The Real Value Behind the Cloud Goes Beyond Cost Reduction. Cloud Analytics is Paving the Way.September 29, 2015
For more than a decade, we’ve seen the cloud transform nearly every enterprise software offering with the promise of reducing costs. And the cloud has significantly cut upfront capital investments, initial consulting and on-going personnel costs for the vast majority of solutions. From CRM and ERP to back office and even supply chain apps, the cost advantage has made the cloud pervasive.
So pervasive, in fact, that it’s long past the tipping point and has become the status quo. So many enterprise applications are cloud-based now that the cost advantage is now the new norm. Instead of touting cost savings when evaluating a cloud app, businesses must now justify a higher cost when considering an on-premise solution.
Customers are budgeting for 2016 now, and Nucleus found that they will be increasing their analytics spending by 36 percent. As customers search for new solutions, it is important that they take note of the benefits the cloud provides because it addresses pain points specific to analytics usage.
It was hardly surprising to hear that cloud analytics deliver 2.3 times more Return On Investment (ROI) than an on-premise deployment. (See the Nucleus Research Note here) Again, we all know about the initial cost savings. But that high ROI goes well beyond initial investments. Our report shows notable upgrade advantages, better Time-to-Value and integration benefits.
Cloud analytics are starting to show the real value of Software-as-a-Service (Service) – flexibility and agility. Let’s start with the upgrade cycle. Where an on-premise solution locks a business into a set path that requires a costly ‘rip-and-replace’ upgrade, a cloud-based solution is easy and relatively inexpensive to change. Especially a SaaS-based subscription model, where a company can migrate quickly to a new solution with little to no pain. Companies are open to change course and deploy the very best solution for their business — at any given time.
This is causing some pain for vendors, as the propensity to upgrade increases, making analytics even more competitive. It’s a fast-paced race that is only accelerating. Which in turn is good news for businesses taking advantage of the rapid advances in analytics.
That flexibility to dial-in a new cloud app is driving better Time-to-Value, allowing companies to quickly deploy solutions and change course as needed. The lower barrier to deployment is fueling a broader use of analytics too. We are seeing companies expand successful deployments in one department out to other groups and leverage analytics in creative new ways.
Perhaps the biggest advantage the cloud offers to analytics solutions is integration. Streamlined cloud applications are much easier to integrate, delivering on the promises of Big Data. After speaking with customers, Nucleus found that 86 percent of analytics users are unhappy with data preparation capabilities, but despite the challenges, 92 percent of them desire to add additional data sources. Cloud analytics solutions often have more pre-built connectors that allow users to pull from more data sources more quickly. Many new cloud applications are able to more easily integrate even disparate data streams for a more comprehensive analytics solutions that can provide better insight with a full view of the business.
With integration of all relevant data sources, businesses have access to powerful new capabilities that deliver greater efficiency. Plus analytics is increasingly being integrated with strategic business applications. That has a bottom-line effect on ROI. Better yet, integration itself cuts costs significantly. Remember the old days of middleware, when companies spent millions of dollars to integrate CRM with a fulfillment application? Or payroll with basic HR functions? Cloud apps provide an easier, more seamless path. Plus many vendors are providing that integration as part of their offering.
You can expect to see even more integration of cloud analytics with other applications, leveraged into new areas of business. And that will continue to improve ROI. Lowering initial costs was merely the beginning. The real value of the cloud lies ahead.