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Posts from the ‘Social Media Analytics’ Category

Aug 13

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SaaS-based Analytics and Business Intelligence Market Update, August 2011

Challenging, uncertain economic times accelerate sales cycles and lead to more closed deals for business intelligence software providers.  Companies get an urgency to reduce costs and risks, relying on the insights gained from these applications.

There’s an interesting dichotomy starting to emerge in how experts and analysts define just how these markets will mature however.  Both agree that economic uncertainty are growth catalysts yet they diverge on adoption rates, roadblocks, and which analytics and BI technology will dominate in the years ahead.

This week I read Balancing Custom And Packaged Apps In Your Application Portfolio Strategy by George Lawrie, Mike Gilpin and Adam Knoll from Forrester and the latest Hype Cycle of Business Intelligence, 2011 by a collection of Gartner authors led by Andreas Bitterer.  I’ve summarized the key points of each below.

Forrester Sees SaaS Applications Overtaking Custom Application Development

Forrester sees SaaS-based applications starting to replace in-house custom application development, gathering momentum through 2013.  Gartner, with their Hype Cycle for Business Intelligence, 2011 just released this week, shows BI platforms having greater near-term benefit than SaaS-based analytics and BI.  Custom application development projects are going to face continued pressure to keep up with business requirements that SaaS applications are proving able to handle more effectively and economically than ever before.

In-house development makes more sense for specific analytics and reporting requirements,  yet will continually be eroded by SaaS-based applications that can meet most requirements at a lower cost.  Forrester has in the past said SaaS-based adoption of analytics applications in general and predictive applications specifically would be very slow due to data integration challenges.  This study points to a potential shift in their mindset, as the data shows SaaS-based analytics beginning to replace custom in-house developed applications.

Here are the key take-aways from the report:

  • Analytics processes are supported 79% of the time with custom application development.  Procure-to-pay (33%) and record-to-report (33%) are the second-most supported.  Multiple responses were allowed in the survey.
  • When asked which process areas they are automating with SaaS, analytics (33%), record-to-report (18%), order-to-cash  (15%), and purchase-to-pay (12%) were the most common responses.  There was a small sample size on the Forrester report and the most startling insight was how quickly respondent companies plan to migrate from custom application development to SaaS-based analytics and BI.
  • Nearly 50% of the respondents to the Forrester survey have between five and 19 SaaS-based applications today with 18% expecting to have 35 or more by 2013.  In addition 63% of respondents expect to deploy between five and 34 SaaS-based applications by 2013, a significant shift in just two years.
  • 36% of survey respondents say their  SaaS applications run completely standalone.  Another 36% mention they use a combination of on-premises Master Data Management (MDM) and process integration tools.  Ironically only 3% are deploying their applications on cloud-based MDM or process integration-based platforms.

Gartner’s Hype Cycle for Business Intelligence, 2011

Unlike the hype cycle for cloud computing, this hype cycle has fewer technology categories (25), a narrative firmly grounded in business process and strategy, and more practical and pragmatic insights versus just theoretical.  At 50 pages it’s  quick read and while there are many excellent points made, I have summarized the key take-aways pertaining to the highest hype points and SaaS adoption below:

  • Mobile Business Intelligence (BI) is the latest entry to the Hype Cycle for Business Intelligence based on the massive hype around analyzing locational and application data.  The hype surrounding the Apple iPad Series, Google Android and other tablet and smartphone platforms has made this one of the most hyped areas of the last year according to the analysis.
  • Consumerization, Decision Support, analysis of non-traditional data and “Big Data” are the areas of the greatest innovation today.  The hype cycle points to search, mobile, visualization and data discovery being the catalyst of Consumerization.  Predictive analytics, which is on the Slope of Enlightenment on this latest hype cycle, is critical to decision support.  The non-traditional and “Big Data” area of innovation is further supported by content, text analytics, in-memory DBMSs and columnar DBMSs.
  • SaaS-based Business Intelligence is at the apex of the Peak of Inflated Expectations yet will continue to have low adoption rates.  Gartner believes that the  lack of trust in third parties managing confidential data, and the inertia and fear many companies have in moving to a new architecture are slowing adoption.  This is in contrast to the survey Forrester released this week showing analytics being one of the most popular SaaS-based applications planned by 2013 in their base of respondents.
  • Gartner sees SaaS-based Business Intelligence of the most value to midsize and smaller organizations who lack IT staff yet have very specific, targeted information needs.  Website analytics, social media monitoring, dashboards, predictive analytics and Excel as a BI front-end all apply.  Both Forrester and Gartner agree on this point and see this type of custom development going away quickly internally.
  • There is a massive amount of hype surrounding in-memory computing, particularly from SAP at its Sapphire conferences .  Gartner believes that SAP’s vision of in-memory computing exceeds  in-memory analytics to include analytical and transactional processing.  As a result, In-Memory Database Management Systems are at the Peak of Inflated Expectations.


Source: Hype Cycle for Business Intelligence, 2011, Published 12 August 2011 | ID:G00216086 By Andreas Bitterer.  Gartner, Inc.

What Both Agree On

Forrester’s survey shows SaaS eventually replacing custom application development while Gartner’s Hype Cycle for Business Intelligence shows the practical, pragmatic technologies including dashboards, predictive analytics combined with the more complex Business Activity Monitoring (BAM), Business Intelligence Platforms, and Data-Mining Workbenches delivering the most value.  Despite these differences, both agree on the following:

  • The overall market for BI, Analytics and Performance Management continues to grow at between 8 to 12% per year depending on the forecast used.  The following forecast is from the report  Market Trends: Business Intelligence, Worldwide, 2011-2014, 7 June 2011 | ID:G00213483 by Dan Sommer and James Richardson.
Source: Market Trends: Business Intelligence, Worldwide, 2011-2014, 7 June 2011 | ID:G00213483 by Dan Sommer and James Richardson
  • 2011 continues to see large, strategic deals for analytics and BI closing more rapidly than they have in the past.
  • SaaS-based analytics and BI continues to gain a greater share of spending in midsize and smaller companies.  Both also agree that the proliferation of smaller SaaS-based analytics and Bi vendors concentrating on a specific niche have successfully displaced in-house custom development of competitive applications.  Trust in the smaller vendor, their track record, customer references and financial viability are what are winning deals for SaaS-based analytics and BI software providers today.
  • The market transition from build to buy is now in full force as budgets become available again.  This is key assumption of both analyses and means that smaller, more niche-oriented SaaS-based analytics and BI vendors stand a chance to get new reference accounts and grow, despite a challenging economy.

May 28

Succeeding with SaaS: Four Hot Tips For Start-Ups

Mark MacLeod, General Partner, Real Ventures, discusses four tips of how to succeed with a Software-as-a-Service (SaaS) start-up. Real Ventures is a Montreal based venture capital and private equity partnership that specializes in early-stage investments in web, mobile, software, digital media, social and casual gaming. The majority of its investments are at the seed level, between conceptualization and the validation of the business model. Funded companies include Fabric Technologies and MConcierge Systems. Typical funding rounds are below $500K with $1M being at the higher-end. 

Key take-aways from Mark MacLeod’s discussion on SaaS revenue models include the following key points:

  • Stakeholders and investors prefer recurring billing over one-time licenses – Investors in SaaS start-ups and seed investment rounds prefer recurring revenue models, as this approach reduces risk by providing greater revenue forecast accuracy. For customers, being able to forecast monthly costs makes recurring billing the most popular model on SaaS today. Mark also mentions how this fuels the dynamic of operating expense (OPEX) versus capital expense (CAPEX) budgeting on the part of customers. He makes the point that investors like the recurring revenue model because the lifetime value of customers can be more accurately tracked.       
  • Be data driven – The best-managed SaaS start-ups rely heavily on standard metrics and many of their own unique measures of performance to better understand and predict revenue and costs. Mark contends that all SaaS start-ups need to be data-driven to not only understand their existing customers, but also see how their levels of use and satisfaction are influencing potential new customers.  The best SaaS start-ups measure every aspect of application use and customer experience. These in-house custom analytics are a competitive advantage for any SaaS start-up, as these application-specific metrics can provide insights for further product development and customer loyalty programs.
  • Pricing decisions are the most complex to make– The greater the hard benefits in terms of measurable, recurring cost reduction or revenue generation, the greater the price that can be charged, according to Mark’s experiences funding SaaS start-ups. He also mentions the cost of a direct sales force, market position, and relative benefits delivered as factors in making a pricing decision.
  • Always go for customer prepay options when possible – Prepayment is critical for a SaaS start-up, not only for cash flow but more importantly because it shows that customers trust the application to deliver value over the long-term. It is a great proxy for how much value a customer sees in the application over time.

Apr 2

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Gartner’s Hot CRM Applications for 2011 Show SaaS is Accelerating in the Enterprise


Gartner’s report, What’s ‘Hot’ in CRM Applications in 2011 shows clients are moving to the next stage of their strategies for using SaaS in the areas of customer service, marketing and sales.  They’re asking for more analyst time, discussing how to quickly deploy applications company-wide versus just in departments, and most important, how to measure the results. Cross-CRM applications including Business Process Management Systems (BPMS) and Master Data Management (MDM) are two of the more popular areas of inquiry Gartner is getting right now from infrastructure initiatives standpoint to unify CRM data and strategies as well.

Factors Driving Faster Adoption

Escaping high maintenance fees on their legacy CRM applications, facing chronic time shortages that make the traditional lengthy application deployment cycles unaffordable and impractical, and a mindset of measuring results from software spending are fueling greater SaaS adoption.

A local financial services firm is migrating to SaaS-based feedback management and analytics to capture customer satisfaction more effectively than their legacy CRM application could.  Chief Marketing Officers (CMOs) are also driving more technology adoption in the areas of social media for marketing, lead management, mobile marketing and Web analytics as they’re more accountable for delivering measurable results.  The new mindset in many companies about measuring results and continually improving strategies is a powerful catalyst of SaaS application adoption.  A summary table from the report is provided below (please click on it to expand for easier reading) along with key take-aways.

Key Take-Aways from the Report:

  • Software-as-a-service (SaaS) delivery represented approximately 26% of all CRM application spending in 2010. Spending on CRM applications grew by more than 8% in 2010.
  • In sales applications, almost 50% was delivered via SaaS, where it is now widely viewed as a mainstream model.
  • Operational CRM is the automation of processes such as campaign management or case management. It represents more than 70% of all CRM spending and grew at around 4% in 2010.
  • Analytical CRM, which includes predictive analytics and segmentation applications, grew 9% and according to Gartner represents nearly 25% of CRM spending.
  • Social CRM grew at over 50%, but still represents less than 5% of all CRM spending. According to the report, 90% of social CRM spending is by business-to-consumer (B2C) companies and approximately 85% of spending is initiated by companies based in North America.  Gartner expects the social CRM market to reach $1B in revenue by year-end 2012, up from $600M in 2010.
  • In terms of inquiry traffic, Social CRM is the hottest area of interest in customer service and marketing departments, followed by related areas like digital marketing and e-commerce. Gartner points out that Social CRM is used both within and outside an organization and is of equal importance to its clients today based on their inquiries.

Bottom line: This report shows more companies are confronting the need to change their customer service, marketing and selling strategies to be customer driven on an enterprise, not just department basis.  They are relying on SaaS based applications as  the catalyst of changing customer-driven strategies in companies.  CMOs and other senior managers are focused on measuring customer satisfaction, loyalty and profitability instead of just cost reductions as a result.

Source: What’s ‘Hot’ in CRM Applications in 2011 Ed Thompson, Michael Maoz, Kimberly Collins, Michael Dunne Publication Date: 17 March 2011 ID Number: G00211657


Aug 4

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SaaS-based ERP Systems are Business Process Stress Tests in Progress

Bottom line: Signing up for an Amazon AWS account is faster than creating a profile on Expedia. As a result, there are dozens of SaaS start-ups in the analytics, CRM, social CRM, ERP, supply chain management and many other areas of enterprise software. The ones that are going to make it already have a very clear vision of which complex, challenging, impossible business processes their customers face that they can standardize on, drive down cost per user per month down, and build a real business on.

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Jun 25

Measuring the Growth of Cloud Computing

The bottom line is that the need for staying current on analytics, business intelligence, data mining and linguistic modeling using cloud-based data is going to accelerate in importance faster than anyone expects.

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Apr 22

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Altimeter and Web Analytics Demystified Release Social Marketing Analytics Report

Bottom line: Altimeter and Web Analytics Demystified have delivered a landmark report on social marketing analytics that is both pragmatic in advice and strategic in the framework delivered.

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