Cloud BI or BS (5 of 5): How Cloud Delivery Shapes Incentives

Cloud Vendors are pot committed to your succssAs cloud solutions represent a growing constituency within the analytics space, Blue Hill Research has identified an increasing need for clarity regarding cloud vendors. This is the fifth of five articles intended to help organizations assess the value of cloud in the analytics space and differentiate between the solutions currently available. [See parts one, two, three, and four of this series].

For IT executives looking to purchase an analytics solution, the landscape is more challenging that it ever has been. There is a paradox of choice here, as there are so many vendors vying for attention that it is difficult to feel confident in any specific selection.  The rise of self-service analytics and the tremendous popularity of visualization tools have flooded the market with new entrants. Compounding this, these executives must also consider the impact of cloud vendors such as Bime, Birst, GoodData, Treasure Data, and Yellowfin that have gained momentum behind their hosted analytics suites.

As an IT buyer, if you only have one or two choices, the path to selection is simply an exercise of mapping functionality to need. But what do you do when the equation is more complicated? The recipe gains an additional step; you now must compare relative costs of ownerships as well. Cloud vendors in general have done a good job of educating the market to their collective value propositions of scalability, elimination of infrastructure costs, and reduction of time to deployment. But there is an important differentiator that is frequently getting missed in the discussion: vendor devotion to customer success.

Simply put, cloud based analytics vendors have stronger incentives than their on-premise counterparts to ensure customer success. Let’s be clear: I am not saying that on-premise vendors don’t try their best to ensure customer success but I am  saying that they have less riding on it.

Because of the significantly lower up-front costs of cloud vendors, customers experience less switching costs if they change their mind. Meaning that CIO’s can and will switch their cloud vendors if they don’t meet expectations. Cloud vendors are painstakingly mindful of their attrition rates. The breakeven point of course varies from vendor to vendor, but I am willing to bet that if I were a BI vendor and my customer terminated services after one year, I would be losing money. In fact, David Key of, estimates that the typical SaaS vendor does not see their ‘breakeven point’ until after 24-48 months.

With traditional on-premise deployments, the IT buyer is betting big that their vendor of choice will live up their promise. Conversely, cloud delivery creates a scenario when the vendor is betting on you.

This is an important consideration for IT buyers. We know that vendor support is one of the most important factors in any implementation’s success, and factoring in a vendor’s customer devotion could be a useful differentiator amidst the sea of options.

Of course, there is a danger in making a categorical assumption. The traditional big on-premise vendors have vast resources that can be poured into customer support. You must investigate each and every vendor with the due diligence demanded of what is often a multi-million dollar decision. However, it is always a useful strategy to see where the chips fall and who is ‘pot committed’ to your success.

About James Haight

James Haight is a principal analyst at Blue Hill Research focusing on analytics and emerging enterprise technologies. His primary research includes exploring the business case development and solution assessment for data warehousing, data integration, advanced analytics and business intelligence applications. He also hosts Blue Hill's Emerging Tech Roundup Podcast, which features interviews with industry leaders and CEOs on the forefront of a variety of emerging technologies. Prior to Blue Hill Research, James worked in Radford Consulting's Executive and Board of Director Compensation practice, specializing in the high tech and life sciences industries. Currently he serves on the strategic advisory board of the Bentley Microfinance Group, a 501(c)(3) non-profit organization dedicated to community development through funding and consulting entrepreneurs in the Greater Boston area.
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