Embedded Analytics: The Evolution Of The Analytics Industry

With any technology, there is always a natural evolution of the industry and analytics is no different. In short, Embedded Analytics is the next stage of the analytics industry. With a shift towards SaaS, a new breed of analytic products is required to serve SaaS companies where legacy business intelligence (BI) solutions cannot.

What’s Evolved In The Analytics Industry

Most BI companies were founded between 2000 and 2010. Their target customers were enterprises needing to analyze data internally by various lines of business. SaaS wasn’t quite the dominant force it is today during that decade, so these systems were designed to be installed in servers owned by each customer with a database administrator from the IT department.

Fast forward to 2020, SaaS companies dominate and so does cloud hosting. Looking at company creation data from Crunchbase, there are about 140,000 total software companies in the US as of 2020. Back in 2005, that number was about 25,000. That’s almost a 5x increase in those 15 years with the movement picking up steam in the early 2010s. However, pivoting from a server-focused software product to a cloud-focused product is not easy. We see BI companies talk about being cloud-ready and having an embedded analytics feature, but it’s really just that: a feature.

Taking a closer look at what has changed, it’s easy to see in these five areas:

  1. Product focus shift from internal usage to SaaS applications
  2. Licensing shift from users + servers to usage-based
  3. Architecture shift from server-based to cloud + serverless
  4. Built for IT vs product and engineering
  5. Software updates are independent of users and how they are aligned

Embedded Analytics is Not Embedded BI

To put a finer point on the matter, embedded analytics is what embedded BI wanted to be on the surface, but BI companies never made the necessary commitment to it.

Traditional BI solutions led the way in democratizing data analysis such as Tableau. BI solutions represented the first timeline of business users could perform their own analysis. BI solutions were created to focus on that use case.

Embedded BI was a feature set BI solutions tried to offer, but it was never a core focus of these platforms. Embedded BI features lacked focus on their SaaS customers’ actual needs and further diluted their ability to innovate.

Embedded Analytics solutions were created with a singular focus on shifting trends: the rise of SaaS companies. Embedded analytics can offer the support for SaaS companies that BI companies cannot give their native focus on internal usage. Read more with our guide to what is embedded analytics.

Why do BI companies struggle to serve SaaS?

Simple. The majority were created before the rise of SaaS, so the legacy enterprise market was the only attractive market. As a result, the legacy companies have mostly had to go the acquisition route, such as Tableau selling to Salesforce. SaaS companies require purpose-built solutions to adequately achieve the necessary time savings to invest in a third-party data and analytics solution.

Consequently, we now have another industry evolution upon us.