Business Intelligence (BI) was traditionally an on-premise software sale that was made via the IT department. This situation is changing rapidly as BI solutions are increasingly accessed via the cloud and businesses become accustom to consuming applications remotely as a service.
In some respects, BI has been a little late to the game where cloud is concerned, with CRM and similar applications having been cloud-based for some years now. With Gartner predicting the BI market to undergo a Compounnd Annual Growth Rate (CAGR) of 8.7% until 2018, with 42% of end-users interested in cloud deployments according to its 2015 BI Magic Quadrant research, the opportunity for the channel to deliver BI as hosted service is very real.
Where are all the managed services?
But today you don’t see many channel companies providing BI as a managed cloud service. By this I mean there are not a large number of resellers forging vendor agreements, hosting the software on their own managed servers, and offering solutions to customers.
One reason for that could be that many vendors in the BI industry are more focused on building their own proprietary clouds – a bit like Salesforce did with CRM, where the software resides in the vendor’s own data centre. This presents something of a problem for the channel as it reduces the level of ongoing services revenue resellers are able to generate around BI, therefore hitting margins.
At Yellowfin we actually take the opposite approach. We encourage our reseller partners to meet growing user demand for cloud-based BI by delivering their own managed services. Frankly, we don’t want to host solutions for enterprises, and would much rather our channel partners took on that role. There are some very simple reasons why:
- We don’t want to compete with our channel partners – ever. When software providers offer a cloud service directly, there’s always a chance you’ll take business from your partners. And, with a 100% channel-based go-to-market strategy in Europe, why would we want to risk alienating our partners?
- Customers trust channel partners with their data. As the cloud matures, the issue of trust has become central. And, the closer the relationship with the customer, the greater the trust. That’s why we think VARs, who have regular contact with end clients, are better placed than BI vendors to host their customer’s critical BI data.
- If BI is being practiced in the cloud, it needs to be portable. A VAR is in a better position than a vendor to deliver a trusted, portable BI service where customers don’t experience vendor (or cloud platform) lock-in.
- Sometimes our brand isn’t the best fit. We know that resellers invest in their brand and are often in the best position to deliver on the particular needs of their clients. That’s why we’re always happy to consider a whitelable approach for a managed service.
Why BI is ripe for managed services
Gartner’s 2015 BI Magic Quadrant also pointed to the fact that “many leaders of BI and analytics initiatives do not have a strategy for how to combine and integrate cloud services with on-premise capabilities.” This statement should be music to the ears of channel players with BI capabilities. The process of knitting together data from an increasing proliferation of internal and external data sources and software systems offers significant opportunities for revenues beyond license sales alone. Interestingly, those departments that are pushing ahead with cloud BI seem to be the “ones where data for analysis is already cloud based”. For VARs that already host some of these operational systems, offering BI as a managed service would seem like a natural service extension.
As the BI industry continues to change its operating model due to the demand for end-user flexibility, there are structural changes taking place that are working to the advantage of the reseller community. The ability to offer BI technology and services on a SaaS basis is perhaps the largest.