The early adopters of the 1990s-style decision support systems that evolved into today's data warehouses were typically large, monolithic organizations with the budget, resources and management capacity to buy high-end hardware platforms and hire workers with the specialized skills needed to design, develop and deploy architectures to support data analysis. But over the past 20 years, business intelligence, analytics and data warehousing technologies have matured significantly, gelling into an ecosystem that commonly includes components such as extract, transform and load (ETL) tools, data quality software, and applications for reporting, querying, data discovery and data visualization.
This de facto standardization has created an opportunity to package cloud BI tools in hosted environments that offer economic models suited to organizations with tight IT budgets. Various vendors sell software as a service (SaaS) versions of their BI suites. And an emerging cadre of cloud providers has deployed data warehouse systems and BI tools on their own platforms, giving users platform as a service (PaaS) options that can further simplify application development and deployment.
For users, the value proposition of cloud BI tools lies in cost and time savings. Lower IT bills and freedom from the administrative burdens of technology acquisition, management and maintenance lower the barriers to entry on BI for companies -- particularly small and midsize businesses with limited budgets, staffing and skills -- and makes it easier for them to benefit from reporting and analytics applications. In addition, cloud users can rapidly deploy data warehouses and data marts, and then modify them as needed; end-user BI and analytics tools can also be quickly implemented through a PaaS environment.
Benefits of BI in the cloud
Let's look more closely at the potential advantages of using cloud-based BI tools.
Reduced or eliminated capital costs. Because BI systems are managed on the cloud service provider's hosted architecture, a user company has no up-front capital investments or multi-year equipment leases with depreciating value. It also stands to benefit from improved cash flow. The subscription fees charged by cloud vendors are treated as operational expenses and don't incur additional interest charges, which can lead to better cash management and debt avoidance.
Streamlined system design and increased elasticity. In the cloud, companies can rely on a provider to architect the BI environment, select the technologies that will power it, assemble systems and manage the hardware and software stacks. That frees them to focus their attention on running BI and analytics applications and interpreting the results. Also, there's more flexibility for setting up BI systems and making changes to them. A provider can configure its platform to meet the specific needs of each company it does business with, and customers can grow or shrink their systems and usage models based on changes in their business and analytics needs; meanwhile, they pay only for what they use.
Fully integrated BI components. BI environments hosted in the cloud comprise a complete end-to-end architecture that spans the ETL, data management and analytics spectrum, simplifying and speeding the deployment process for users. Cloud BI systems should be ready to use out of the box, so to speak, and the standard setups can quickly be augmented with templates that vendors have developed over the course of different customer engagements.
Simplified and transparent user interfaces. BI systems in the cloud can be accessed by business users through a Web-based portal, which can be customized based on user roles and business needs.
Strong data security. Many IT and BI managers still have concerns about putting data in the cloud, so user demands for data protection may be acute. But a reasonable cloud BI vendor will include guarantees of strict security provisions and compliance with data privacy requirements -- offering a more secure environment than many companies have internally.
Two-way street on cloud BI's pluses
The service provider also benefits from a hosted BI environment. The underlying SaaS or PaaS architecture needs to be designed only once, but it can be deployed multiple times for different customers. Virtualization can enable different deployments on the same physical platform without sacrificing system security and data protections. Lessons learned during customer engagements can contribute to the development of best practices, standardized processes, common reporting and analytics templates, and other means of accelerating deployments -- shortening the time it takes users to get business value from their BI applications, and hopefully making them happier customers.
There are issues that continue to hold down adoption of cloud BI tools -- the lingering doubts about security, existing investments in on-premises systems, the cost of moving data to the cloud. But the hosted BI market is evolving and growing naturally as the process of setting up cloud-based data warehouses and BI systems becomes less of an effort and companies become more comfortable using them.
About the author:
David Loshin is president of Knowledge Integrity Inc., a consulting and development services company that works with clients on big data, business intelligence and data management projects. He also is the author or co-author of various books, including Using Information to Develop a Culture of Customer Centricity. Email him at firstname.lastname@example.org.
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