Business Intelligence: One of the Last Bastions of the On-Premise World

While the SaaS model has made aggressive advances in a number of software sectors, including CRM, Human Resources, and Productivity Tools, it has been slow to gain a foothold in other, important parts of the tech world.

One of the last bastions of the on-premise world is Business Intelligence.

Resistance to cloud BI is seen most prominently at the enterprise level.  Here, existing deployments are heavily integrated and entrenched.  In addition, there exists a general wariness of exposing corporate data to the cloud. In the past four years, however, a growing number of startups have taken on the mantle of on-demand BI.  And in doing so, they’re slowly re-shaping the future of analytics.

On-premise software is indeed a lucrative business, which is why large, well-established BI vendors have been reluctant to move to an on-demand model. Instead, the first attempts at SaaS BI came not from the “Titans” — SAP, Oracle, IBM and a few others — but from a few bold upstarts, a familiar tale from many industries.

Some of the pioneers in the SaaS BI space include Birst, Oco and Lucidera.  These companies ventured into the cloud long before the cloud hype exploded.

Not everyone survived those early days.  But slowly, the market took shape.  A variety of pioneering enterprises, especially at the mid-market level, began to adopt cloud BI solutions, sometimes as complements to their existing deployments. In fact, a survey of 3000 CIOs commissioned by IBM found a 50% increase in the number of mid-market CIOs planning investments in cloud computing from a similar survey in 2009.

In the roughly six years since, services such as AWS have made the cloud much more palatable to corporate decision makers. In another change, the BI solution stack has unraveled from a monolithic offering by mega-vendors to a variety of specialized vendors tackling a smaller piece of the problem. For example, ETL (Extraction, Transformation and Loading) now has both an open source (Talend) and a SaaS version (Snap Logic). This means that cloud BI companies can do one or two things really well and outsource the rest, speeding time-to-market.

As a result, cloud BI has gained significant traction. According to Gartner, it is expected to grow at 22.4% through 2013, the fastest growing sub-segment in BI.

As the SaaS BI market heats up, emerging companies such as Chart.io, Indicee and GoodData are offering fully-SaaS BI solutions, built on a variety of open source and proprietary tools that speed time to market.

SaaS BI offers a number of very compelling advantages. These include much faster deployments, a drastic cut in the amount of low-level plumbing required by IT staff, easier and more accessible pricing models and increased scalability. These benefits, and many more, make cloud BI a no-brainer. While not all sub-segments of the software industry will make the move to SaaS in the next few years, the stars for cloud BI are finally aligning. It’s only a matter of time before on-premise software gives way to analytics as a service.

David Beyer is the co-founder and CEO of Chart.io, a Y Combinator company backed by Avalon Ventures. He’s been fascinated with data for years and is now working hard to help businesses quickly and easily understand their critical data. He can be reached at dbeyer@chart.io.