SaaS to boost business analytics mart

Thanks to the ascendancy of cloud computing, the on-demand business analytics market is picking up, writes Nivedan Prakash

Business analytics delivered through the SaaS model is gradually gaining attention and traction in the Indian market. With the ascendancy of cloud computing, the on-demand business analytics market has picked up in terms of market visibility and user adoption.

While business intelligence and analytics tools have been leveraged by organizations for over a decade now, there is a pressing need for attaining cost efficiencies and reducing the element of capital expenditure thereby making a strong case for SaaS-based business analytics tools.

Business users are at the forefront driving demand for this market segment as there is a tremendous attraction in terms of quickly integrating market and demographic data with internal data across departmental silos in a secure manner to achieve visibility and better insight for decision making.

Some areas where on-demand business analytics has been used include sales analysis, supply chain visibility, customer analytics, merchandising, product analysis etc. Also Web 2.0 is emerging as an effective delivery mechanism of real time intelligence delivered across the organization for quick and effective decision making.

Successful on-demand software vendors have been instrumental in educating the marketplace on the benefits of accessing software

functionality through such a model. business analytics software providers are moving to address increasing market demand for software that is updated frequently, hosted off-site and purchased on a subscription basis.

However, some industry experts feel that business analytics SaaS hasn’t taken off yet. At this point, it is more of an area that all enterprises are looking at, primarily as a way to reduce the huge costs that enterprises presently incur while deploying business analytics solutions.

The market scenario

According to IDC, the business analytics SaaS market is poised to grow three times faster than the overall business analytics market with a CAGR of 22.4% through 2013.

Other leading analysts and technology advisory firms are of the opinion that the growth rate of this market will be anywhere between 20-50% over the next three-four years. It will grow rapidly, albeit from a small base; however, market revenue will remain low relative to on-premise software throughout the forecast period.

Renganathan Kasthurirengan, GM - Technology, CSC India, said, “SaaS adoption rates in India in general have been high with growth to the tune of 70% due to the low initial base and it is anticipated that the business analytics SaaS market will also pick up speed in coming months. Although Indian companies saw the need for business analytics in the face of increased competition, the high initial investments needed kept most businesses away. However, with on-demand solutions available, there has been a sudden spurt of growth.”

“The Indian market has seen a surge in SaaS model adoption by users and that is why the demand for business analytics delivered via this model is growing steadily in India. Businesses are turning to this model to satisfy their BI requirements. It has become easier for users to subscribe to high-end analytics tools at a low cost. Earlier, the upfront product/license cost was a deterrent. The significant CAPEX deterred firms from adopting business analytics tools and technologies despite genuine business requirements,” asserted Navin Chandra, Head - Analytic Sales, ConnectM.

The adoption of these solutions is accelerating not only among large-scale enterprises but also among SMBs. The market is expanding on account of increasing IT adoption across industry verticals, increasing competition and globalization, bringing with it new business challenges.

Indian enterprises are adopting these solutions in an effort to overcome the challenges of competition and globalization and to pave the way for increased revenue growth and profitability. Some key industries where stronger adoption of business analytics SaaS platforms is expected include financial services, retail, logistics, telecom, FMCG, manufacturing and the public sector. Increasing competition in each sector is driving players in that sector to adopt competitive and efficient analytics.

“We see quite a lot of potential for SaaS business analytics to rapidly grow in the market specifically in sectors such as retail (B2C industries). With the cost of a SaaS solution being significantly lower than that of the on-premise versions, this is definitely acting as a business leveler between small and large businesses and is providing a competitive edge to user companies,” pointed out Praveen Bhadada, Engagement Manager, Zinnov Management Consulting.

Shifting focus

Vendors are hoping that this market will see rapid growth as more organizations turn to cloud-based computing and alternative deployment options. As businesses look towards cloud-based computing, it becomes easier to integrate the market and demographic data with the rest of the business data and services.

As companies adopt cloud computing and the required security, compliance and governance standards are established, this will enable the secure sharing of business data and the faster adoption of business analytics SaaS.

Aniruddha Banerjee, Head - Technology Services Business, Sonata Software, was of the view that shrinking IT budgets and a growing need for business analytics are compelling organizations to look at alternative strategies to acquire the software tools that can help them lower capital expenditure and stay agile, within their operational budgets. Inadequate time and long-term capital investment expenses on resources to build tools are also leading customers to buy readily available SaaS business analytics software. These tools are easy to install/implement and allow organizations to save time as compared to on-premise solutions.

“Business analytics is an area of high spending in enterprises worldwide, including India. SaaS and cloud traction will surely catch up in this area as well. Interestingly, the rapidly evolving heterogeneous IT landscape with enterprise solutions in both the enterprise intranet and in cloud-based deployments in the SaaS model offer more interesting challenges and solutions to the business analytics problem specifically with respect to the simplicity of data extraction and transfer by leveraging Web-based service models such as REST and SOAP. Taking a step further, the easy and on-demand access to information and data also opens up the possibility of real time analytics,” added Ramesh Loganathan, VP - Products and MD, Progress Software India.

Limiting factors

Hindrances to growth would come in many areas including lack of network bandwidth to stream large amounts of data, telecom connectivity issues, data security vulnerabilities, need for India-based service providers, high cost of transferring data to a hosted environment, data integration issues etc.

According to Umesh Karpe, VP and Head - Business Intelligence, Patni, there are a couple of hurdles that need to be overcome in the Indian market. Firstly, there is the need to develop the mindset and rigor to take data driven decisions and a curiosity to look at what the data is telling you. This is more applicable to the SMB market that could well end up being the biggest buyer of such applications. Secondly, the quality of analytics will be driven by the availability of data and inherent data quality issues for which improvement in the operational systems has to happen.

Another aspect is that the user experience will be highly dependent on network latency which will require improvements in broadband speeds and connectivity which is far from a given. As of now, Indian broadband remains a dismal scene and this could well cripple the utility of this model for smaller business although medium and large businesses would definitely go in for leased lines if the rest of the value proposition (including bandwidth costs) is compelling.

“The biggest challenge that this technology will face will be the transition to a subscription-based model. It is so tied up with cash flow and maintenance that the transition to subscription pricing has to be handled carefully. Another key challenge will be the need to increase awareness about the benefits of SaaS among end users. Organizations are exercising financial caution and have a low risk and investment appetite only during a slowdown, which are the reasons for adopting SaaS. As companies emerge from this dark phase, they might want to look at long-term cost effectiveness instead of short-term costs and will need greater conviction for this,” highlighted Maneesh Sharma, Head - Business User and Platform, SAP India.

The integration of discrete in-house systems for data aggregation continues to be a major challenge for enterprises and business analytics providers in India. Other roadblocks include issues related to data security when information has to reside outside a company’s firewall, fear of loss of control and lack of clarity with respect to compliance requirements for the data.

Looking to the future

The business analytics market encompasses query, reporting, analysis, data mining tools, packaged analytic applications and data warehouse platform software. The SaaS portion is expected to account for a bigger slice of the overall pie. It will contribute new revenue as well as replace some traditional, on-premises licensed software purchases that will result in revenue expansion of the overall market for these solutions over the next few years. Significant numbers of users will access analytics functionality through a SaaS model during that time period, which will result in case studies that further educate prospects and drive interest in business analytics SaaS.

The SaaS market in general is poised to grow in India. This trend will also be seen on the business analytics SaaS market. The growth will be much higher than the predicted rate because of increased competition, introduction of faster broadband and wireless networks, more SMBs taking advantage of the level playing field created by cloud-based and other technologies and the need for accurate intelligence to target emerging and rural markets.

An increased number of companies will seek to focus on core competencies and rely on service providers to support non-core operating processes. The outsourcing market is rapidly growing, and the business analytics SaaS market will benefit from that trend. Continued adoption of Service-Oriented Architecture (SOA) as the primary methodology for software deployment will make it easier to integrate on-premise applications among themselves as well as with hosted applications. Therefore, broader adoption of SOA will contribute to the growth of this segment. Overall it will grow faster than its parent category. Due to the increased flexibility and affordability of the SaaS Model, it will cut more ice than the on-premise products or licenses option.

nivedan.prakash@expressindia.com