also manages the hardware, meaning one less headache for its customers' IT departments.

End users access the data via 1010data's homegrown Web-based BI tools, which include reporting and ad hoc query capabilities. "The customer merely needs to get onto the Web and manipulate the data," Steier said. Cloud-based data warehouse deployments also make B2B connections easier, he added.

Steier and other SaaS BI and data warehouse vendors may be on to something. "[BI] technology is a pure commodity. I have no doubts whatsoever about that," said Mark Madsen, a consultant with Third Nature who has worked on numerous BI deployments.

In such an environment, where there is little differentiation among vendors in terms of product functionality, service could mean all the difference. And that's where SaaS BI and data warehousing companies are trying to make their mark.

"You can't run a service unless you can give instant gratification," said Roger Llewellyn, CEO of Kognitio. Kognitio sells its WX2 data warehouse as a service and touts its ability to get customers' installations up and running in a fraction of the time it takes on-premises deployments.

Risk of failure low with SaaS BI and data warehouse, but it's not foolproof

In addition to fast deployments thanks to optimized infrastructures, SaaS BI and data warehousing can also remove much of the risk of failure for customers, Llewellyn said. Because customers aren't required to plunk down large sums up-front, they can walk away from a failed SaaS BI or data warehouse deployment without losing much money, he said. If an on-premises deployment doesn't work out, there's no getting back that initial sum.

That is not to say SaaS BI and data warehousing is without risk. For one, many companies are still not comfortable sending sensitive corporate data to a third party outside the firewall. Transferring data outside the firewall also means that customers are reliant on the Internet, increasing the risk of downtime compared with an on-premises deployment.

And the service in "SaaS" isn't a draw for all customers. Companies with a large number of customized data sources and unpredictable analytic queries probably want to control the normalization and integration of the data themselves, according to analysts.

And then there is the perception that SaaS BI and data warehouse deployments are most suitable for small and midsized businesses (SMBs) that lack the IT resources to run the software and database in-house. Vendors like 1010data and Kognitio take issue with that contention.

"It really has nothing to do with customer size," Steier said. "There is a certain mindset that is very difficult to break out of."

Indeed, while many SaaS BI and data warehouse customers are SMBs, 1010data, Kognitio and others also boast a number of large enterprises among their clients. Both the New York Stock Exchange and Goldman Sachs are 1010data customers, while Kognitio recently signed a deal with GroupM, a division of the marketing communications conglomerate WPP.

Still, for SaaS BI and data warehousing to break into the mainstream, vendors are going to have to be aggressive in order to overcome their more traditional BI rivals, a prospect that suits Kognitio's Llewellyn just fine.

"Our sales technique is confrontational," he said.

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