BI In The Cloud? Yes, And On The Ground, Too

Slowly but surely, with lots of criticism and skepticism, the business intelligence (BI) software-as-a-service (SaaS) market is gaining ground. It's a road full of peril — at least two BI SaaS startups have failed this year — but what software market segment has not seen its share of failures? Although I do not see a stampede to replace traditional BI applications with SaaS alternatives in the near future, BI SaaS does have a few legitimate use cases even today, such as complementary BI, in coexistence with traditional BI, BI workspaces, and BI for small and some midsize businesses. 

In our latest BI SaaS research report we recommend the following structured approach to see if BI SaaS is right for you and if you are ready for BI SaaS:

  1. Map your BI requirements and IT culture to one of five BI SaaS use cases
  2. Evaluate and consider scenarios where BI SaaS may be a right or wrong fit for you
  3. Select the BI SaaS vendor that fits your business, technical, and operational requirements, including your tolerance for risk

First we identified 5 following BI SaaS use cases.

  1. Coexistence case: on-premises BI complemented with SaaS BI in enterprises
  2. SaaS-centric case in enterprises: main BI application in enterprises committed to SaaS
  3. SaaS-centric case in midmarket: main BI application in midsized businesses
  4. Elasticity case: BI for companies with strong variations in activity from season to season
  5. Power user flexibility case: BI workspaces are often considered necessary by power analysts
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Bottom Up And Top Down Approaches To Estimating Costs For A Single BI Report

How much does it cost to produce a single BI report? Just like typical answers to most other typical questions, the only real answer is “it depends”. But let’s build a few scenarios:

Scenario 1: Services only. Bottom up, ABC approach.

Assumptions.

 

  • Medium complexity report. Two data sources. 4 way join. 3 facts by 5 dimensions. Prompting, filtering, sorting ranking on most of the columns. Some conditional formatting. No data model changes.
  • Specifications and design – 2 person days. Development and testing - 1 person day. UAT – 1 person day.
  • Loaded salary for an FTE $120,000/yr or about ~$460/day.
  • Outside contractor $800/day.

Cost of 1 BI report: $1,840 if done by 2 FTEs or $2,520if done by 1 FTE (end user) and 1 outside contractor (developer). Sounds inexpensive? Wait.

 

Scenario 2. Top down. BI software and services:

Assumptions:

  • Average BI software deal per department (as per the latest BI Wave numbers) - $150,000
  • 50% of the software cost is attributable to canned reports, the rest is allocated to ad-hoc queries, and other forms of ad-hoc analysis and exploration.
  • Average cost of effort and services - $5 per every $1 spent on software (anecdotal evidence)
  • Average number of reports per small department - 100 (anecdotal evidence)
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