Robert Kugel's Analyst Perspectives

Host Analytics is taking advantage of one of the inherent advantages that vendors of software as a service (SaaS) have compared to on-premises ones: It’s easier for them to offer their customers data services and shared data repositories. The company’s  Decision Hub has been available since last summer. Although it doesn’t break new ground, it is a solid offering of this type and its value should be considered in any evaluation of Host’s offering.

I expect that most business-oriented SaaS ultimately will have to provide users with a common data repository for information that they need to access in the course of using the software. This information may be from third-party sources as well as within the application. In Host Analytics’ case, it is offering easy access to data from the United States Securities and Exchange Commission’s (SEC’s) EDGAR database which contains information on 12,000 companies that can be used to benchmark a company’s performance (albeit at a very high level), and the performance of competitors, suppliers and customers. Decision Hub has leading indicators available for companies to track in planning and anticipating potential changes in the economy or specific markets. And there is a set of foreign exchange rates for translating subsidiaries’ results.

Decision Hub also can serve as a virtual file server. Organizations collect information that can be shared within or even across departments. This may be financial data used in creating reports or operating data (for instance, production, site data, employment and units of input consumed) for which it’s important to have a single, reliable source of company data for analysis and reporting. For companies that must file reports with a financial regulator such as the SEC, the repository can become the source for nonfinancial information they use in footnotes and supplemental data such as a list of leased facilities, executive compensation, head count or acquisitions. To be sure, some companies already have established a centralized data source, and most have on-premises data store options. But even larger organizations with well-developed business intelligence systems and data warehouses can have problems with data used in reports that are inconsistent or “incorrect” because they are pulled from different enterprise reports that use different contexts (gross and net sales, for example), use different effective dates or use captions that mean different things but can be confused (such as “bookings,” “sales” and “revenue”). Such data frequently is copied from enterprise reports and pasted into spreadsheets, creating errors that can be points of contention or sources of delay in executing a process.

I think the Decision Hub is an important tool that companies can use to increase the efficiency of processes (such as dealing with foreign exchange), share enterprise information more easily, and more readily incorporate information from outside the company into planning, forecasting and review processes. As to the last of those, almost all companies’ management reports present results in the context of year-over-year performance or actual-to-budget comparisons of the company’s performance. But obviously, business is not just an us-vs.-us proposition – it’s us vs. them. For example, if sales are up 5 percent and you were expecting a 10 percent increase, is that bad? Us vs. us would say it is, but that would not be the case if the company’s major competitors are experiencing flat sales. Yet only 15 percent of participants in our Financial Performance Management benchmark research said they have adequate information about their competitors’ performance, while more than one-third (36 percent) said they receive no information at all.

The only cautionary note I would add about Decision Hub to Host Analytics’ customers is that people will not automatically use it. Although I think its value is obvious, that’s probably not the case to people in Finance and other departments. They must be informed (and reminded regularly) that it exists and offered suggestions on how to use it. It must be woven into standard operating procedures. Senior executives must be educated on how it can help them manage the business more intelligently to generate top-down demand within the organization.

Having reliable, consistent data readily available for use in performance management and other processes is one of the biggest issues confronting companies. I have already written about the sweet value of Host Analytics in the cloud and Decision Hub is another important step in helping a corporation address its data issues.

Regards,

Robert Kugel – SVP Research