Cloud Computing: Show Me the Analytics

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Last week’s announcement that IBM is acquiring DemandTec for approximately $440 million is the latest move by Big Blue – and most recent example across the broader marketplace – that Cloud analytics will be a key battleground for industry supremacy in the coming months.

DemandTec delivers Cloud-based analytics software that businesses use to track customer online and in-store buying patterns to identify trends so they can make better pricing, packaging, and other marketing decisions to generate higher revenues and profits.

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A little over a year ago, IBM closed another acquisition of a Cloud-based analytics company, called Coremetrics, whose Web analytics offering enables users to develop more targeted online marketing campaigns.

IBM isn’t the only company acquiring Cloud-based analytics vendors to fortify their business intelligence (BI) capabilities. In 2009, Adobe acquired another Cloud-based Web analytics vendor, Omniture, in a deal worth approximately $1.8 billion, aimed at embedding tracking capabilities into web development tools.

Back in 2004, Business Objects acquired Crystal Decisions, which many credit for pioneering the idea of ‘on-demand’ BI with its Crystal Reports. Business Objects was subsequently acquired by SAP in 2007, and today SAP boasts about its Cloud analytics solutions based on the original Crystal Reports capabilities.

This past May, I published a commentary in this space suggesting that CIOs’ fears about data security and privacy in the Cloud is beginning to give way to a growing interest in utilizing Cloud-based analytics tools and computational power to attain better insight into business effectiveness.

The growing interest in Cloud-based analytics is understandable. The factors fueling it are:

• escalating customer expectations

• intensifying competitive pressures

• explosive data growth

• rising demands among a highly dispersed workforce for quicker access to useful information and insight to make better day-to-day business decisions

This interest is also fuelling the proliferation of Cloud analytics vendors. A barometer of this growth is THINKstrategies’ Cloud Computing Showplace, which currently lists nearly 190 companies offering Cloud-based BI solutions.

Cloud-based BI solutions can track, collate and disseminate data and analysis in ways that was unimaginable in the past. In the same way that Moore’s Law predicted the doubling of computing power every 18 months, today the Cloud is delivering exponentially greater analytical capabilities on a regular basis.

The Cloud’s infinite computing resources allow users to more economically capture and store data. And, a new generation of intuitive analytic tools permit users to more easily access and utilize the data to measure behavior and improve performance.

Simple examples are Salesforce.com’s embedded sales performance dashboards, which have become emblematic of the type of user interface that many other Software-as-a-Service (SaaS) vendors now offer as a basic feature of their Cloud-based solutions.

These dashboards not only enable end-users, business unit managers and corporate executives to track their performance. In addition, Cloud vendors are increasingly aggregating non-proprietary activity data across their user base to provide useful benchmark statistics that enable users to compare and contrast their performance against their peers.

The most exciting part of the new wave of Cloud analytic solutions is that you don’t have to invest millions of dollars to build vast data warehouses, deploy complex business intelligence software and hire an army of expensive consultants in a vain attempt to gain a competitive advantage.

Instead, a lot of the BI and analytic capabilities many corporate executives and end-users have dreamed about are embedded into their other SaaS enterprise applications and point solutions.In 2012, a growing number of enlightened IT and business decision-makers will move quickly to take advantage of these Cloud-based analytic tools to achieve their corporate objectives.

Jeff Kaplan is Managing Director of THINKstrategies (www.thinkstrategies.com), an independent consulting firm focused on the business implications of the on-demand services movement. He is also the founder of the Cloud Computing Showplace (www.cloudshowplace.com). He can be reached at jkaplan@thinkstrategies.com.