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BI SaaS – What Does Deloitte’s Acquisition of Oco Mean?

I was intrigued by the recent CIO.com article about Deloitte’s acquisition of Oco, and found myself wondering what it might mean for the future of the SaaS BI business model.  As BI strategy consultants, we’ve evaluated the offerings and technical architectures of Oco, Pivotlink, and other providers so we can advise our clients regarding BI SaaS and its fit for their situations.  Because we are BI educators at TDWI Conferences and for TDWI on-sites, the BI SaaS vendors have been happy to have us “look under the hood” to understand their value propositions.   And there has also been a fair amount of BI analyst attention to BI SaaS – most of which has touting the growth of BI SaaS.  So all this raises a couple of questions, and I’d be very interested in getting other perspectives.

1. Why Sell SaaS BI Now?

If BI SaaS is such a hot emerging business model with such a great value propostion, why would Oco sell out so early in the market and company development lifecycle?  Why not get bigger and go public?

My take, absent any inside information, is that Oco couldn’t raise venture capital because the BI SaaS business model is unproven, and there are a number of inherent challenges associated with what amounts to outsourced BI.  Most of the BI SaaS vendors tout the number of users they have.  If their revenues were significant, I believe they would be touting those also, and I believe that if Oco management believed in the long-term viability of the business model they would have waited to sell out.  All that said, it’s possible that Oco has achieved revenues that are significant, and that Deloitte’s acquisition is a bullish sign.

2. Is SaaS BI the New “Packaged Analytics”?

According to the CIO.com article, “Deloitte plans to use Oco’s technologies in it’s managed analytics practice, giving it the ability to deliver projects that can be turned around quickly, yet still deliver specialization.”   This raises the question as to whether BI SaaS will suffer the same fate as the packaged analytics that BI vendors were touting in 2002/2003 and that they have recently begun to tout again?

We know that Deloitte is bullish on BI SaaS and/or packaged analytics, or they would not have made this move.  That said, consultants have always been interested in monetizing their intellectual capital by creating revenue streams that don’t rely as heavily on selling billable hours.  The BI SaaS value proposition basically comes down to three things:

  • Packaged analytics
  • Rapid data integration
  • Hosting

My view is that whether you buy packaged analytics from a  BI tools vendor such as Cognos or from a BI SaaS provider, it still comes down to whether the application is a fit for your business.  As to rapid data integration, that value proposition becomes much more speculative as the number of source systems and the number of differences between dimensional hierarchies proliferates.  In many cases the data integration work required to leverage BI SaaS  (or packaged analytics) becomes a custom development job, which impacts the BI SaaS value propositions regarding being faster and less expensive than traditional BI development.  Given all this, it may be that what was once Oco ends up being the tip of the spear for selling Deloitte’s professional services – a nice demo and perhaps a jump start for BI application design.

As independent BI strategy consultants, we feel it our duty to be professional skeptics on behalf of our clients – to help them sift through the hype and value propositions to help them make good decisions about leveraging BI to create business value and about managing risk.  We are bullish on BI or we wouldn’t be in the business, and it may be that BI SaaS becomes a meaningful player in the BI landscape.  From that perspective, it will be interesting to see what the Oco acquisition allows Deloitte to achieve and whether they become a significant BI SaaS provider

By Steve Williams, President

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