May 5, 2014

Does On-Premise Business Intelligence Software Still Have Value?

If you just read the headlines, you’d think that cloud computing could solve every problem your business will face. Outsourcing your in-house applications, or even your IT infrastructure, can provide the types of resources previously available only to large enterprises.

However, for business intelligence platforms, simply moving applications to the cloud won’t solve the inherent obstacles associated with the technology. There are numerous cloud offerings that provide valuable tools, such as data visualization, but several factors still favor keeping your BI software in-house.

Security

Security has remained one of the major factors, if not the major factor, in holding businesses back from moving to the cloud. These issues differ depending on the cloud deployment model, but the value of the data that would need to be put in the cloud to properly perform business intelligence is always high.

For example, using the cloud’s scalability to host a company website is logical: the data being hosted are not mission critical, and revolve mostly around website traffic. In contrast, business intelligence draws from a plethora of high value sources, such as financial information, operation specifics, and proprietary customer information.

The value of this data makes it a prime target for theft. Trusting a third party with your proprietary data means giving up some amount of control over it, and relying on cloud service vendors whose physical security is often impossible for clients to thoroughly vet.

Performing all of your business intelligence in the cloud requires placing high value data into the hands of a third party – unless you have the resources to construct a private cloud. However, private cloud construction is often extremely expensive, and beyond the IT infrastructure capabilities of all but the largest enterprises.

Speed

The cloud has done wonders for empowering smaller market competitors that provide tremendous value. And while BI solutions for small businesses are becoming more common, much of the heavy analytics of business intelligence still requires a certain threshold of data.

The cloud offers a more affordable way to store data, but if your organization needs to analyze a high volume every day, you’ll be limited by your connection’s bandwidth. In cases where the file size exceeds 50GB, performing business intelligence in the cloud can result in slower performance than using on-premise software. And with business intelligence increasingly being used to influence real-time decisions, waiting on analytics to return reports seems like a step backwards.

Customization

BI’s value lies in its ability to aggregate large, disparate sets of data, analyze them, and return actionable insights. Though cloud applications offer scale, cost, and even accessibility, such programs service a large audience relatively inexpensively by offering common functionality. The delivery model of the cloud often means there is limited customization available, which is a problem for technology that by its nature must be customized to retrieve data from company-specific sources.

If your business intelligence solution limits the data sources you can analyze, what trends are you missing, and how will it impact your competitive advantage, or your ROI?

While these three factors are reasons to keep business intelligence in-house, downsides due exist, most notably price.

Looking beyond just installation costs versus licensing, total cost of ownership still favors the cloud. Even though recurring subscription fees will eventually surpass the cost to license software, the additional investment in human capital as well as server maintenance – and inevitable server replacement – are generally greater than the recurring costs of a SaaS solution.

Cloud computing is changing and expanding the business intelligence market.  However, cloud technology is still nascent in terms of efficiently transferring large data, which functions as a foundational element of business intelligence. As it stands currently, on-premise business intelligence still has a significant part to play in the future of big data.

Want to learn more about how on-premise software can help your company? Use our Business Intelligence product selection tool to find vendors that fit your needs.

photo credit: J. Kleyn ∞ via photopin cc

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