February 24, 2011, 5:21 PM — Shifting business intelligence and analytics off-premise can make financial sense, as it does with other applications. Instead of buying servers and software licenses up front as a large, sunk capital cost, paying monthly fees from operating budgets can be less expensive over the life of the application. But doing BI in the cloud also carries some particular challenges, one of which is that it can be hard to define in advance every type of report you want to run using cloud-based data.
Integrating cloud applications with remaining on-premise BI systems isn't easy, either. CIOs who dawdle when weighing these concerns will likely lose control. Yet the IT group was heavily involved in just 38% of off-premise BI purchasing decisions, compared to 57% of traditional BI projects, according to a recent survey of 400 business intelligence users by Aberdeen Group. "CIOs have to get in front of it," says Mark Popolano, a senior advisor at Kurt Salmon Associates. Popolano was formerly global CIO at AIG and global CTO at Reed Elsevier.
Spelling out service levels and contingency plans can be more difficult with analytics than with, say, storage, according to Kathleen Barret, president and CEO of the International Institute of Business Analysis, a professional association for business analysts. Analytics systems are inherently speculative. A marketing manager may not know what data is most useful until she is deep into her queries. With an on-premise system, she can ask IT for ad-hoc access to something new. But in the cloud, says Barret, if the data isn't covered by the contract, new terms may have to be negotiated.
Define and IntegrateData security must be defined for an outside provider, then monitored, Popolano says. He suggests one possible approach: Hire cloud providers for periodic projects where extra processing power is needed. Then stipulate in your contract that the vendor delete the data and related queries after the analysis is complete.