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Business Objects To Enter Software-As-A-Service Market

Posted by iTech - 2006-04-12

Business Objects is plunging into the white-hot software-as-a-service (SaaS) market.
This week, the company is scheduled to launch CrystalReports.com, a hosted subscription offering for its reporting software. The venture makes Business Objects one of the first analytics developers to dive into the on-demand software market pioneered by enterprise applications vendors.

One issue that remains to be resolved is whether channel partners will get a commission for reselling the Premium edition of CrystalReports.com.

Loren Bahnick, owner of Scientia Partners, a Tampa, Fla.-based Business Objects reseller that specializes in analytics for midmarket companies, said he will be disappointed if the vendor doesn’t work out a plan that gives resellers a cut of Premium deals they originate. But Bahnick added that profit margin on the software service isn’t a killer issue. “I’m pretty confident they’re going to figure that out in a fair way,” he said.

Bahnick and other channel partners said the primary value of the new SaaS offering is that it will make Crystal Reports accessible to customers that previously would have been put off by the cost and complexity of building a report-sharing infrastructure.

“All of these opportunities that I could not previously talk to because they didn’t have an intranet or the IT staffing to create one, I can now go to and say, ‘Look, I can still offer you report distribution and some business intelligence functionality,’ ” Bahnick said.

CrystalReports.com is designed to let companies share analytics information and reports through a remotely managed and hosted platform, sparing them the burden of constructing their own intranets. The offering has two service levels: Basic, which will be offered as a free feature of Crystal Reports XI; and Premium, which is currently priced at $20 per user per month and offers more storage and user slots. CrystalReports.com’s free service is capped at 10 named users, 60 reports and 2 Gbytes of storage.

CrystalReports.com users will still need to purchase copies of Business Objects’ Crystal Reports XI desktop or server software to use in creating reports. The hosted service is focused on easing distribution of those reports. Hosted applications specialist OpSource is handling the service’s infrastructure.

Business Objects is still working out many of the specifics of its SaaS offering. Whether partners will get a commission for reselling CrystalReports.com Premium is still being determined, said James Thomas, director of product marketing at Business Objects.

Business Objects also hasn’t nailed down a permanent price for its Premium service. The $20 monthly rate is an introductory price that Business Objects plans to raise next quarter. It expects to offer discounts to customers that sign one- or two-year contracts.

Joe Guerra, director of business intelligence at Andrews Consulting Group, a services firm in Cheshire, Conn., echoed the argument that margin is less important than opportunity with SaaS products. “My reselling any Business Objects product is not something I’m making money on beyond covering our cost of sale,” he said. “The money is in the relationship with the customer. We love this idea for the SMB space.”

Guerra said he envisions offering free best-practices information through CrystalReports.com Basic in exchange for the branding opportunity and offering more sophisticated add-ons for the Premium edition. “Some of the stuff we’ll provide is secret sauce,” he said. “We’re working out with Business Objects what the best arrangement would be—a fee, something else—we’re still deciding.”

This is not the first time Business Objects has dipped its toe into the SaaS pool. In January, it announced a partnership to offer Crystal Reports XI through Salesforce.com’s AppExchange network as an optional add-on module available to Salesforce.com’s nearly 400,000 subscribers. General availability and pricing is due this quarter.

But CrystalReports.com is its first direct SaaS play and marks the starting spread of the SaaS model beyond the applications space. It will be a test case for customers’ willingness to outsource greater chunks of their IT infrastructure.

“When we ask in our surveys, ‘Would you consider [SaaS offerings]?’ the ‘yes’ rate is very high. But there hasn’t been much out there yet, so it’s not clear how it’s going to pan out,” said Dan Vesset, analytics and data warehousing research director at research firm IDC.

Still he’s optimistic about CrystalReports.com’s prospects. He expects other business-intelligence software vendors to follow in Business Objects’ wake. With ERP and database vendors, particularly Oracle and Microsoft, aggressively going after the analytics market, now is the time for vendors such as Business Objects and SAS to press their brand-recognition advantages. The technical barriers to creating hosted-software offerings are low. The main hurdle vendors need to overcome is queasiness about the business model, Vesset said.

“The functionality of the analytics market is very mature. I think experimenting with new delivery methods is something companies will have to do to stay competitive," he said.

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