This inspired me to launch a quick poll extending the question to “outsourcing of BI” which is a more general perspective: from infrastructure, via analysis and solution design, over maintenance to the entire BI system. And this, not necessarily in the cloud, because the cloud is just another version of distancing your applications from your core operations. The written responses of the respondents provide some extra clues why outsourced BI remains mainly restricted to infrastructure and not the data and the analytics.
On the other hand, it is not easy to describe and measure the outsourced BI market in its entirety. Is the BI functionality in cloud based software like Open Bravo, Salesforce.com and others part of this category? Some will include them, I don’t. Because the essence of BI is that it delivers cross-application data and insights.
Here are the results of the poll in a tabular form:
How far can outsourcing of Business Intelligence go?
Relative (x/194 * 100%)
I outsource the entire system
Only the IT infrastructure
Only Business Analysis and Solution Design
Only the maintenance
Table 1: results of the poll in absolute and relative figures.
Let us open the debate…
…with the staunchest adversaries of outsourcing
Donna Hutcheson: A business should never outsource anything that is core to the business: its security, its data, or the strategic direction and controls.
Donna is supported by Marleen de Frenne, BI manager at bpost, the number one Belgian logistics and postal services organisation.
Marleen De Frenne: I totally agree with Donna. Only IT infrastructure. I need to have my developers very closely to the business, otherwise the development would never reflect the (ever changing) business reality.
Jamie Castille In speaking with other PMs, developers and IT managers about this very subject, I've found that the common feedback is that the cost is not always beneficial. It's an issue of what gets Lost in Translation. The communication barrier causes the project to get extended, which nullifies the so called cost savings.
Jack Whittaker Outsourcing BI poses issues of security, which some may find difficult to overcome. You may feel that this is paranoia - but there is no point in spending millions on data security and then shipping the data off to "the cloud" wherever that may be.
Ivan Van den Bosch I believe specialists are better have a huge added value to setup a adequate BI for a Business by closely working together with the business management. Of course the infrastructure can be outsourced as long as confidentiality is secured.
Mark Notschaele BI (outsourcing) in the e-payment industry is rather sensitive and subject to an abundance of regulatory issues.
J.C. Software developer: Outsourcing is something that at first you hope "they" will do ok, then shortly after fear that "they "won't, and usually regret that "they" didn't. Thus begins the recovery.
Fig 1. The poll results in a graph
What I conclude from these remarks is also based on my own experience: BI is about creating and using context with metrics. It is also about making sense from analyses, reports and other BI products. Therefore, analysts and developers should be kept close to the business.
The infrastructure can be outsourced and you can choose from two options: put the storage and processing power in the cloud or keep the data on your servers and outsource the processing to grid computing providers.
The reluctance to outsource the entire system is understandable but if the provider can guarantee flexibility, security and keeps your migration options open, then I can imagine BIaas as a viable option, especially for smaller companies or for larger ones who would like to play around in a sandbox and discover new techniques, modelling patterns and analytical insights. But do make sure a seamless migration to another provider or to on-premise infrastructure remains possible. Have regular audits from independent BI consultants like Lingua Franca to assess this.
.. but there are also defenders of outsourcing
Sreenivas Jayaraja, PMP Outsourcing is a concept and concepts can be applied every part of your day to day activities. Outsourcing is just beginning and it will blossom with time. Today I do not think without outsourcing any model can sustain for a longer term. In house development is becoming more costlier by the day and Organisations are looking for a sustainable model to beat 1)Market Shift 2)Competition and most importantly the 3)The Technology Advancement. And to achieve this Outsourcing is necessary. Outsourcing does not merely mean push the job to outside world but a more meaningful of getting things done, efficiently and effectively.
Joeri Van Bogaert In a world where powerful and knowledgeable specialists and specialized services are available I choose to outsource these activities in order to focus on the company’s core activities.
If the promising vision of Mr. Jayaraja were true, I would be an enthusiastic outsourcer. Some experience with foreign outsourcing partners on various BI projects in Europe has learnt me this is only the case if you have your people managing their people. This means mixing expensive expats with low cost, out of context technicians you need to explain everything to the slightest detail or things go south and outsourcing costs you a multiple. I remember a customer needing one local guy to create a report in five days. “Could be better, faster and cheaper” he thought. He quickly outsourced it to a large Indian IT services provider who needed six engineers for three weeks to come up with the reports. Needless to add that during these three weeks, the client’s people were on the phone, chat or mail all the time to provide basic information and local context to come up with meaningful results.
Outsourcing analysis and development in BI is the last thing I would recommend. Hardware, processing, storage, data manipulation, … anything that can run within a clearly defined out-of-context setting can be outsourced. But keep the context close to you because this is one of your last competitive advantages that can’t be, shouldn’t be outsourced.
... let’s look for some nuanced opinions
Bill Genovese As per what is being discussed here, I agree, and it largely depends on customer local and regulatory requirements + their business requirements. The most prevalent SO model I've seen and where I have been engaged is typically only the infrastructure. However, if BI Tool (i.e Standard Reporting Applications from an End-User perspective) in this definition, then customers are also starting to outsource these applications more from a design, installation, development and support perspective. The line of delineation I've seen starts with the level of analytics required, in terms of the application analytical engines, DWH, data models and calculations required that are close to the heart of the customer's business, and the complexity of the application and information architecture design and development that is known most intimately by the business . These typically stay within the customer organization--customers of course bring in consultants and architects on an engagement basis, but rarely have I seen E2E outsourcing of the entire BI, Analytics, Data Integration, Metadata Management, and DWH stack (including security, and governance).
Dan Linstedt Outsourcing the data lends itself to privacy issues. Outsourcing the people / team has been going on for years. Outsourcing the maintenance has been done by hiring vendor based consultants (those that know the chosen vendors' solution). In my opinion, the outsourcing components will be utilized because of cost per terabyte - but only in cases where the data set will not disclose personal information, or a breach of security won't yield any personal information. Things like Amazon RedShift are a game changer in this regard - but only if they can show that it's a protected environment. Cheers, Dan Lhttp://www.LearnDataVault.com
Saurabh Dwivedy I firmly believe that only those activities should be outsourced which can be performed more competitively by a specialist. One should retain focus only on core business areas that are fundamental to the value proposition of the firm. The rest can be outsourced. In this regard, your BI system's overall design, implementation and maintenance being critical to the value proposition being offered should ideally be retained by the firm.
Dr. Henk Dijkmans You can outsource the complete BI activities, but the outsource partner has to be integrated and respect the brand and business strategy of the your company.
Michelle Mueller: Information Technology is not my area of direct expertise, however as a Financial Analyst I have worked on several financial systems that have required a level of competence. My choice was "Other" because I think that outsourcing of a Business Intelligence System can go as far as the needs and expectations of its user/Stakeholder. The risk in outsourcing the management and/or Analysis of a company's 'Internal Intelligence' is that by doing so it places the third party at a vantage point while simultaneously runs the risk of alienating internal stake holders - therefore the third party Manager remains gatekeeper. Alternatively, a mixed approach that on the one hand leverages external expertise while integrating that level within your company promotes an interdependent strategy in addition to a value-add that may be more in line with the marketplace. Bottom line, data security should be a priority and carefully thought through if a company wants to remain competitive from both a short and long term perspective. (Toronto, Ontario, Canada)
Nothing more to add to these comments.
There is a market for outsourced BI as long as it remains a peripheral option: only the IT infrastructure and only the entire solution if we have no other viable options. Because we are a small company or we are business users who can’t get past IT governance boards blocking any new initiative. BI people like to explore new possibilities so in the long run, when all known issues with flexibility, security and vendor lock-in will be solved, BIaas has a future. But for now, it requires a restrictive vision on outsourcing of our principal strategic asset: information for decision support and improvement of efficiency and effectiveness.