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On-premise vs. on-demand BI: SAP tries for the best of both worlds

When it comes to the debate over on-premise vs. on-demand business intelligence deployments, SAP Business Objects is trying to be all things to all customers.

When it comes to the on-premise versus on-demand business intelligence (BI) debate, SAP is trying to have it both ways, providing customers with the choice between one or the other, or a mix of the two.

The German software maker vaulted to the top of the BI heap with its 2008 acquisition of Business Objects, which itself began offering on-demand reporting software in the form of in 2006. The company rolled out the more comprehensive Business Intelligence OnDemand platform a year and a half later.

Now, SAP is expanding its Business Objects on-demand, or software as a service (SaaS), BI offerings in the form of Project Kona. The new offering, which begins beta testing next week and is slated for public release sometime next year, includes on-demand versions of Crystal Reports, Explorer for search functionality, and Xcelsius, a Microsoft Excel visualization and dashboard tool, a streamlined user interface for casual BI users, and new IT administration tools.

As with most on-demand BI offerings, SAP is targeting departmental-level deployments with the aim of allowing casual BI users to fill gaps in their on-premise BI systems, according to Holly Simmons, director of marketing for SAP's on-demand BI division. Non-technical users will be able to quickly upload data and begin reporting and analyzing it with intuitive, easy-to-use tools, she said.

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 "We've really been focusing quite a bit on the user experience and making this just as simple as can be for folks to get online and begin using these business intelligence tools," Simmons said. "The intention of Project Kona is to bring all of these robust capabilities to the casual business intelligence user."

Simmons noted that marketing and other departments "don't always get the IT support that they want for things like business intelligence." With SAP's on-demand offerings, department heads can bypass IT and download BI software on their own, without having to wade through a long and sometimes futile budgeting process.

But on-demand BI deployments that bypass IT create their own problems. For one, data can become siloed in individual departments, inhibiting cross-departmental collaboration. It also can create havoc for IT departments that eventually want to rein in rogue BI deployments and apply enterprise-wide security and administration rules.

Not a problem, says SAP. Unlike offerings from smaller on-demand BI startups, Project Kona includes tools for IT administrators to easily manage their on-demand BI deployments if and when they decide to do so. And because SAP has what many analysts consider the industry's leading on-premise BI applications, customers can upgrade to a more traditional BI deployment or, as is likely with large organizations, operate a hybrid environment of both on-premise and on-demand SAP BI software, the company claims.

"For companies that want to standardize, business users can purchase this product and know that it's going to work with what they have down the road," Simmons said. And, she added, customers can be assured that "we're going to be around awhile," alluding to the demise of on-demand BI startup LucidEra earlier this year.

Carl Dubler, product manager for SAP's on-demand products, said most of SAP's on-demand BI customers are in fact not rogue department heads but "large enterprises with corporate-driven data warehouses that still aren't getting everything they need from the IT department. They just want to be more self-sufficient."

Project Kona, for example, allows users to combine their own data sources, like Excel spreadsheets, with data from a centralized data warehouse for personal, customized reporting and analysis. Users can then share and publish their findings with colleagues, Dubler said.

"I think we'll see a lot of that type of thing, where you have the official, IT-blessed and built data warehouse that nobody can mess with," Dubler said. "And then you've got people that have their own data sets that are out there that are just never going to be in the warehouse because the warehouse design is set, it's up and running, it's really not easy to change it -- but they still want to combine data."

Gartner analyst Rita Salam thinks SAP has hit on a winning strategy. "What they're trying to do with their on-demand strategy is make BI easier to deploy for those organizations that don't necessarily want to host everything on premise," Salam said. "Given they have a strength of on-premise capabilities, they are in a good position to offer that mixed environment" of both on-premise and on-demand BI applications and software.

"I think SAP offers the best of both worlds," Salam said.

On-demand BI offerings may also appeal to small and medium-sized businesses (SMBs) with few IT resources to spare to help manage another application deployment. RapidAdvance, a small firm in Bethesda, Md., which provides cash advances to its corporate clients, has just a handful of IT workers, according to senior analyst Kirk Keshishian.

Keshishian said RapidAdvance chose to deploy so its employees could begin reporting and analyzing customer data on their own, without the need for a lengthy implementation process and ongoing administration requirements that its IT staff couldn't support or afford.

"You're avoiding the expensive development costs of running your own on-site servers, maintaining them, having the staff and the costs that go along with that of maintaining your own platform," Keshishian said. "You get a simpler, well packaged and scalable product with"

Boris Evelson, an analyst with Cambridge, Mass.-based Forrester Research, agreed that on-demand BI software has a role to play. "It's true that many enterprise users are often looking for 'complementary' BI when for multiple reasons (IT priority, budgets, occasional vs. ongoing needs, etc.) traditional enterprise BI apps can't deliver," Evelson said in an email interview. "So it is indeed a niche in the enterprise BI market that needs to be filled."

He questioned the usefulness of IT administration controls included in Project Kona, however, noting that on-demand BI is attractive to business users precisely because it bypasses IT. "If it's administered and controlled by IT, then we are back to square one. It almost defeats the purpose," Evelson said. "So not sure about that one."

Another important benefit of on-demand BI software, of course, is that it is usually significantly less expensive than complex, on-premise deployments. While SAP has yet to finalize pricing for its upcoming Kona software, it will probably be similar to, which currently sells for $29.95 per user per month, Simmons said.

On-premise BI deployments, by contrast, can cost hundreds of thousands or even millions of dollars.

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