Intelligence in the Cloud: Business Intelligence Software Defined a Certain Stage of Maturity with CRM Data by Making That Data Actionable. Now On-Demand BI Promises to Do the Same for On-Demand CRM-By Making It Affordable

By Tsai, Jessica | CRM Magazine, August 2009 | Go to article overview

Intelligence in the Cloud: Business Intelligence Software Defined a Certain Stage of Maturity with CRM Data by Making That Data Actionable. Now On-Demand BI Promises to Do the Same for On-Demand CRM-By Making It Affordable


Tsai, Jessica, CRM Magazine


[ILLUSTRATION OMITTED]

AFTER A DECADE of growth and adoption, it's not difficult to see that the software-as-a-service (SaaS) delivery model has staked a claim as a major force in the future of enterprise technology. Salesforce.com and others helped popularize the SaaS model, and with CRM at the core of Salesforce.com's offering, it's little surprise that CRM now leads the SaaS market with adoption ranging from 9 percent to 33 percent, depending on the CRM subsegment.

Over the years, business intelligence (BI) software followed a similar path, transforming from a high-end luxury offering to one now seen as a standard component for any company. As a combination of the two, the shining promise of SaaS BI seemed--well, if not inevitable, then at least a likely development.

Quentin Gallivan, chief executive officer of PivotLink, a provider of on-demand BI, says it wasn't that simple. "Business intelligence was a very complicated business solution," he says, which may explain why BI is seen as a laggard in the SaaS space, with Gartner estimating adoption at only between 2 percent and 3 percent.

However, after 10 years of growth in what Gallivan calls "SaaS 1.0," on-demand software is maturing into "SaaS 2.0"--which will finally embrace BI. "Now that companies are getting more comfortable using SaaS services for applications," he says, "we can bring more complexity, more data integration, more ecosystem management to the cloud." As vendors raise awareness, he says, SaaS BI can achieve 7 percent to 8 percent market penetration by 2013--and more than $1 billion in revenue. "That's a pretty special market to be in," he adds.

Just how special, though, remaions to be seen. In mid-June, one of SaaS BI's pioneers, San Mateo, Calif.-based Lucid-Era, stunned the marketplace by announcing it was shutting its doors. It was an unfortunate turn of events for a company that by many accounts had finally found its groove under the leadership of some BI veterans.

Founded in 2005, LucidEra went from start-up to shut down in large part due to the tough economic climate. With customers as wary to spend as venture capitalists were wary to invest, LucidEra could simply no longer stay afloat. (See "Lucid- Era: The End of an Era?," page 40.)

But did something else go wrong? Something that the remaining players in the SaaS BI marketplace (see "SaaS BI Vendors," page 42) could just as easily fall victim to? Something that all SaaS BI users--not just LucidEra's customers--need to be concerned about?

THE OLD DAYS

More than a decade ago, business intelligence promised to answer all questions, address all woes. Long-lost data would be found. Access to more information, integrated processes, and robust technology meant companies could at last make intelligent decisions. Finally, Gallivan says, "a business tool that could be pervasive throughout your organization."

Unfortunately, the grand BI promise failed to materialize for many companies. "They bought all these features and functions and they weren't using [them] regularly," says Ken Rudin, who founded LucidEra and was its chief marketing officer at the time of its closing. "There just wasn't much impact."

Rudin claims that years of idle reports have "jaded" the business users. That's what gives SaaS BI vendors the freedom to compete with their on-premises counterparts not in terms of bells and whistles, but in achieving business impact. If clear benefits aren't forthcoming, on-demand solutions give consumers something legacy software never could--a way out. They just won't renew their subscriptions.

Rudin was formerly at Siebel Systems, where he recalls having to significantly soft-pedal its CRM OnDemand offering. "We had to say that it was 'a lightweight CRM,'" he says. On-demand offerings aren't lightweight anymore, he says: "When it comes down to capabilities that people really care about, I don't think there's much difference at all [between on-demand and on-premises BI]. …

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