State of Embedded Analytics Report. Logi Analytics Third Annual Executive Review of Embedded Analytics Trends and Tactics

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1 2015 State of Embedded Analytics Report Logi Analytics Third Annual Executive Review of Embedded Analytics Trends and Tactics

2 Table of Contents 3. Introduction 4. What is Embedded Analytics? 5. Top 10 Insights 6. In-depth Insights 6. Majority of Applications Have Embedded Analytics 7. Focus on Customers 8. Expanding the User Base 9. Increasing Value of Embedded Analytics 10. Strategic Benefits for Commercial Software Providers 11. Driving Revenue with Embedded Analytics 12. Benefits for IT Application Providers 13. Continued Investment in Embedded Analytics 14. Why Embed a Third-Party Product 15. How to Choose a Third-Party Product 16. Embedded Analytics Capabilities 17. Future Outlook of Capabilities 18. How Analytics is Embedded Inside Applications Today 19. Meeting Strategic Objectives Through Embedded Analytics 20. The Future of Embedding 21. Appendix 21. Survey Methodology 22. Additional Charts 26. About Logi Analytics 2

3 Introduction Welcome to Logi Analytics third annual State of Embedded Analytics Report. The looks to provide insights to executives, product managers, and technology leaders on why and how organizations embed analytic capabilities within their applications. We delve into the strategic vision, the business case, and the implementation approaches for embedding analytics. At Logi Analytics, our vision is to create a smarter world by making analytics available to everyone. The traditional approaches to business intelligence are fading, marred by a long track record of expensive and ineffective solutions. In order to create data-driven organizations, applications must bring data and insights to life in an agile, intuitive, and resource-efficient way. Serving the analytical needs of end users is about much more than great-looking charts. Analytic capabilities must also be available when and where users need it most contextualized where the action actually takes place which is inside the applications, systems, and processes that run a business. This ultimately results in a delightful user experience that simultaneously informs and drives action based on the insight. It s about creating engaging applications with embedded analytics that users love. While our customers leverage best practices that we have developed through our extensive experience in the space, we also recognize the need to incorporate a broader intelligence to expand our view of embedded analytics. So we endeavor every year to independently discover the current state of embedded analytics. In addition to surveying commercial ISVs and SaaS providers as we have in years prior, we expanded the 2015 report to include non-commercial IT-managed applications used by internal staff and partners. When interesting findings emerge between the commercial and non-commercial application providers, we highlight the differences in the report. What s exciting to all of us at Logi Analytics is that ALL companies are becoming software companies, and ALL software applications are becoming analytic applications. As more companies and developers adopt this point of view, we anticipate more compelling and intuitive business applications to come to market. 3

4 What is Embedded Analytics? Embedded analytics is the integration of analytic capabilities within business applications. The goal is to help users work smarter by incorporating relevant data and analytics to solve high-value business problems and create a more efficient user experience. This is in contrast to traditional BI, which focuses on extracting insight from data within the silo of analysis. Embedded analytics strives to bring together insight and action into the same context by integrating analytics deeper and deeper within business applications and workflows. Software providers embed analytics within their applications in one or more of the following ways. Embedded Analytics Maturity Model Application Analytics Analytics Application Module Module Integration Standalone Analytics Application Analytics in a separate application from the process application Gateway to Analytics Embedded accesssingle sign-on from process application to analytics Inline Analytics Analytics appear inside the process application (e.g. reports module ) Infused Analytics Analytics embedded within core workflows and application functionality Application UI Security Data UI/UX Insightto-Action Separate Context Same Context 4

5 Top 10 Insights 65% of all application providers offer embedded analytics. Commercial ISVs and SaaS providers lead the way over their non-commercial peers with 75% embedding analytics. 82% of all application providers say embedded analytics is important to their customers. 62% of all application providers will invest in adding and improving embedded analytics in the next 12 months. 40% AND GROWING of an application s total user base regularly use embedded analytics. This level continues to be greater than the 30% adoption limit of traditional BI. The value of embedded analytics relative to the overall value of the application is 43%, jumping up from 22.5% in two years. 22.5% 43% 2015 $ 93% of commercial ISVs and SaaS providers say embedded analytics has helped them increase revenue They charge an additional 25% on top of their core product offering, up from 15% last year. The top reason for embedding a third-party product for analytics is faster time-to-market. Functionality is once again the top evaluation criteria for embedding third-party products, followed by ease of integration. Dashboards are top embedded analytics capability, followed by self-service analysis, and then reports. Application providers are trending towards infusing analytics as a natural part of the their application workflow. This is especially true among those who have already embedded analytics, compared to those who have not. 5

6 Majority of Applications Have Embedded Analytics COMMERCIAL APPLICATIONS LEAD IN THEIR ADOPTION 65% of all applications have embedded analytics Do you currently offer embedded business intelligence Q: and analytics as part of your application? Comm. ISV/SaaS 75% 25% Non-Comm. Apps 55% 45% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Yes No Almost two-thirds of software applications embed business intelligence and analytics. Commerical ISVs and SaaS providers lead with 75% adoption. Among the top ten industries in our survey, applications in financial services, technology, and manufacturing, lead the way. Financial Services Technology Manufacturing Healthcare Business Services Retail Construction Consumer Goods Government Education 75% 73% 71% 70% 69% 65% 62% 58% 57% 52% Embedded 6

7 Focus on Customers EMBEDDED ANALYTICS VIEWED AS IMPORTANT TO CUSTOMERS 82% of all application providers say that embedded analytics is important to their customers How do your customers view the importance of business Q: intelligence and analytics within your application? Comm. ISV/SaaS 50% 39% 7% 4% Non-Comm. Apps 35% 41% 13% 11% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Very Important Somewhat Not Important Somewhat Important Not Important 89% of commercial ISVs and SaaS providers, and 76% of non-commercial application providers say that embedded analytics is important to their users. This is a strong indication of the importance of analytics and how users expect business intelligence inside the applications they use everyday. This provides evidence that a key focal point of any embedded analytics project should revolve around delivering value to the customer and having a clear understanding of how the customer will benefit from improved capabilities. Note also that the percentage quantifying customer need (average of 82%) is higher than the percentage of applications who currently offer embedded analytics (average of 65%). The desire to close the gap between these two findings is a driver for continued investment in embedded analytics that we see later in the report. 7

8 Expanding the User Base EMBEDDED ANALYTICS SEES GREATER ADOPTION THAN TRADITIONAL BI Q: What percentage of the application s total user base uses business intelligence and analytics on a regular basis today? In 1-2 years? 40% Today 47% In 1-2 Years For a long time, the ceiling for end user adoption of CIO-sponsored traditional business intelligence tools as reported by industry analysts such as Gartner has been 30%. Even in the Logi Analytics 2014 State of Self-Service BI Report, we found that only 22% of business users have access to and use selfservice BI tools when they need them. So while the responses of this year s survey on embedded analytics are tempered from last year s report, the 40% you see above still represents greater user adoption over traditional, nonembedded business intelligence. This provides clear evidence that embedded is a path to increasing the pervasiveness of business intelligence and increasing data-driven decision making within an organization. 8

9 Increasing Value of Embedded Analytics VALUE HAS GONE UP FOR SECOND STRAIGHT YEAR The median value of analytics relative to the overall application: 43% 35% 22.5% Application providers reported that analytics provides a relative value centered around 43% of the overall application. This is a substantial jump from just two years ago when the median relative value was 22.5%. This shows just how quickly data and insights has become a core value proposition for applications today. For those who are building a business case for their embedded business intelligence and analytics project, this is just one way of thinking about the value in a quantitative manner. Another way to calculate value is to identify the number of users who are currently affected or could be impacted by analytics in your product. In addition, for commercial software providers, when customers are demanding better analytics capabilities and customer retention is at risk, another way to quantify the value is to consider the revenue impact of such capabilities. 9

10 Strategic Benefits for Commercial Software Providers SOFTWARE PROVIDERS STAND TO BENEFIT IN A MYRIAD OF WAYS Q: Describe to what extent embedded business intelligence and analytics helps you to: Comm. ISV/SaaS Attract new users 57% 34% 8% 1% Increase overall revenue Differentiate your product Improve customer satisfaction Give better sales demos Improve user experience Increase end user adoption 56% 37% 6% 1% 54% 36% 8% 2% 52% 42% 5%1% 50% 37% 12% 1% 49% 44% 6% 1% 49% 40% 9% 1% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Strongly agree Slightly agree Slightly disagree Strongly disagree For commercial software providers building a business case for their embedded analytics project, it is important to understand the strategic business benefits that they can realize when embedding analytics in their product. When looking at the results in the chart above, we see that the respondents have a generally positive reaction to all the options presented. This reinforces the previous finding where the value of business intelligence and analytics has reached such a high point that commercial software providers expect to benefit in a myriad of ways, and all of these are true potential outcomes of embedding analytics. 10

11 Driving Revenue with Embedded Analytics MOST SOFTWARE PROVIDERS HAVE INCREASED SALES 93% of commercial ISVs and SaaS providers say embedded business intelligence and analytics has helped them increase revenue We find that embedded analytics has helped the majority of commercial software providers increase revenue. This finding clearly shows how valuable analytic capabilities leads to increases in sales. In addition, with the increasing value of embedded business intelligence and analytics, commercial software providers report a rise in the how much they charge for such capabilities, with a median value of 25% on top of their core product, up from a median of 15% reported last year. The median value of how much software providers charge on top of their core offering for embedded business intelligence and analytics: 25% Up from 15% in

12 Benefits for IT Application Providers CUSTOMER SATISFACTION AND EXPERIENCE ARE TOP OF MIND Q: Describe to what extent embedded business intelligence and analytics helps you to: Non-Comm. Apps Improve customer satisfaction Improve user experience Increase end user adoption Differentiate the application from competitors Extend the life of an existing application Attract new users 61% 26% 11% 1% 61% 33% 5%1% 51% 34% 13% 1% 44% 40% 13% 4% 42% 42% 12% 4% 38% 38% 19% 6% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Strongly agree Slightly agree Slightly disagree Strongly disagree While non-commercial application providers in IT may not be able to directly drive revenue like their commercial counterparts, we see that they can benefit in other ways by embedding business intelligence and analytics inside their applications. The chart above shows that they are clearly customer-focused, rating customer satisfaction and user experience as the top two ways that they help their organization. 12

13 Continued Investment in Embedded Analytics MOST APPLICATIONS WILL SEE UPGRADES IN THE NEXT YEAR 62% of application providers will invest in embedded business intelligence and analytics over the next 12 months Q: Do you plan to invest in embedded business intelligence and analytics over the next 12 months? Comm. ISV/SaaS 69% 31% Non-Comm. Apps 56% 44% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Yes No Because embedded analytics is important to application providers and their customers, it comes as no surprise that the majority of application providers plan to invest over the next 12 months. And even though 65% of applications already embed analytics, just as many providers will invest, showing that they are not content with what they have and plan to upgrade in the near future. Industry Breakdown Technology Business Services 70% 80% Retail 70% Construction 67% Manufacturing 66% Financial Services 63% Education 63% Consumer Goods 63% Healthcare 61% Government 40% Will Invest 13

14 Why Embed a Third-Party Product ACCELERATING TIME-TO-MARKET IS TOP REASON Q: Why did you choose to integrate a third-party product to deliver business intelligence and analytics capabilities? (select all that apply) Need to get to market faster 45% Maintain internal focus on core functionality 39% Internal resources not available for this project 35% More expensive to build and maintain on our own Internal resources lacked required skills for this project 31% 34% 0% 10% 20% 30% 40% 50% The top reason to utilize a third-party product to embed business intelligence and analytics is to get to market faster. This comes as no surprise since competitive pressures and customer satisfaction drive the need to embedded analytics, and time-to-market is key to successful delivery. 14

15 How to Choose a Third-Party Product FUNCTIONALITY TOPS THE EVALUATION CRITERIA Q: How important are the following factors in choosing a third-party provider to embed business intelligence and analytics within your application? Functionality 65% 30% 5%1% Ease of integration Pricing Experience in my industry Speed of implementation Ability to customize Licensing Architecture matched our application Matched internal skill sets Previous relationship 61% 31% 7% 1% 59% 33% 7% 1% 58% 32% 9% 1% 56% 37% 6% 1% 55% 38% 7% 1% 54% 39% 6% 1% 51% 42% 7%1% 46% 46% 7% 1% 45% 38% 14% 4% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Very Important Somewhat Important Somewhat Not Important Not Important Once again, functionality is the top evaluation criteria for embedding third-party business intelligence and analytics products, as it has been in every year of our survey. The biggest change in this year s report is how industry experience moves from the bottom of the list to the middle of the list, highlighting its growing importance. In the remainder of this report, we hone in on the top two criteria functionality and integration by taking a look at which capabilities are most important, and how these capabilities are embedding inside applications. 15

16 Embedded Analytics Capabilities CLASSIC BI CAPABILITIES PREVAIL Q: What types of business intelligence and analytics capabilities do you offer within your application? Dashboards Self-service reporting and analysis Static and interactive reports Benchmarking Mobile Predictive analytics Writebacks and visual workflows Big data 39% 39% 38% 33% 30% 52% 56% 66% We see that the top three classic business intelligence and analytics capabilities (dashboards, reports, and self-service analysis) are also the most popular embedded capabilities, each being implemented in at least half of applications. While the top three has not changed in the three years of our survey, the ordering within them has. In years prior, self-service reporting and analysis was in third place and trending up; this year, it has made the move from third to second most popular functionality. This is evidence that empowering end users with greater flexibility to perform their own analysis is beneficial to users and application providers alike. 16

17 Future Outlook of Capabilities TOP CAPABILITIES SHOULD RETAIN THEIR POSITION Q: How would you rate the importance of the following business intelligence and analytics capabilities over the next 12 months? Dashboards 51% 35% 6% 8% Self-service reporting and analysis Static and interactive reporting Mobile access Predictive analytics Big data Writebacks and visual workflows Benchmarking 46% 35% 11% 8% 44% 40% 9% 7% 43% 36% 13% 8% 40% 38% 14% 8% 36% 43% 12% 9% 35% 40% 17% 8% 34% 44% 13% 9% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Very Important Somewhat Important Somewhat Not Important Not Important Comparing the relative position of capabilities currently deployed versus their importance over the next 12 months, there is little difference between the two charts. The one area that may experience some shift is benchmarking, which stands in the middle of the list of currently embedded functionality, and is in the bottom of this list looking 12 months ahead. 17

18 How Analytics is Embedded Inside Applications Today INFUSED ANALYTICS GAINS, THOUGH STILL TRAILS BEHIND INLINE EMBEDDING Q: Which best describes how you have embedded business intelligence and analytics within your application? 53% All Responses Non-Comm App Comm ISV/SaaS 21% 31% 45% 36% 29% 23% 33% 5% 11% 1% 13% Standalone Level 0 Not embedded - analytics is a separate application from your application Gateway Level 1 Embedded access - single sign-on from your application to a separate analytics application Inline Level 2 Embedded in UI only - reports and dashboards appear inside your application Infused Level 3 Embedded in UI + workflow analytics drive and guide usage of core application functionality Inline Analytics, where analytic content and capabilities are integrated with the data, security, and UI, of the application, is the most popular at 45% of all implementations. The popularity is likely related to the fact that most third-party analytics applications can be embedded in this way. Infused Analytics, which also embeds analytics within the application workflow, is second most popular with 29% of implementations. Looking at commercial ISVs and SaaS providers, adoption of inline analytics at 53% is the same as last year, but infused analytics increased from 22% last year to 33% this year. This group continues to mature in their embedding of analytics. We also see that commercial software providers embrace deeper levels of integration over their noncommercial peers. As we see on the next page, deep integration is correlated to greater strategic benefits, and commercial software providers are likely more motivated to realize those benefits. 18

19 Meeting Strategic Objectives Through Embedded Analytics DEEPER INTEGRATION = GREATER BENEFITS When we compare the strategic benefits of analytics to the way analytics is embedded in an application, we find some interesting correlations that inform the future direction of embedding. Specifically, for each of the four different ways of embedding, the charts below display the percentage of application providers who strongly agree that embedded analytics helps to achieve each of the top 3 benefits. For example, 74% of commercial ISVs and SaaS providers who infuse analytics in their application strongly agree that embedded analytics helps them attract new users. On the left side of the same top chart, there are no commercial application providers offering analytics as a standalone capability who strongly believe they are delivering on any of the top 3 strategic benefits. Comm. ISV/SaaS 52% 55% 53% 74% 66% 67% Attract New Users: Strong Agreement 41% 36% 32% Increase Overall Revenue: Strong Agreement 0% 0% 0% Standalone Gateway Inline Infused Create a Competitive Differentiator: Strong Agreement Non-Comm. Apps 81% 84% 77% 60% 47% 40% 52% 50% 33% 57% 59% 55% Improve Customer Satisfaction: Strong Agreement Improve User Experience: Strong Agreement Standalone Gateway Inline Infused Increase End User Adoption: Strong Agreement Generally, what we see is that deeper embedding is tied to greater realization of each of the top 3 strategic benefits identified earlier in the report. While infused analytics is not for all applications, these results do give application providers more reason to seriously think through how analytics can be a more natural, intuitive part of their product. 19

20 The Future of Embedding THE TREND CONTINUES TOWARDS DEEPER INTEGRATION How do you anticipate embedding business intelligence Q: and analytics within your application in the future? 43% 38% 39% 37% 17% 5% 17% 22% 14% 31% 27% 9% All Responses Without Embedded Analytics With Embedded Analytics Today Standalone Gateway Inline Infused We see how application providers anticipate incorporating analytics in the future. Across all respondents, compared to the distribution of current implementations shown earlier in the report, it appears that each of the three forms of embedding (gateway, inline, and infused) lose a few percentage points, giving rise to more standalone implementations. But this is only a surface-level comparison. Breaking out these results between those who do not embed analytics today and those who do, we get a clearer picture of future approaches. Those who have not embedded analytics today tend to be more cautious about future integration they lean towards above average implementations in the earlier phases (left side) of the maturity model. Those who have embedded analytics trend toward deeper integration and are actively maturing in their use of embedded analytics they lean towards above average implementations in the later stages (right side) of the maturity model. This provides evidence that embedded business intelligence and analytics will continue to become a natural part of an application experience, thus creating more insightful applications and increasing customer satisfaction over time. 20

21 Appendix SURVEY METHODOLOGY Logi Analytics fielded our 2015 State of Embedded Analytics Survey in February Data collection took the form of an online survey, to which there were over 500 complete responses from business and technology professionals. Survey respondents included Product Management, Product Development, Software Engineering, IT, and executives of companies of all different sizes. 65% of respondents were from the United States, and 26% from the UK. 26% of the respondents say they are customers of Logi Analytics. To request further information about the design or conduct of this survey-based study, please contact us at Type of application Top 10 Industries Technology Business Services 12% 12% a commercial application or Software-as-a- Service used by customers an internal application used by company staff or partners Financial Services Manufacturing Education Healthcare Government 8% 6% 6% 6% 11% Construction 6% Consumer Goods 5% Retail 4% Number of Employees % % % % % % % 21

22 Additional Charts How long did it take you to add business intelligence Q: and analytics to your application? 50% 40% 35% 30% 20% 20% 21% 18% 10% 7% 0% < 1 month 1-3 months 3-6 months 6-12 months More than a year Who was the primary driver of your decision to add business Q: intelligence and analytics to your application? Executive management 40% Product management 31% Development staff 19% Customers 7% Competition 4% 0% 10% 20% 30% 40% 50% 22

23 Additional Charts Q: What is your deployment model? Comm. ISV/ SaaS 38% 33% 29% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Hosted / Cloud / SaaS Both On-premise How do you package business intelligence and analytics Q: with your offering? Comm. ISV/ SaaS 56% 31% 12% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Tiered (analytics capabilities are packaged into different editions, each with increasing functionality) Add-on option (customers add analytics as a separate option) All-inclusive (every customer has access to all analytics capabilities) 23

24 Additional Charts Q: Where is the application deployed? Non-Comm. Apps 46% 23% 31% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Public or private cloud Data center On-premise Q: Who are the end users of the application? Non-Comm. Apps 62% 27% 11% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Internal employee Both External partners, suppliers, and/or customers 24

25 Additional Charts Q: Do you have a UI/UX designer or team of designers? Comm. ISV/SaaS 66% 29% 5% Non-Comm. Apps 31% 54% 15% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Yes No Not sure Q: Do you adhere to an agile software development methodology? Comm. ISV/SaaS 65% 26% 9% Non-Comm. Apps 40% 39% 21% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Yes No Not sure 25

26 About Logi Analytics Logi Analytics is the leader in self-service analytics, delivering tools designed to meet the needs of users, IT and product managers. At Logi, we are re-imagining how software can empower individuals, and the organizations and products that serve them, with analytics that can be embedded directly into the business applications people use every day. From interactive dashboards to ad hoc queries and visual analysis, Logi enables users to explore and discover insights, and make data-driven decisions. More than 1,600 customers worldwide rely on Logi. The company is headquartered in McLean, Virginia, with offices in the U.K. and Europe. Logi Analytics is a privately held, venture-backed firm. For more information, visit LogiAnalytics.com. 26

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