Not just for small businesses anymore
Vendors offering on-demand and SaaS applications have made names for themselves by serving midsize and smaller companies, which typically don't have the IT resources to dive into a full-fledged on-premise rollout. The partnership makes a lot of sense for both parties, say analysts.
"Midmarket companies lack the sunk costs that large enterprises have already invested in a BI infrastructure. They have similar requirements to integrate, report and analyze data from numerous systems, but they don't have the staff or infrastructure to pull it off," writes Gartner Research Director Kurt Schlegel in a February 2008 report on BI self-service options. "Plus, midmarket companies are often in volatile business cycles where revenues could grow quickly or come crashing down."
But larger companies are also starting to test the on-demand waters with targeted applications. Welch's, the $654 million consumer-packaged goods manufacturer known for its jams, jellies, and juices, recently installed an on-demand BI application from Oco. In January, Welch's rolled out a transportation logistics BI application that serves up analytic insights from Welch's systems and its distribution partners' in a way that its Oracle BI software (installed in 2007) could not.
"We're essentially capturing every element -- from the customer orders we receive, to bills of lading on every shipment we make, as well as every data element on every freight bill we pay," says Bill Coyne, director of purchasing and logistics for Welch's. "We dump them all into one data warehouse [maintained by Oco], and we can mix-and-match and slice-and-dice any way we want."
Coyne says that Welch's tries to ship its products five days a week out of its distribution center. "But we found ourselves just totally overwhelmed on Fridays," he says. "We would complain, 'How come there are so many orders on Friday?'"
It turns out that Coyne's team was doing it to themselves. The data aggregated into Oco's data warehouse and sliced-and-diced by Coyne's team revealed their errors, which they have now fixed. "Just trying to steer away from Fridays provides us a huge benefit," Coyne says. "We can look at the number of orders per day, the number of orders by day per customer and overall customer order patterns."
Welch's spends more than $50 million each year on transportation expenses, and the Oco BI application and reporting features have become critical in a very short period of time, he says. "We literally can't go any amount of time without knowing this stuff," Coyne says.
In addition, training users on the new application is "the equivalent of training someone to use Google," he notes. As to the payback, it's been "almost instantaneous."
On-demand changes IT's role
The oft-cited concerns regarding on-demand and SaaS applications (integration, customization, security) typically don't emanate from the business side of an organization. Typically, they come from IT groups already under intense pressure from project backlogs and a lean number of staffers, who most likely don't have BI development skills. "The IT and BI skill sets that are required to meet this demand are in limited supply," notes Aberdeen's Hatch.
With easy-to-install on-demand applications, IT's role as gatekeeper is minimized, say analysts. By 2012, Gartner's Schlegel predicts that emerging technologies such as on-demand and SaaS BI tools will make users "less dependent on central IT departments to meet their BI requirements."