The Keys to SaaS Business Intelligence Success

April 25, 2008

The shift from on-premise to on-demand business intelligence applications continues to get a lot of attention in the market. Here are 4 critical factors to look for in a SaaS business intelligence solution:

1) Simplicity (“Simplicity is the ultimate sophistication.” - Leonardo Da Vinci)

The concept of simplicity always rises to the top of the list when discussing the software-as-a-service model. With Microsoft jumping on the SaaS bandwagon this week, launching their Dynamics CRM Online, it will be interesting to see if the folks in Redmond have learned a few things from salesforce.com over the years. If not, they’ll want to check out this excellent presentation called 7 Secrets to SaaS Startup Success, from the recent Tour de Force roadshow. SaaS vendors take their cues from the consumer web – with sites like Google, Amazon, and NetFlix paving the way. As Rick Sheman writes on his blog:

“Part of the appeal of various BI products from SaaS, open source software (OSS) and other “small” software vendors is that they are easy to use and get the job done. This is in contrast to BI products that may win classic product evaluations but are overloaded with features and products stuffed into a BI suite. Feature-rich may win evaluations but not necessarily business users if the offering is too complex.”

As outlined in this introduction to on-demand business intelligence, SaaS applications must be:

Simple to set up. Gone are the days of the SE flying in to do a killer on-site demo that dazzles the execs and leads to a buying decision. With SaaS applications you should be able to “try before you buy” on your company’s data. Set up should take hours or days, not the months (or in some cases years) we’ve seen with traditional on-premise tools and data warehouse projects.
Simple to use. You don’t need advanced training courses to use websites like NetFlix. Why should software vendors not be held to the same standard? SaaS vendors have the advantage of being able to monitor and measure user adoption and they can intervene and assist if usage is low. Some even go so far as to say that the future of SaaS is all about the data because of this unique capability.
Simple to buy. Studies have shown that the pay as you go (and “pay-as-you-grow”) model reduces capital and operating costs by an estimated 10-30%. The subscription model itself is a huge simplification compared to the historical approaches of BI vendors, who have always counted on million dollar deals, annual maintenance fees, and a heck of a lot of shelfware.

2) Analytic Application Focus

When IDC’s Henry Morris coined the term years ago, he stated that ”an analytic application must do more than just provide information. They must guide the decision making process, leading to actions that improve business performance.” (See this article as well as his comments to this post for more details.) While the on-premise BI vendors tried to move towards analytic applications, their DNA as tools vendors made it very difficult to make the leap to becoming higher-value solution providers. The challenges associated with on-premise customization and the required built-in domain expertise also proved to be difficult to overcome. SaaS business intelligence applications should focus on analyzing and optimizing specific business processes, such as lead to cash, instead of simply being tools for IT and advanced business analysts.

3) Platform Power

The real benefit of business intelligence delivered as an on-demand service is that you don’t need to build an on-premise nuclear reactor when all you want is power. The “heavy lifting” of traditional on-premise business intelligence is managed behind the scenes so you can focus on getting the information you need to succeed in your role. Yes, the analytic power and performance have to be part of the underlying SaaS business intelligence platform, but this should be fairly transparent to the business users. This means that the sales cycle is no longer all about how to connect, combine, cleanse, aggregate and deliver data from multiple sources. Instead it’s about:

What metrics do you want to measure?
How can the analytic application help you improve the velocity of your sales pipeline?
Are you interested in measuring sales rep performance or historical customer acquisition trends by product line?

This is a refreshing change from the speeds and feeds discussions of traditional BI sales cycles and it should help organizations deliver on the promise of operational business intelligence.

4) Customer Success

As Byron Deeter outlined in his “Laws of Being SaaS-y” sandhill.com article:

“The top performing SaaS companies typically achieve annual renewals on a customer count basis above 90%, and over 100% renewals on a dollar value basis due to up-sells into this installed base.”

With the SaaS model, customer success must be at the forefront of everything the vendor does. Adoption must be high and the customer must see real, measurable value from the application. This is another refreshing change for the business intelligence market and perhaps the most exciting aspect of business analytics being delivered as an on-demand service.

It’s going to be interesting to watch this market evolve over the next few years as business process improvement and business intelligence applications continue to be the top business and IT priorities.

Written by dcunningham · Filed Under Features