The use of cloud-based business intelligence (BI) tools in enterprises is a growing trend. Louis Columbus suggests that in 2018 cloud BI has grown to twice its adoption level of 2016.

However, for businesses considering a switch from an on-premises business intelligence platform, following a trend simply for the trend’s sake is not always a good plan. In this article, you can discover the advantages and disadvantages of cloud-based systems and whether they genuinely present more benefits than traditional in-house tools.

Exploring the Cloud

Cloud-based business intelligence has been around for a few years now, gaining in popularity and adoption across various industries. Breaking it down by sector, Forbes suggests the 2018 adoption rates at around 62% for Financial Services, and 54% for Technology and Education.

Such BI tools allow businesses to analyze KPIs, trends and other metrics via a variety of systems, with Amazon AWS, Microsoft Azure and Google Cloud leading the pack.

With such impressive rates and providers behind the movement, it’s difficult not to be enchanted by the potentials presented by the technology. But is all as it seems?

Advantages of the Cloud

These are the benefits that enterprises engaging cloud-based BI tools can expect to receive:

  • Scalable

Cloud software is often expandable to meet the needs of a business; pricing plans will vary accordingly based on the number of users and required functions.

  • External maintenance and updates

The monitoring of cloud-based tools is the vendor’s responsibility, meaning your staff will not be required to update or maintain the software, only to use it. It should also be updated regularly by the vendor ensuring the product’s security and relevance.

  • Excellent reporting standards

Such tools are often able to sync with other software, making reporting more straightforward. This saves time for employees and reduces the need for copying and pasting information from one source to another.

Challenges of Cloud-based Solutions

While the advantages of cloud solutions are impressive, there are some challenges along the way that could prevent a perfect BI experience. These include:

  • Integration issues

If your business is seeking a switch from traditional on-premises BI to a cloud-based solution, it’s likely that there will be some integration issues. This may include data that doesn’t transfer well, programs that don’t work together and other problems that prevent a seamless data stream.

Additionally, in terms of staffing, a business may experience additional integration issues with the roles and responsibilities of current employees, which may involve training, thus adding further expense.

  • Security concerns

While cloud-based software is reasonably secure, many organizations (up to 77% according to RightScale) may still feel discomfort with storing vital business data on the cloud. This is particularly relevant in the case of financial information and corporate secrets which could potentially be compromised.

Further, certain businesses are subject to strict data storage regulations, in particular financial and healthcare companies, in which case it is essential that data protection is up to industry standards. For them, using cloud solutions would make compliance more challenging.

  • Reliance on a third-party provider

No matter the provider, employing BI cloud services means relying on a third party. This may affect a business if the cloud temporarily goes down. Even if it quickly rectifies, this can lead to a loss.

Besides, unlike on-premises systems, in the case of a system failure businesses may find it problematic to employ efficient contingency planning in the case of downtime.

  • Connection issues between cloud and server

As much as we like to believe that the cloud is a faultless infrastructure, the issue of connectivity remains. In case of an Internet failure, backup measures need to be in place to ensure data is synced once the system is back online.

In addition, it may slow down working time if a lag in the server-cloud connection occurs. Although for those with a solid, reliable Internet connection, this isn’t too biting an issue.

Keeping BI On-Premises

While cloud BI is improving and booming, for large enterprises the decision to switch or continue with on-premises solutions is often a tough one. In some cases, innovation is not always worth the risk, whereas in others it is a cost-efficient answer to an organization’s BI woes.

On-premises solutions generally offer the same BI capabilities as the cloud; however, in practice, the two work very differently. In this section, we will explore the advantages and challenges of an in-house BI tool and why it may prove more suitable for your enterprise.

Advantages of On-Premises BI

Businesses that decide on in-house solutions can expect the following benefits:

  • No compromises on security

Unlike cloud solutions, crucial data is stored on site, meaning essential BI information is less likely to be exposed. In this case, the security measures will rely solely on the business itself that can adjust levels to meet its particular needs.

It also means that if a data leak has occurred, it would be much easier to track who had access to the information and when.

  • Guaranteed maintenance and contingency

When systems are built and maintained on-premises or with the help of an external BI development team, the business itself is responsible for maintaining the services and tools. While this may sound like extra work, it also means flexibility in available tools, planned downtime, and available staff if an issue occurs.  It also brings in reduced contingency issues as BI software is already tailored to meet the needs of the company.

  • Pay-off in the long term

While initially setting up an entire BI network within a company may be quite a costly exercise, this pays off in the long-term as the solution can be tailored to meet the growing needs of the company without any unneeded supplementary tools. Additionally, staff will become more knowledgeable as their skillset advances. And of course, no one can discount the stability of having a system in-house.

Challenges of On-Premises BI

With such strong advantages, companies sticking to tried and tested on-premises solutions should feel no shame in not following the trend. That said, those choosing this route should be aware of the following obstacles to be overcome:

  • Installation may not be a smooth process

In theory, simply paying for and using third-party cloud BI may be a more straightforward solution than designing and developing your own, at least in the short-term. It will take time and testing to install and successfully use tailored on-premises solutions.

  • Additional staff training needs

On-premises often means more staff: those who will work with, engineer and monitor the system. These would be the people that your cloud outsourcer would hire. However, for software produced in-house this onus is on you or your provider, which may prove more or less expensive. Additionally, staff using the system will require additional training to use the new tools successfully, though this is also true for the use of cloud systems.

  • Scalability and flexibility

The ability of your team or provider to scale and personalize your BI tools after they’ve been created is limited by cost, personnel and time. While you can tailor to specifically meet your needs, it does mean investing further funds to keep up with the latest BI trends.

Hybrid––the Middle Ground?

One option that hasn’t been mentioned is the ability to combine cloud and on-premises solutions to work in a hybrid environment. This can bring together the flexibility and scalability of public cloud BI services with the security of private on-premises solutions.

According to BI consultants, how this works in practice is individual to every organization but may prove a suitable middle-ground for companies seeking quick expansion while mitigating security risks.

To sum up, both cloud and on-premises BI present their own advantages and disadvantages. Each business should evaluate for themselves which areas hold the most relevance for their sector. However, one thing is clear; following the crowd blindly is not the way to go. Each company should thoroughly examine the advantages and disadvantages taking into account their specific needs and requirements.