There’s a flaw in the cloud-based business intelligence model. Too many vendors are offering the icing but not the cake.

That’s the argument made by Wayne Eckerson in a blog post: Expectations Vs Reality: Understanding the Dynamics of the Cloud BI Market.

Eckerson makes the point that complaints about security and data transfer rates are not the real reasons for the slow adoption of SaS business intelligence offerings.

The real issue is about complexity. Data takes time to get ready for proper analysis and business intelligence. It has to be managed:

Preparing data is hard, tedious work, but it’s the foundation of BI. Do it right, and you can ice your cake with sweet-tasting frosting. Do it wrong or not at all, and there is no cake to ice! Too many Cloud BI vendors have been peddling the icing and downplaying the need to bake the cake, and now they’re suffering. The same thing is happening with visual analysis tools, such as QlikView. They are great at handling simple data sets, but give them dirty data from complex operational systems and they fall apart. Someone, somewhere has to do (and pay for) the dirty work of preparing data or else everyone goes hungry.

Services Angle

What might be a better approach? Offering consulting services that provide value on top of the technology offering. Eckert:

If Cloud BI vendors want to deliver a complete BI solution that solves real business problems, they should shift from selling software services to professional services, and compete head-on with BI consultancies. Cloud BI vendors would have several advantages here:
— Cloud BI vendors can not only develop custom solutions, they can run them. And they can do so in a cost-effective (but not inexpensive) way due to the economies of scale of a virtualized, hosted infrastructure.
— They can also develop solutions faster than BI consultancies because they can leverage prebuilt software, models, and metrics built for other customers (although veteran consultancies will also have at least prebuilt models and metrics to contribute to a project.)

I haven’t come across any Cloud BI vendor that is taking this approach overtly, although many are doing so in practice. Perhaps the closest is SAP BusinessObjects OnDemand.

Eckert has a point. Self-service is the best reason to offer cloud-based services. Email is a prime example. It is the most basic of cloud-based services. It’s as simple as it gets. But business intelligence? That’s an offering that does require a certain level of sophistication and expertise. The data has to be managed before it is even used in a BI application. Without that preparation, the application loses its value and the customer loses interest.