BI Concept: Software as a Service (SaaS)

There's been a buildup of buzz in recent months around the terms "Software as a Service" (SaaS) and "cloud computing." SaaS hss been touted as "the next big thing" for a number of different applications, including business intelligence.

What is "The Cloud?"
The simplest answer is: it's simply the Internet. I first heard the term "cloud" used in an IT context to describe data communications. There it was used to describe how data moved most efficiently from a source to a destination. "Cloud" has since been applied to the idea of allowing computer software to run over the Internet instead of having it on your local desktop or network server.

Since the application is being "served" to you over the Internet, you're running the software as a service, hence the acronym. If you've played Web-based online games, you've probably already used SaaS.

But BI isn't a game
Playing Bejewled over the Internet is one thing; using business intelligence tools over the Internet is something else. In order to use the tools you have to supply the application with your business data, either by uploading it to the service provider or by allowing the service provider access to the data inside your company's firewall. In the new age of "spies without borders" (see my article WikiLeaks and Beyond) this can be a disconcerting prospect. But if you can accept the risk, there are potential advantages in going the SaaS route.

Evaluating SaaS
In financial terms you can look at the decision to go with SaaS as a classic "lease versus purchase" decision with a few twists. The advantages are that you don't have a large initial investment in servers, licenses, or human resources. You simply pay for what you need now, and buy more as you need it later. If the vendor also markets its software for licensing on your own servers (as is the case with SAP Business Objects or IBM Cognos) it's a potential opportunity to "try before you buy."

The disadvantages are that you're at the mercy of multiple failure points. If the vendor's website or your internet router goes down at a critical time, you're stuck. But if you're already comfortable using another SaaS product like Salesforce.com this may not be such a big problem for you.