Business intelligence: buy or build?

Ten years ago, business intelligence (BI) solutions were only available to large organisations that could afford to spend time and money developing them in-house. With the advent of the cloud, this scenario is changing. Adam Hawkins, Co-founder and Managing Director, Mercurial, discusses the limitations of in-house business intelligence solutions, and looks at cloud-based solutions as an alternative.

Let’s face it - business intelligence (BI) is not everyone’s cup of tea.

But BI is a fundamental tool that can help most organisations maximise their effectiveness, better understand their sales challenges and prospects, and - if done right - allow them to act proactively to meet ever-changing market demands.

A decade ago, business intelligence solutions were developed in-house - a costly, time-consuming process that limited their appeal to large organisations which could afford them.

Fast-forward 10 years and the market for BI has markedly changed. Today, alternative and outsourced solutions are available to all companies seeking to maximise efficiencies, productivity and profit. They are also generally available faster and more cost-effectively than in-house solutions, even modern ones.

So the question on many a CXO’s mind, when it comes to BI, is buy or build?

For the past few years, many industries have been subjected to various financial constraints, mainly as a result of the global financial crisis. Large-scale cost-cutting was the order of the day, and every dollar spent had to show a measurable return by way of profit, improved productivity or overall effectiveness. These are the outcomes BI was designed to achieve; streamlining multiple information sources (both internal and external) to drive revenue growth, reduce operating costs and ultimately improve profitability.

Gaining access to readily available business insight is a powerful tool in increasingly data-rich industries. An in-house system, while based on a strong understanding of a particular sector in your own industry, will usually put less emphasis on the activities of your major competitors. Opening up your BI system to third-party consultants partially solves this problem, but doesn’t really address the other complexities inherent in a self-built system.

What’s required is a more modular approach, underpinned by a pre-architected BI system that can be rapidly implemented and optimised for a particular market sector. Pre-architected systems that have already been widely tested in your industry should be able to meet 70 to 80% of your analytical requirements, resulting in a significant reduction in effort and time to deployment. The combination of a pre-architected system, and outsourced third-party analytics, would then deliver all the benefits of an in-house system, but improve on time to deployment, cost and analytical efficiency.

Ongoing maintenance is another reality of an in-house BI system. Manually managing an in-house system may initially seem logical but can very easily delay the process, given the inherent complexities of a data warehouse and BI system. There is virtually no footprint with a prebuilt, outsourced BI model, as there is no software or hardware to maintain. A streamlined prebuilt BI system removes the need for detailed hardware planning, procurement and provisioning, which usually take many months to complete.

Moreover, any system built to work with existing applications will inevitably need to undergo costly upgrades over time, a cost borne by the business. In tough times - and for companies that don’t have the specialist resources required to do BI well - this poses significant challenges, and risks. For example, with constant changes in technology, a business may be left not knowing how to fix problems once the initial developer leaves. Training costs therefore increase dramatically if manually maintaining an in-house BI system.

Security is critical for organisations. Failure to implement a secure BI system can have devastating consequences for your company. With in-house systems, companies can spend enormous resources to protect their data and networks, and ensure their system stays up to date and adheres to best-practice policies. Outsourced BI systems go beyond what companies can achieve for themselves, using the latest firewall protection, intrusion detection systems, SSL encryption and proprietary security products.

Also, many companies have data loaded on to a salesperson’s laptop or tablet computer, exposing the information and making the organisation vulnerable to theft. With outsourced systems, there is far greater control around the information, where rules and level of access given to each employee are easily set.

Importantly, outsourcing BI does not equate to outsourcing control. Specialist BI agencies work closely with their clients to find out exactly what their businesses need and how they can best help them achieve their goals. Pre-architected BI systems are rarely constrained and are instead built for customisation, whether it be for data entry, reporting, workflow or visualisation. The advantages of outsourcing, or buying into, a prebuilt BI system can outweigh the benefits of an in-house system by a factor of four to one.

Third parties that specialise in BI system modelling can further speed up the process and open up a whole new dimension of information access through the internet - or via the ‘cloud’. Imagine giving your users instant access to business data in real time, wherever they are in the world, supplemented by an analysis of that data as it pertains to their current business activities.

While BI has a long history of in-house development, the reality of today’s economy, and access to a number of superior alternatives, makes the decision easier for companies for whom BI is not a core focus but who still depend on the real business value it delivers. Outsourcing BI as a service is all about the sophisticated and secure improvement of business performance and profitability. If this is your objective, the decision is an easy one, even if you have a vested interest - and longstanding investment in - an in-house BI system.