Business Intelligence: Cloud-based, On-premises, or Both?

When deciding if an on-premises or SaaS platform is better for your company’s next business intelligence (BI) solution, there are several aspects to consider.  This article will discuss the pros and cons of both options, so that you can navigate to a decision a little easier.

One element of Business Intelligence (BI) software implementation you cannot avoid these days involves the debate about on-premise technology versus a Software as a Service (SaaS) platform.  The traditional software approach entails purchasing software, housing and managing it on-site.  However, as SaaS or Cloud platforms builds momentum as an attractive, relevant alternative, the conversation heats up for customers and vendors alike.

In general, customers are looking for an easy-to-manage, dynamic, powerful BI tool or suite of tools, and management can be a deciding factor in terms of cost, customization, accessibility, and maintenance responsibility. For the BI vendor, your business is obviously important to them, but this is also a tug-of-war in a potential evolution of technology that they are trying to navigate.  I was just talking to an Accounting clerk for a distributor in Alabama, whose boss assigned her the task of researching a budgeting tool.  To put it mildly, she was confused about the difference between on-premise and Cloud offerings.
She’s not the first – and she won’t be the last to find the two deployment methods confusing when it comes to figuring out which is “better.”  In the confusion of sales speak coming at her from all different directions and the labyrinth of the internet when it comes to research, she cannot decide which option would be best for her company.  And that is mainly because, if you attempt to do your research to learn more about both options, you will find a lot of web sites positing their information with a biased angle.  If you’re in a sales meeting, they’re obviously trying to sell their product, which includes how it will be managed over the years.  No wonder she and so many others are confused about how to make this important elemental decision.  There is so much to consider when deciding which is the best option for your investment.  Let’s break it down.
 
 
When learning about the differences between on-premises and SaaS platforms, there are several things to evaluate about your company’s specific needs.  A lot of emphasis is placed on the price and the management of the software in the higher level, salesy conversations currently, but there’s also hardware and security as main facets to consider. This article will go about discussing the options in the context of these aspects and the product marketplace.
Let’s start with the main argument that customers and vendors rightfully focus on the longest in the process of selecting a product: cost. Both sides will argue that their option is the more cost-efficient, usually in terms of the long run.  On the surface, it might appear that SaaS is the obviously more expensive choice.  Much like renting versus owning a home, you are routinely paying for the vendor to manage your software and your data with a Cloud platform while on-premises solutions require an upfront investment.  On-premise proponents argue that after 3-5 years, your initial costs will have paid for themselves, and you will own the software outright, while the payments continue indefinitely with a Cloud platform.  SaaS vendors are going to point out that there are always backup, recovery, hardware additions and software updates.  Lost?
Don’t be.  In the case of cost, my best suggestion would be to do the math on your own.  It’s not fun to translate what a salesperson is saying to you, but it is a big investment for your company.  In terms of calculating the investment in the goal of what is best for your company, don’t assume that this is a quantitative analysis because the other aspects can really make the difference.  When you calculate what the dollar amount will be for the next 5-10 years, consider also the responsibilities associated with each.
In terms of software management, the two are very different.  With on-premises software, your relationship with the partner or vendor involves an initial transaction regarding a license, any updates or upgrades periodically, but for the most part, the relationship is transactional, and the product is yours to manage.  When going the SaaS route, the provider is managing the hardware and software (upgrades, backups, etc.) for your daily use, so a relationship starts from the very beginning.  However, when the software is on-premise, you control the software completely, which include management, maintenance, customization.  On the other hand, when the SaaS provider houses the software and hardware, you have no control over that technology.  If you want to own and manage your own tools and your own data, then it would make more sense to go the traditional route of on-premise technology.
Speaking of the hardware aspect, SaaS is lower maintenance to manage.  Because the product is actually a service, the SaaS options provides both software and hardware off-site.  When you go the on-premise route, any hardware or system requirements are the customer’s responsibility.  For example, if you are wanting to run an Excel add-in financial report writer, the customer would have to have Microsoft Excel licenses.
Another area to consider is integrations between your data sources, such as between your ERP and your payroll systems, and your BI solution.  If all your transactional data sources are already in the cloud, it may be easier to also have the BI solution in the cloud, while if most of your data sources are in-house, you will have easier and more integration options if you also locate the BI solution in-house.
Even though cost and management seem to be the most buzzworthy debates surrounding these platforms, security is the battle that SaaS providers are fighting.  Access to SaaS software is via the internet, so security risks are inherently present.  Because on-premises applications are managed in the office, security management is much more hands-on and therefore, less risky.  However, sales people are doing their jobs on the internet because half of what you might read says that security for SaaS products is not an issue (at least anymore), and the other half are still writing about the great risks of access to company data.  I think this is an important issue that I would suggest investigating by talking to SaaS users, but I also don’t believe that SaaS would be as popular as it is if security is (still) an issue.  Of course, invest some time in the process of selecting the right BI tool for you, but also know that there are more aspects to consider.
Some good news: there are also some vendors that offer both options.  This might not make the decision easier, but it does allow you some flexibility if you are impressed with a certain product.  While there are several things to take into consideration when deciding on any software investment, the platform is obviously somewhat foundational in terms of moving forward with a certain vendor and product.  Solver would be happy to answer questions and generally review both SaaS and on-premises options to run BI360’s easy-to-use Excel, web, and mobile BI tools with both real-time or data warehouse integrated analysis, budgeting and collaboration as a way to accelerate company performance management.