I’d like to expand upon my final 2009 blog post that identified 5 key trends that will shape the SaaS BI market and consequently our customer’s success in 2010.

1. Just like in 2009, SaaS BI will grow faster than on-premise BI.
2. Business users will drive more SaaS BI purchases and demand more Insight as a Service (IaaS), i.e.  pre-packaged analytics based on industry best practices and self service capabilities.
3. SaaS BI will drive more data mash-ups that integrate company data behind the firewall with company data in other SaaS applications for unified business visibility and reporting.
4. Companies will look at how to incorporate the explosion of social media into their business information environments. Social media use in the enterprise will drive more adoption of SaaS BI.
5. Customers will make SAS-70 Type II certification a non-negotiable requirement for security.

SaaS BI vendors will grow faster than on-premise business intelligence vendors and take significant revenue away from them. SaaS BI will continue to experience an uptick in investment, market visibility and user adoption in 2010 (read more in this post by Wayne Eckerson at TDWI) because of its advantages over on-premise BI offerings; i.e. price, ease-of-use, collaborative features, user-managed self service and reduced burden on IT (exemplified by Ann All’s post on IT Business Edge about Shaklee CIO’s experience). Basic reporting and analysis is now a commodity, so there is little reason for any customer or business to invest in on-premise capabilities with the price/performance ratio that SaaS vendors offer. I believe we will continue to see the on-premise BI vendors’ revenue streams shrink as the SaaS BI value proposition goes mainstream – successful vendors will be those whose offerings were designed from the beginning for cloud scale architecture and whose marginal cost per additional user approaches zero.

Because of SaaS, BI tools are now being used successfully by more and various types of users. Jim Hunter, VP of operations and CFO at Rossignol, shared his success adopting PivotLink with Doug Henschen in this article in Intelligent Enterprise. There is an opportunity for SaaS BI to support a more efficient, collaborative and intelligent workforce and support IT’s  goal to make powerful business analytic tools and consumable information available enterprise-wide. The more easily people can communicate and collaborate with coworkers, team members, customers, vendors, and clients, the fewer information silos will exist. For example, we have several customers who share business analytics with their supply chain and partner community to drive business efficiencies for all. REI, the large outdoor retailer allows key vendors access to timely sales and product analysis which allows REI to avoid stock out situations and allows the manufacturers to better serve a key customer. DMA is a large food service supply chain company, providing their entire ecosystem of food manufactures logistics providers and large restaurant chains with critically business insight and reporting.

Insight as a Service (IaaS) is the new greenfield in business intelligence. Business users require insight from data analysis and care less about the ETL process, data warehouse concepts and SQL commands. Given the collaborative advantages of SaaS BI, business users will be able to take advantage of pre-packaged analytics (KPIs, reports, dashboards) based on industry best practices related to sales pipeline analysis, marketing effectiveness , supply chain management, merchandising and product analysis and bookings, billings and backlog analysis. Communities of interest will build along these functional areas and users will be able to share best practices in related KPIs and report types, while ensuring the actual data is secure and confidential.

Data mash-ups linking internal databases and business data in SaaS applications will be a major theme in 2010. Most businesses are challenged by integrating data from internal systems with data from their SaaS applications. One example is linking sales pipeline data from a SaaS provider with demand forecasting data from an internal ERP system to get a true picture of what and how much to manufacture that week. The cloud becomes a natural place to integrate data for business analysis purposes.

Mike Vizard’s post notes that as BI expands to new types of users, it changes the way they expect to use and manage information. In the year ahead, a combination of Web 2.0 technologies – including blogs, wikis, Twitter, instant messaging, social networking, and innovative Google gadgets – will become part of the BI delivery mechanism that brings greater context to their experience. Web 2.0 innovations will provide users with the social features lacking in business intelligence systems from years past. With Web 2.0 style collaboration embedded into SaaS BI solutions, the industry will return to its decision-centric roots. This also means business users will have to learn to use information more dynamically. In 2010 and beyond, we will see a resurgence in collaborative decision-centric business intelligence offerings that make decisions the central focus of the offerings (as opposed to analysis and reporting). For more operational decisions, mash-ups will allow users to assemble all of the relevant data to make a decision, while social capabilities will allow users to discuss the relevant data to generate “crowdsourced” wisdom. As a result, business users will be able to make decisions with greater confidence and understand how their decisions impact both the company’s and their individual performance.

2010 will be the year organizations shift from viewing information as a technology-mediated commodity managed by specialists, to treating information as an asset that provides business advantage. The highest security standards will remain crucial to driving adoption of SaaS BI applications across a wider audience in the enterprise. Customers will demand that SaaS vendors offer proof of audited end to end security, and mature SaaS companies will rival, if not surpass, the level of security offered by on-premise BI solutions. When both business users and IT believe that the information they are utilizing is trusted, higher-quality decisions will flow from people using SaaS BI tools and kick off another level of the virtuous cycle.

These trends indicate BI has entered a new era where companies are increasingly dependent on it at all levels.  Take a moment and try to imagine how your business would change if you could leave behind inefficient, error prone ways of working and have your BI tools conform to the way you work by serving up the right information for the unique circumstances you encounter on a daily basis? As we move into 2010, this reality may not be too far away.

Are you seeing signs these trends are gaining momentum? I welcome your thoughts.