BI AND SAAS

Business Intelligence in a SaaS Environment

Benefits, Implementations, and the Trusted Cloud
John K. Thompson Abstract
Many companies are seeking the advantages of a data analytics deployment while trying to minimize the costs and time involved. One option with proven deployments and results is business intelligence (BI) delivered via software as a service (SaaS). BI SaaS enables firms to implement data analytics initiatives in a fraction of the time and capital expenditure required by traditional installations. This article will discuss the range of companies that can benefit from a BI SaaS deployment and detail steps that need to be taken, both by vendors and customers, for a successful customer engagement. This article also discusses BI SaaS in the cloud computing environment, cites specific privacy concerns associated with the outsourcing of sensitive data in such a deployment, and discusses the concept of the trusted cloud as a solution to these concerns. We will show how BI SaaS can be deployed via trusted clouds, enabling more companies to employ this timeand cost-sensitive solution.

John K. Thompson is the CEO of North American Operations, Kognitio, Inc. john.thompson@kognitio.com

Introduction
At the very time that more companies are figuring out how data analytics can benefit them, they have run headlong into constraints that would seem to prevent them from taking advantage of analytics. Costs of deployment, of course, still continue to be the most obvious limiting factor; designing, building, installing, and running a data warehouse for data analytics has traditionally been too costly to undertake on a consistent and profitable basis. The process of building any analytical data warehouse has involved a fairly rigid process incorporating all four of these activities, plus a significant ETL and business analytics exercise.

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ETL has also proven to be a significant gating factor, especially at firms that are considering moving existing data warehousing implementations to a BI SaaS configuration. Unless they use a service provider for a brand new data warehouse, companies must still move existing data into the new system themselves. Traditional tasks, such as the business analytics exercise, even determining the definition of customer, present challenges that are difficult to resolve. Too many firms have concluded that the level of work required to implement a traditional data warehouse and make it a success will not produce the required return on investment, especially in the current economic climate even given the promise of analytical insight. IT professionals, already strained to the hilt, are loath to assume greater responsibilities, especially projects that often deliver benefits only to a particular department instead of to the entire enterprise. In addition, departments such as marketing or finance may only need the benefits of data analytics on an intermittent basis; an on-site, dedicated data warehouse for individual departments may be overkill. The challenge, therefore, is to disconnect business users from the bottleneck of overworked IT departments while giving them the ability to respond quickly to market demands. The answer, especially given recent corporate attention to cloud computing-based environments, may be to deploy data analytics on an outsourced, distributed basis. This option allows a trusted provider of managed or hosted services to take over the heavy lifting (i.e., performing physical construction of the data center, creating network connections between the client and the center, and providing the analytical database and software). The concept behind this configuration, BI SaaS, is not new; its been successfully deployed for more than a decade. What is new is the recent popular focus on the service and its potential upsides and downsides. Do not confuse BI SaaS with data as a service. The two are vastly different. Data as a service, as defined by Jill Dych of Baseline Consulting, basically advocates

the view thatwith the emergence of service-oriented architecture [SOA], which includes standardized processes for accessing data where it livesthe actual platform on which the data resides doesnt matter. With data-as-a-service, any business process can access data wherever it resides (Dych, 2007). BI SaaS goes much further, allowing companies to outsource the analysis of multiple terabytes of information as part of an overall business intelligence strategy.

BI SaaS: The Background

New technologies have eliminated the constraints that have historically inhibited progress of analytical services. In particular, quantum increases in performance have combined with significantly more robust ETL and increased flexibility in schema designs. Together, these improvements have delivered a new generation of systems. Consider the developments that have taken place over the last three years:
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The ability to create a scalable data infrastructure that enables clients to undertake developments on very small configurations, with the confidence that they can scale as their data loads grow. It is now realistic to begin with 100 GB of data and subsequently scale up to one petabyte with 100 percent confidence in performance. Low-cost commodity hardware linking data warehouse costs with Moores Law, directly associating the scalability of a data warehouse to the development of hardware and de-coupling it from major analytical and software development costs. The ability to deploy and re-deploy data warehouse architectures in minutes and hours, rather than days. The combination of non-indexed database environments and rapid deployment, reducing the time to implement or re-implement. Parallel data imports that enable data loads in a fraction of the time previously required.

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The focus on cloud computing and cloud services, enabling third parties to act as both host and production facility.

Most of these capabilities have been discussed for several years; now, they are available, making the BI SaaS model a reality. Successfully implementing a BI SaaS environment requires an approach that mitigates complexity, cost, and time delays. Equally important, it requires a mutually agreeable mindset between customers and vendors.

As the cost dropped, the number of users seeking to take advantage of a BI/DW implementation grew. Moreover, they didnt want the answers to questions that others had mandated over time: They wanted answers to their questions, and they wanted those answers within seconds or minutes, not weeks. For SMBs, this represented an unwanted trade-off: Lower technology costs were being replaced by the higher costs the IT staff needed to maintain a system, along with the cost of frequent technology updates (albeit at lower prices).

BI SaaS: Pros and Cons

Those most likely to use BI SaaS are groups and departments within organizations that range from small/ midsize businesses (SMBs) all the way up to business units within multinational corporations that want to gain business value rapidly on an as-needed basis and at low cost. Here, the need for action and insight outweighs the inertia of corporate latency. Lets look at why SMBs stand to benefit the most from BI SaaS. Traditionally, data warehousing and analytic implementations cost too much: between the software, the intensive computing power required, and the storage needed, data warehousing required far too many ongoing resources to produce a positive return on investment. Even if those challenges could be overcome, obtaining answers to questions often took hours, days, or longer, and the information was processed at a central facility. The running joke was that the answers would be back just in time for the company to be unable to benefit. The questions, incidentally, were usually pre-formed by managers and analysts unable to handle ad hoc queries. All that has changed in the last decade, with the pace of change accelerating sharply in the last several years. Beginning with massively parallel processing (MPP), technologys power increased, even as its cost nosedived. The result is that commodity-based hardware BI appliances sprung up; alternately, deploying analytic databases and software across multiple locations became both financially feasible and strategically desirable as a way for firms to put business intelligence to use.

Successfully implementing a BI SaaS environment requires an approach that mitigates complexity, cost, and time delays. Equally important, it requires a mutually agreeable mindset between customers and vendors.
Given that environment and those concerns, BI SaaS has increasingly come to the attention of decision makers at SMBs. Although not every SMB will automatically benefit from BI SaaS, many can, given the following set of customer requirements:
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Typically, clients have data warehouses holding less than 10 TB of data They need rapid, low-cost proofs-of-concept (POCs) or development projects Users are capable of paying for the service with operational budgets, but are constrained by a lack of capital funds Users require initial insights and intelligence within days or weeks, rather than months or years

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Users need the infrastructure of a BI SaaS service and the analytical expertise and custom consulting efforts to complete periodic ad hoc analytical projects IT staffs are stretched to keep operational systems running and have little to no time for new systems development IT staffs lack the skills, expertise, and experience in building and maintaining a data warehouse and business intelligence infrastructure They demand advanced analytical performance They expect a low-risk environment where the BI SaaS supplier assumes the risk of service success through increasingly high service-level agreements (SLAs) They want a service that includes data-load services combined with support and upgrade services

Cloud-based BI isnt a cure-all for SMBs. These enterprises must evaluate:

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Scalability: BI solutions in the cloud may not offer the same scalability as on-premises deployments, given that there may not the be the possibility of provisioning more servers and processing power on-demand to meet new business requirements. Security: Some firms are still wary of allowing a third party to have access to their data; Steve Dine of Datasource Consulting calls that concern a barrier that is impossible to overcome today. He notes that the concern should lessen as more companies adopt cloud-based strategies. Large Data Volumes: Moving huge amounts of data over the Internet can be problematic, even for large firms. Speed of Access: What goes out must come back, but concerns exist over significant latency in accessing large amounts of data via the cloud, especially from vendors whose architecture may not support rapid response times. Reliability: Even the most reliable systems will fail. Many firms still have significant doubts about guaranteed uptime and accessibility via cloud providers, even with written SLAs in place. They point to publicized failures from Amazons EC2 and S3, as well as the more recent outage at Rackspace.

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They want operational costs amortized across a given contract period rather than up-front capital expenditure costs and associated risks They may ultimately want to bring the entire system on site

Realistically, what works for an SMB may not work at a large-scale enterprise. The McKinsey report issued earlier this year makes clear that there are significant hurdles to the adoption of cloud services by large enterprises (McKinsey & Co., 2009). Among them is that large data centers have already achieved effective operating costs; transitioning their huge data stores to a service provider would not result in cost savings. In fact, the report notes that for large organizations, the total cost of ownership per CPU each month would be more than twice as much running on a cloud-based service such as Amazon EC2 as opposed to running in a companys own data center. It should be noted that these organizations have the resources mentioned above already in place, such as a significant, full-time IT staff.

Making BI SaaS Work: Setting Expectations

A rapid implementation, even in a BI SaaS environment, is rarely a plug-and-play event. The goal of every BI SaaS project is to produce measurable value rapidly, typically within several days or weeks. When evaluating a BI projects benefits (and thus its value to the enterprise), you risk setting user expectations too high. For example, when cost-justifying a project, you may (accidentally) give users an unrealistic view of the new features they will enjoy. There are, however, several ways to reduce those risks if you address the issue early in the project.

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With BI SaaS, value-based proofs-of-concept can be created in a matter of days. In addition, POC validation takes place on a scaled-down model of the final system showing a positive ROI at every level, with an understanding that performance will scale with size. This is paramount in establishing a low-cost entry that can be combined with a pay-per-use BI SaaS model. Companies should not expect a full-scale implementation from the start, as this may be counterproductive.

the process may present unforeseen challenges. On the front end, the tools to be used for client-based analytics and reporting may not be what users expect. One vendor says he never assumes that the data to be analyzed is up to date and available, so he often builds data preparation costs into his project estimate. This can be expensive because the system must be designed and implemented to query, report on, analyze, and mine what are, increasingly, billions of rows of records. A rapid application development (RAD) approach tries to take these variables into account, allowing vendors to create initial POCs in hours or days. However, at the high end, some data sets may require specific handling and processing that diminishes BI SaaS value. BI SaaS may not be for everyone, especially in larger implementations or at larger enterprises.

Outsourcing the tactical implementation does not give a company the right to wash its hands of knowing what is happening with its operations at all project stages.
One of the key benefits of a BI SaaS project is that the client may specify a service-level agreement derived from the POC or some other mutually agreed-upon criteria. The BI SaaS environment measures the resources a customer is using and efficiently bills the enterprise for only the time actually used (the vendor may require a minimum subscription period). A terabyte per month is the standard unit, meaning clients who analyze seven terabytes of data for a month pay a flat fee based on data storage space used. The enterprise does not need to be concerned with how many CPU cycles it uses or the number of rows of data it analyzes. This variable pricing model is one payment option. The majority of BI SaaS customers pay for the service on a subscription basis over a period of two to five years. The subscription model is more economical, providing for longevity, predictability, and lower costs over longer periods of time. Of course, there may be pitfalls, especially during implementation. Preparing data loads at the back end of

BI SaaS and the Trusted Cloud

Security, confidentiality, and data protection requirements often trump the need for speedy, broad-based analysis required by a marketing department or for cross-selling using a CRM application. As a result, corporate data warehouses must comply with a myriad of data protection laws. They must absorb the related costs and accept the resulting inflexibility. This has been a potential gating factor in the adoption of data warehousing by SMBs. Skeptics worry that allowing an outside firm to access data may lead to unwanted breaches that violate a variety of regulations. Many analysts still express wariness over where the data is being stored, who has access to it at those locations, and whether the data is being mingled with data from other firms. As Gartner analyst Donald Feinberg said, With the cloud, it could be in Bangalore, it could be in Russia, or it could be in San [sic] Paulo, Brazil. Amazon wont tell you where their machines are for security reasons. You have no control over what machine your database is running on. Youre buying a virtual machinethats what the cloud isand I dont know or care where it is (Henschen, 2008). An emerging solution lies in the implementation of BI SaaS as administered through a trusted cloud.

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Specifically, this entails choosing a partner to handle the technical issues. The company can host your data, or you can allow them to access it behind your corporate firewall. The firm is also responsible for handling hardware deployment and upkeep. Most important, the firm is chosen as the preferred vendor because the end user may have an established relationship with the vendor, may know a colleague who is using the firm to provide similar services, or may perceive value because the vendor has a presence in the community where the company is based. Theres a level of trust present with such a vendor, where another, even larger, vendor may not engender the same trust. Even with trust, failures occur; the source of the failure may not be the service provider itself, but the result is the same. Companies considering a BI SaaS solution have the right to insist on high levels of uptime from potential providers, guaranteed through failover and redundancy. The cost of the guarantee, however, must be taken into account, especially if the company itself is not able to replicate the insisted level of uptime within its own walls. In other words, if you cant do it at any cost, dont necessarily expect the other guy to be able to do it for mere pennies. In addition, companies should conduct a thorough security audit of the service provider before entering into a BI SaaS contract. They should keep a hands-on attitude; outsourcing the tactical implementation does not give a company the right to wash its hands of knowing what is happening with its operations at all project stages. At the very least, companies should conduct audits every 6 to 12 months during the contracts life, ensuring that the provider can offer tangible proof of delivery on its promises. Of course, BI SaaS may not be the solution for some firms, where control over the data is of paramount concern. Enterprises may wish to license the analytical database and front-end tools themselves. Although they lose the economic and time benefits afforded by a BI SaaS implementation, they maintain full control, which, for their particular needs, may represent the best scenario.

Summary
BI SaaS is attractive to midsize companies as well as departments and divisions of large corporations that seek to implement cost-effective, quick, and dynamic data analytics projects. By outsourcing the design, building, deployment, and operation of a data warehouse to experts outside the firm, BI SaaS can allow an organization and its clients to focus on reaping the rewards from understanding and analyzing their data instead of handling the time-consuming burden of creating the analytical environment. With BI SaaS, costs are reduced, performance is guaranteed, and full business insight is enjoyed. Enterprises considering such an implementation should start small, requiring a POC project to demonstrate the positive ROI involved before moving ahead. They should also take into account governance, risk management, compliance, and privacy issues at every stage, from considering whether BI SaaS will allow them to meet those requirements to considering who will have access to the data and where it will be stored. The promise of BI SaaS is already being fulfilled at companies, both large and small, around the globe. When pursued and implemented prudently, its demonstrated value will grow over time. n

References
Dych, Jill [2007]. Data-as-a-service, explained and defined, TechTarget Expert Response, July 24. http://searchdatamanagement.techtarget.com/ expert/KnowledgebaseAnswer/0,289625,sid 91_gci1265463,00.html Henschen, Doug [2008]. Q&A With Gartners Don Feinberg on Database as a Service and Cloud DBs, Intelligent Enterprise, May 23. http://www.intelligententerprise.com/showArticle. jhtml?articleID=208200257 McKinsey & Co. [2009]. Clearing the Air on Cloud Computing, April. http://uptimeinstitute.org/content/view/353/319

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