What Makes More Sense? Building or Buying Embedded Analytics? An Analyst’s Perspective
Watch this video to find out the pros and cons of building versus buying embedded analytics.
When companies decide they want to embed analytics in an application, they almost always struggle with the build versus buy dilemma. Build often turns out to be a short-term solution. Over the long haul, partnering with a third-party whose specialty is embedded analytics turns out to be the smarter play.
There are a variety of reasons for this. First, is time to market. It’s faster to buy. Second, is total cost of ownership. Building the embedded analytics application is only part of the equation. It has to be maintained and updated as well. And, typically, those that buy embed a wider range of capabilities because they’re collaborating with a specialist that has a large embedded toolset.
If you’re an organization that creates and delivers software applications, whether as a traditional ISV producing commercial products or an organization with a strong internal development team, you may possess some of the skills required to build and embed analytics within your offerings. But, should you go down this road of building it yourself or have you considered engaging with a third party?
Hi. I’m Mike Lock, Vice President and Principal Analyst at the Aberdeen Group, and this is the fourth video in a five-part series exploring embedded analytics. And today what we’re talking about is the decision to build versus buy analytics functionality to be embedded.
So, if you recall the first video in this series, you’ll remember our discussion of the ecosystem of embedded analytics and all the various stakeholders involved. So, for any company developing or delivering or supporting or maintaining applications, many struggle with this build-versus-buy decision and this video explores some of Aberdeen’s research findings related to the topic.
Build Versus Buy: Why It Matters
So, from my most recent survey on embedded analytics, in this chart here I’m showing a comparison of companies that have a collaborative relationship with a third-party analytics provider and those that are developing embedded analytics capabilities internally themselves--so, in other words, those who buy versus those who build--and the impact that it has.
Buying is Often a Strategic Choice
So, a couple interesting overarching findings here. One is that those who take a buy approach are considerably more likely to think strategically and long term about embedded BI. In other words, it’s not just a one-off implementation of some dashboard or reporting capabilities. It’s much more likely to be incorporated within the product roadmap. They want analytics to evolve alongside their core offerings, whatever those may be.
Buying Can Offer More Analytic Functionality
Secondly, those with a buy approach, they’re generally embedding a broader array of capabilities. Perhaps because they’re buying a suite of technology that works well as a combined unit, they have more of these core analytics capabilities embedded. So, from interactive visualization and data discovery to more sophisticated capabilities like predictive analytics, the strong implication is that they spend less time writing code and more time building a broader suite of capabilities into the long-term roadmap of their products.
Measuring the Time-to-Market Impact of Build Versus Buy
Also important in this concept is to look at some of the performance discrepancies here between a build and a buy approach. So, time to market is an important metric, as you might imagine. Here we are looking at from initial concept to delivery, how long does it take to get the capabilities into the hands of users? While the delta here isn’t necessarily enormous, it’s definitely a notable time difference as those taking a buy approach are able to deliver the capabilities almost a month and a half quicker.
And then, looking at some of the other metrics we already saw--cross-sell/up-sell revenue and customer renewal rate, if you might recall from a previous video--some fairly significant outperformance for those taking a buy approach versus those building it themselves. And at the end of the day, the research demonstrates that companies are seeing value in focusing their internal resources on the core capabilities and the idiosyncrasies of their own applications, while leaning on the expertise of a third-party provider to bring embedded analytics into their suite of technologies and software applications.
So, thanks for joining us today. Be sure to check out the final video in this series as we look at a few brief industry snapshots of how embedded analytics works in action. Thanks very much and have a great day.