(WEB HOST INDUSTRY REVIEW) — Recently, business intelligence has exploded in popularity with its promise of enabling businesses to make more informed decisions by capturing, analyzing, warehousing and mining information.
In a recent survey polling largely corporate IT professionals, The Data Warehousing Institute (www.tdwi.org) reported that 46 percent of respondents anticipate replacing their current primary data warehouse platform by 2012.
And while businesses tend to be amenable to the benefits of BI, it’s not always obvious how to best implement them.
At the forefront of BI and data warehousing, solutions provider Kognitio (www.kognitio.com) offers a solution that can run large-scale data analytics projects, all on a pay-per-use basis. Users pay no overhead for implementing a data warehouse on-site, nor do they have to pay IT employees to service, maintain and support the database and its users.
DaaS solves several issues that are common within the data analytics industry – most notably, the inability to prove business value from data warehousing and analytics projects before spending large capital sums of money.
Additionally, Kognitio’s DaaS is powered by its fast analytical database architecture, Kognitio WX2.
In an email interview with the WHIR, Kognitio US chief executive officer John Thompson explains the outsourced BI and data analytics model, what businesses can gain from implementing DaaS, and how hosting providers can benefit from providing DaaS to customers.
The WHIR: While it’s only recently gained wide-scale attention, the concept of Data Warehousing as a Service, or DaaS, is not new, is it?
John Thompson: Absolutely not. Kognitio has been performing this kind of outsourced business intelligence and data analytics for more than a dozen years, long before the idea of SaaS was first introduced. Back then, British Telecom asked us to do analytics on millions of call detail records, so-called CDRs. They wanted us to review them to help reduce customer churn, yet maximize as much profit as could be realized. More than a dozen years later, BT is still using Kognitio to perform that functionality and more. The technology has improved, the hardware and software enable more companies to take advantage of DaaS, but the business drivers behind its adoption have largely stayed the same.
What has changed are the demands and expectations of business. It used to be that only large companies could afford to install a data warehouse or to implement a business intelligence strategy. It was hugely expensive, and even at those companies that deployed one, the time required to obtain answers from a query was quite long. It could take days, or even weeks, after a query was submitted before the analysts in the ivory tower were able to get it back. Well, business doesn’t operate that way anymore; the answers are needed now, and companies want more of their workers, especially customer-facing ones at the front line, to be able to access the results of those analytics. Traditional installations can take weeks, sometimes months. For many companies that want to gain or maintain the competitive marketplace advantage, that’s simply not good enough. They need answers far sooner than that. This is where an outsourced service like DaaS can pay huge dividends.
WHIR: What are the target markets that can benefit most from a DaaS or BI SaaS implementation? And what are the advantages of DaaS to companies in those markets?
JT: If you’re looking for specific vertical markets that can benefit more than others from DaaS, I’m not sure you’ll easily find them. DaaS is particularly effective for companies that require rapid implementation, rapid time-to-decision, and don’t want to or can’t afford to spend huge amounts of upfront money to implement the needed infrastructure. At Kognitio, we’ve already made that investment, and have developed the system that we have repeatedly proven will work, so it’s great for companies that may want to implement a divisional or pilot program, or need to scale their implementation without the time and investment traditionally needed to do so.
We’ve found that DaaS customers come from a wide range of markets, from insurance to retail, from online to telecommunications and more. The one thing they have in common is that they are data-intensive and that their data is the very lifeblood of their business, where they need to analyze huge quantities of data and need the information back in seconds, not hours or days.
Having said that, I’ll also tell you that we recently launched an initiative targeting insurance firms. There’s an insurance company in Chicago that targets high-risk drivers. They need as much information as they can to competitively price their policies. It’s not just coming up with the lowest price; they need to mitigate their risk as well. So, we’ve developed a DaaS-based service for them that combines census data with 750 million potential quotes and their proprietary information. And as rate changes are filed by competing firms, it enables the insurance company to make the appropriate changes to their rates within hours; it previously could take up to two months.
We realized, of course, that if we did it for this one company, there are a number of other insurance firms we can do it for as well. We’ve partnered with Quomation to develop this service, and we’re highly optimistic about our opportunities in this segment.
WHIR: What factors into a client’s choice between employing a data warehousing appliance and DaaS?
JT: Traditionally, you’ll look at factors such as capital expenditures, staffing and time to implementation and results. Implementing an appliance, even with its “plug-and-play” simplicity, can still take time. An entire range of tools needs to be installed and integrated, the data must be imported and the system tuned to work optimally. A number of firms really appreciate the value an appliance provides. (I should mention that Kognitio was building appliances before they were ever called “appliances.” We still build them today, but use commodity-based hardware, which reduces both initial and ongoing costs.)
On the other hand, companies realize that buying the appliance means you have to staff it through your IT personnel, and you probably need experts who are capable of designing and running the queries and analyzing the results. Mid-tier firms may say they don’t want to deal with that range of costs; larger firms may say they have a limited-scale project that doesn’t require a full-scale implementation. In both cases, DaaS is an ideal solution.
WHIR: What are some of the stumbling blocks that have slowed widespread adoption in the past, and what are companies such as Kognitio doing to alleviate those concerns?
JT: The biggest concern has been the security and privacy of the data as it resides “in the cloud.” Any SaaS-based service is going to rely on the cloud to an extent, and a number of companies have been highly skeptical of those services, because they don’t know where the data is residing or the level of reliability in accessing it, or any number of other security-based concerns.
At Kognitio, we’ve pioneered the idea of the Trusted Private Cloud; that is, we’ve established partnerships with data center operators on both sides of the Atlantic to host the data of our customers. This gives us the ability to say to our prospects and customers, “your data is being stored here; it’s in these machines; it’s on a dedicated, or shared, server; the center is staffed 24/7,” and so forth. We’ve found it generates a higher level of trust on the part of our customers, and enables their C-level executives to reliably know that their data is secure, which makes it easier for them to sign off on a myriad of regulatory compliance forms.
Conversely, there are firms that refuse to let the data leave their premises, or may be restricted from doing so by government rules. Kognitio’s DaaS works with them as well; we can drop a data warehousing appliance inside their premises, and via a secure private link do the analytics from that point. We’re pretty agnostic in that respect.
WHIR: What role do hosting providers play in ensuring the success of DaaS?
JT: They’re absolutely critical to its success. If our customers are going to trust us enough to allow us to take their data and store it offsite, that location must be secure and reliable. For instance, in Europe, we chose 2e2 based on their accreditations, too. In addition, those providers who proactively work with companies like Kognitio to let their clients know about the availability of services like DaaS are in position to succeed even more; many firms may not know that this capability is available. By cooperatively marketing to them, we both win, both us and the provider.
WHIR: How big do you see this market becoming over the next 18-24 months?
JT: It’s growing like a garden weed. DaaS currently accounts for half of our worldwide revenue. We see it continuing to grow in importance as more firms realize the benefits it provides. We’ve recently seen an independent survey in which one-third of the CIOs questioned said they are considering a BI SaaS implementation. While that number is still relatively low, it’s grown significantly from just two years ago. They’re appreciating the value outsourcing the analytic function delivers, and appreciate the speed with which they can get their answers and insights delivered. And the best bit: companies can now focus on their core business instead of having to get sidetracked with data warehousing, analytics or business intelligence implementations. Via DaaS, that’s all taken care of for them. Moreover, DaaS has largely changed the game, in the sense that smaller firms that would previously have thought they could never have afforded a BI implementation are now realizing they can. And that they can get it now, at a price that was thought unthinkably low just several years ago. We started the DaaS trends a dozen years ago at Kognitio, and its fun to be here, seeing it mature.
