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Software as a Service (SaaS) as the Optimal Model for Operational BI Delivery

by Wayne Morris, CEO, myDIALS Inc.Tuesday, August 31, 2010

As organizations fight for leadership in today’s competitive market environment, the winners, more often than not, are the ones who embrace new approaches and solutions to deliver improved business results.

For instance, many IT solutions are now being delivered through the Software as a Service (SaaS) model due to its clear advantages, which include:

  1. no up-front hardware or software to buy and implement;
  2. very rapid implementation and value delivery;
  3. no ongoing costs and IT resources required to maintain and update the software;
  4. no ongoing computer room and environmental costs;
  5. simple, cost-effective subscription fee (typically on a per user basis); and
  6. low-risk: if value is not being delivered, the company can choose not to renew the subscription. 

At the same time, many companies are turning to Operational Business Intelligence (BI) as a way to improve decision-making, enhance process efficiencies and enhance business results.  Operational BI provides near-real-time metric information on business processes, activities and outcomes to support operational decision-making.  Given the advantages and nature of SaaS, it is natural to examine whether SaaS is an appropriate model for the delivery of Operational BI capabilities. 

A study by Aberdeen Group in 2009 provides data that supports a conclusion that not only is the SaaS model appropriate, it is in fact the optimal delivery model.  

Let’s examine this further by first looking at the main problems that organizations are trying to solve with Operational BI.  The most common issue of the companies that Aberdeen surveyed was the need for improvement in the timeliness and accuracy of business decisions, with sub-optimal operational efficiency and productivity coming in a close second.

The other key challenges were the need for improved visibility into business operations; more rapidly changing market dynamics; and rising operational costs.

This reinforces the idea that organizations lack relevant, timely information to make better decisions more quickly in order to improve efficiency, productivity and effectiveness. 

For the study, Aberdeen used the metrics of Operating Cash Flow, Customer Growth and Business Visibility and divided companies into Best-in-Class (top 20%), Average (middle 50%) and Laggards (bottom 30%) based on their results against these metrics.  When comparing Best-in-Class (those achieving superior business results) to other organizations, Aberdeen found Operational BI use to be much more pervasive, particularly in the areas of sales, customer service, finance, and inventory management, in that order.

In relation to Operational BI, the Aberdeen study found the following:

  1. Companies that outperform their peers are significantly more likely to have embraced Operational BI, and
  2. Best-in-Class companies utilize Operational BI more pervasively across multiple areas (back office and front office) within their organizations.

The study also found a direct correlation between the use of SaaS-based Operational BI and superior business results, especially in relation to the customer experience, making SaaS the optimal delivery model for BI.  According to Aberdeen, companies using SaaS BI achieved significantly better results than those using other forms of BI, such as:

  1. 3x greater improvement in New Pipeline Accounts identified;
  2. 2.3x greater improvement in New Accounts Sold;
  3. 3.6 x greater improvement in Total Closed Contracts;
  4. 2.9x greater improvement in Customer Retention Rate; and
  5. 2x greater improvement in Customer Issue Resolution Speed.

Also, the generic benefits of SaaS hold true for Operational BI.  Compared to companies using other forms of BI, the organizations using SaaS-based BI had:

  1. 2x greater increase in the number of BI users, indicating the ease of BI expansion;
  2. 72 percent using self-service delivery of BI, which also used fewer IT resources; and
  3. 3.3x faster BI deployment, on average. 

Using a SaaS model is not only low-cost and low-risk, it is also very quick to deliver value and can be used to deliver superior business outcomes.  Because of the cost-effectiveness of SaaS Operational BI, more people in an organization can utilize the capabilities to make better decisions more quickly and hence improve the efficiency and effectiveness of processes across many aspects of the business.

Operational BI delivers a real, tangible business advantage to companies that quickly adopt and use its capabilities.  In today’s competitive environment it is more important than ever that companies seek to improve operational efficiencies and effectiveness leading to better business results, including enhanced market position, more customers, greater customer satisfaction, lower costs and improved profit.  As can be seen from the study cited above, Operational BI can drive significant improvements in all of these key measures of business success.

About the Author

Wayne Morris - President, CEO, myDials

Wayne Morris has more than 25 years of experience in executive management, strategy, marketing, sales and technical roles in software, services and hardware companies.  Most recently Wayne was Senior Vice President of Worldwide Marketing for McDATA and previously, he was the CEO and Managing Director of Citect Corporation, an industrial automation software company listed on the Australian Stock Exchange.  As part of his commitment to technology and business, Wayne has spoken at many industry conferences and is co-author of "Foundations of Service Level Management" published by SAMS in 2000.

 

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