For Business Intelligence project managers, sponsors and decision makers, things are getting lot more interesting (and complicated) with the advent of packaged BI Applications. Packaged BI is not new but this domain has been getting a big push in recent years from all the major enterprise application vendors.

The logic behind Packaged BI looks sound and bullet-proof. It goes like this – The enterprise applications vendors understand the business aspects very well and have handled complexity of a high order. The collective experience over many years have been distilled into creating specific BI solutions (Financials, Supply Chain, Operations, Sales etc.) and these come packaged with data models, pre-built ETL jobs, standardized reports and high-end predictive analytics. For an example, take a look at this blog describing the packaged BI Applications from Oracle.

So what’s the problem – Why can’t everybody buy packaged BI applications and live happily ever after?

It appears that the choice is not so simple. Packaged BI has certain drawbacks some of which are outlined below:

Packaged BI imposes a certain way of capturing business entities and metrics (euphemistically termed best practices), which might go against an organization’s way of doing things.
The pre-packaged data integration jobs (ETL) stays relevant only for a plain-vanilla implementation of enterprise apps.
Customization done to transaction systems would involve customization to pre-packaged ETL jobs and reports that involves considerable effort and is error-prone.
Packaged BI apps come with embedded ETL and Reporting tools that might be different from the already chosen enterprise standard tools.
From my own experience, I have seen that the packaged BI comes with so many entities and attributes for each domain that it appears “bloated” for companies taking a first step into performing analytics for that particular domain.

Ultimately, the current situation is such that, BI decision makers are grappling with the question of “Build or Buy” – Should I build the BI application from scratch or buy one of those packaged applications? One way to overcome this problem is to build a strong ROI (Return on Investment) framework for BI initiatives in your organization. ROI is computed by dividing the Net Present Value of cash flows over a time horizon by the initial investment. The details of ROI computation and Hexaware’s proprietary tool for financial assessments in BI will be the discussed in subsequent blogs. For now, let’s assume that you have computed the ROI for a Build solution and also for a Packaged BI solution. Once this is done, the choice becomes a little clear – If the ROI for Packaged BI solution is better than expected and the organization can manage the typical pains of implementing a packaged solution, then consider the “Buy” option, else look for a “Build” option.

Now here comes the little twist In my experience, I have seen customers looking at a shorter time-horizon where the ROI of a build solution is typically higher and then move onto a buy solution with a longer time-frame in mind. The extra advantage of this approach is that the organization understands its analytical needs much better before implementing a Packaged BI solution. So it is strictly not a “Build vs Buy” question but can also be a “Build and Buy” scenario.

Thanks for reading. Please do share your thoughts.

Posted by Karthikeyan Sankaran
Comments (4)
August 25th, 2008

Comments (4)

Mark Ledwich - May 7th, 2009

Buy is the way of the future if you want analytics for a single product. Take a look at Zap's Analytics for Microsoft Dynamics CRM & NAV. They are pre-built solutions, and we have solved at least some of the drawbacks mentioned. • Automatically import your customizations and security • Automatically profile Data and remove unused fields

Mohammed Rafi - September 11th, 2008

Another way of looking at is "Buy" and then "Build (or customize)"! 90s saw the evolution of client/server and standalone business applications maturing into ERP applications and the success of many ERP vendors is here to see. History repeats itself - taking the cue from the ERP success stories, there is a strong beleif that packaged applications are here to stay and will mature thereby replacing stand-alone BI applications which are custom "built".

Karthikeyan Sankaran - August 31st, 2008

The whole concept of "On Demand Analytics" is very enticing and interesting. I feel that On Demand Analytics will continue to grow for analytics around specific functional areas (AppExchange for Sales Force Analytics) but for true cross-functional analytics, there is really no option other than "Build" or "Buy". Having said that cloud computing has lot of benefits for an area like analytics and should definitely be explored by BI decision makers. Thanks for your comments. Please do keep reading.

FeetOnGround - August 28th, 2008

Have you thought about a third option, an on-demand BI application? One I am familiar with, Pipeline Accelerator from Cloud9 Analytics (http://www.cloud9analytics.com/products/pipeline_accelerator.php), an add-on to SalesForce.com, provides insight into the sales pipeline, focusing in particular on what has changed between any set of dates you specify. Although packaged BI has a lot of advantages, you talk about the problems, such as 'best practices' conflicting with how you do business, lack of flexibility, and the general pain of implementing a packaged solution. An on-demand solution, such as Pipeline Accelerator, provides the benefits of a packaged solution (understanding of the business aspects and the ability to handle complexity) while eliminating most of the pain. Because it integrates with SalesForce.com, Pipeline Accelerator naturally fits your best practices, continually adapts to new customizations you make in SalesForce, and best of all, is up and running within a few hours. Of course, Pipeline Accelerator is a narrowly-focused BI application, but part of the appeal of the on-demand model is that you buy only what you need. Could you use the ROI framework and computational model you propose to compute the value of a customized suite of on-demand applications versus a packaged or built system?

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