Summary: The embedded analytics market is growing by 15% annually, and shows no signs of slowing down. What is embedded analytics and why is it so important? In this article, we cover the concept in more detail and explain why it’s a trend you can’t afford to ignore.

---

Let me ask you a question: What is the purpose of business intelligence (BI)?

Some will say that BI helps organizations capitalize on their data. Others will say it helps business leaders make more informed decisions. It reveals actionable insights within your data.

This is all true…but I think BI goes a step beyond these definitions.

The purpose of business intelligence: Deliver the right data to the right person in the right format at the right time, giving them the ability to make the right decision.

How does your BI solution stack up?

Traditional business intelligence tools meet most of these criteria but fail in one key area. They don’t deliver data within the user’s workflow. Reports, dashboards, and analytics are only available within the BI tool itself.

This creates a couple of problems:

1. It forces users to jump between software products to get data. If the user wants to see a report, they must stop whatever they’re working on and open up their reporting tool. This takes the user out of their routine. Not only does that waste time, it hurts user adoption.
2. It hurts data visibility. Suppose a user is looking up a customer in their CRM software. But, they can’t get a complete picture of the customer’s history because their CRM has limited reporting capabilities.

This is where embedded analytics comes into play. According to this report, the embedded analytics market is growing by nearly 15% every year. Why the rapid growth? It helps companies better capitalize on their data (among other things). In this article, we’ll explore this topic in more detail.

But first, let’s answer the big question:

What is embedded analytics?

Let’s first look at the differences between traditional BI and embedded analytics.

Business intelligence combines data from many locations and gives a clear view of your business. It helps leaders make informed decisions.

Embedded analytics lives inside other applications and software. It provides data and statistics that relate to that software. For instance, embedded reporting within an ERP system provide important ERP data.

“Embedded analytics means integrating analytic content within business process applications, says Damien Martin, Shufti Pro. “It offers relevant information and task-specific analytical tools. Business intelligence (BI) on the other hand, pulls data from a variety of sources, organizes and synthesizes it for making business decisions.

The difference between the two is in the collection process.

Embedded analytics empowers external users (e.g. customers), it lets them create reports right from the business application. It also allows internal departments to use data from their business applications for better decision making.”

Who uses embedded analytics?

Almost every business can use embedded analytics. But, we can separate use cases into two groups: Software vendors and all other businesses. Let’s explore each one:

Software vendors
Software vendors often need reporting and analytic capabilities in their products. They need to let customers analyze the data generated by their software.

For example, an ERP vendor might embed reporting capabilities within their product. This lets customers analyze their data and produce reports.

When it comes to analytics, software vendors have two options: Build their own reporting or use an embedded analytics tool.

Let’s quickly compare the two options:

1. Build their own
   

   

   I’ve spoken with many software vendors who tried creating their own reporting solution within their product. Most of the time, they’re now looking to replace their solution with an embedded analytics tool.

   Why?

   First, they don’t realize the level of complexity involved in building a reporting tool. Creating a custom reporting solution is difficult and usually produces an inferior result.

   Second, it takes them away from their core capabilities. They specialize in a specific type of software–not in reporting. Shifting their focus to analytics takes them away from their area of expertise.

2. Embedding an analytics platform
   Embedding an analytics solution within their software helps in many ways–provided they deliver a quality product. I emphasize quality because an inferior reporting/analytic solution can harm the software. I’ve known companies who stopped using software because the reporting features were so bad.

   Assuming they deliver a great reporting experience, it can help a couple of ways:

   1. It provides a competitive advantage
      These days, data is more important than ever. Delivering strong analytic capabilities within a software tool will help set it apart.
   2. It can open up new revenue streams
      Some vendors offer embedded reporting capabilities to their current customers as a paid feature.

Businesses (non-software vendors)
Businesses that aren’t software vendors also use embedded analytics in a couple of ways.

1. Many use it to replace inferior reporting features found in the software they use
   Remember how I emphasized the importance of a quality reporting component above? It’s the biggest complaint we hear about enterprise software. The reporting isn’t customizable enough or doesn’t fit their needs.

   ERP reporting is a common example. ERP solutions include a reporting component. But they’re often limited. They don’t offer the features or customization that a business requires.

   If a business doesn’t like the reporting, they have two options: Replace the ERP or replace the reporting. Most choose the latter.

2. It’s used to bring reporting and BI to the user’s daily routines
   I touched on this above, but let’s explore it in more detail. Gartner estimates that roughly 70% of Business Intelligence projects fail. One of the biggest reasons for this problem: User adoption. After all, if no one uses it, business intelligence is worthless.

   What keeps users from using business intelligence? I suppose it depends on the user. Maybe it’s too difficult. Maybe it’s inconvenient. Maybe they’re just lazy.

   Embedded BI/Reporting helps solve this problem. Rather than spend your time trying to convince users to use a BI tool outside of their daily routine, this approach brings it to them. It places reports and analytics in the software and applications they already use. It makes the BI look like it belongs, and keeps the user in their workflow. The result: Improved user adoption.

3. It delivers self-service reporting to end users
   

   

   Many businesses still struggle with a reporting bottleneck. All reporting requests go through the IT department. Not only does this slow down the IT department, it slows down the reporting process. Users often wait days for reports.

   Embedded analytics platforms solve this problem in a couple of ways. First, they bring ad-hoc reporting capabilities to the users. The reports generated by the platform typically include sorting/filtering, letting the users view their data in different ways. Second, some tools even let users create and embed their own reports. Using a point-and-click interface, users can create their own reports and dashboards without bothering IT.

Benefits: 6 ways embedded analytics can help

The big question: Why use embedded analytics? How will it help our business?

The answer: It depends on your business and your goals. For instance, a software vendor has different goals than a non-software vendor. Both will see benefits but in different ways. Let’s explore a few common benefits of embedded analytics:

Competitive advantage
Software vendors differentiate their offerings with great embedded analytics. In a data-driven world, great reporting capabilities are a must-have in any software product.

Increased revenue
As touched on above, some software vendors use these tools to develop paid features. Customers can opt to purchase their reporting add-on, often at different tier levels.

Improved user adoption
I hear IT leaders complain that business users ignore the BI and reporting tools they’ve provided. Instead, they just request reports from IT like they always did. This defeats the purpose of an end-user reporting tool altogether.

Embedding reports and dashboards within the applications that employees already use eliminates this issue. It fits their routine. There’s no need to log into different areas to access data. It’s instantly available. The result is an uptick in user adoption.

Save time
Embedded analytics save time on a couple of levels.

First, it reduces task-switching. Rather than logging in to a new application every time you need a report, you can access that data right away.

Second, it reduces reporting requests to the IT department. Rather than request reports from IT every time they need one, end users have the data they need at their fingertips.

“While we’ve seen blended data in charts at quarterly business updates, it takes time to create them,” says Shayne Sherman, CEO of TechLoris. “When embedded analytics are in place, these blended charts are available at any time on the fly.”

Contextual information
Embedded analytics bring reports and data to applications that employees are already using. It provides contextual information that users wouldn’t otherwise see.

“Imagine a company intranet – using the embedded analytics tool we can easily post reports or graphs, in a proven element of content, presenting selected elements of the company, e.g. profit, goals, etc.,” says Krzysztof Surowiecki, Managing Partner at Hexe Data. “These charts are presented in the text.”

Better data visibility
Over the last few years, more and more companies are working to become “data-driven”. What’s one huge step in that process? Making data accessible to those who need it. Embedding reports and data in the applications they already use is a huge step in that direction.

“Embedded analytics is the concept of taking those BI tools and putting them in our business software,” says Sherman. “This way we can see data as we’re in the system and we get actionable data in real-time. The benefits of this are simply more data more often. And if you ask anyone in business intelligence, data is money.”

What to look for in a tool

Not all embedded analytics platforms are equal. Some make the process simple, while other are difficult. Some are expensive, while others are affordable.

What should you look for when choosing a tool for your business? Here are a few key areas to examine:

White labeling
White labeling means you can replace the vendor’s branding with your own. It lets embed reports and dashboards that match your software’s look and feel.

Be careful: Some tools offer more flexible white labeling than others. Look for a solution that allows for total control over the look/feel of your generated reports.

Licensing
This is one of the biggest differences between tools. Many vendors charge distribution fees. For software vendors, this means you pay a fee to distribute your generated reports to your customers. The more customers you have, the more expensive it becomes. If you’re a software vendor, look for a solution that has no distribution fees.

Self-service capabilities
Any good tool should provide some sort of self-service analytics. For instance, some will let users create applications on their own. Others let you include filters in the reports that let users see their data in different ways. Understand the extent of the self-service options provided by the tool.

Security
What type of security comes with the tool? Examine the security features from a couple of angles.

Internal Security: Does the platform let your IT department control the data and user access? Does it let you secure data by user or user role? Does it allow for single sign-on?

External Security: From an external standpoint, how secure are the generated applications? How are passwords stored? What encryption algorithms and implementations are in place?

Simple integration
Look beyond the flashy interface. Integration is one of the most important aspects of the software. How long will it take to roll out? How easily can you integrate it with your current software systems?

Potential Drawbacks

Now, I’m not here to tell you that embedded analytics tools are silver bullets. Sure, they offer great benefits, but…what’s the downside? What are the potential drawbacks or “gotchas” you should watch out for? Here are a few areas to watch:

Limited tools
Your reports and dashboards are only as powerful as the embedded analytics platform you choose. If the tool you choose lacks features or customization options, you’ll have unhappy users/customers.

This is especially important for software vendors. Delivering sub-par data analytics features will reflect poorly on your entire product. For instance, we’ve helped countless companies create custom reporting options for their ERP system because they couldn’t use the embedded options.

Difficult integration
I once heard from a software vendor struggling to deploy embedded analytics within their software. They had spent 3 years and over $100,000 trying to make it work, but still had a long way to go. Rather than continue spinning their wheels, they switched to a different platform and rolled out reports in under 3 months.

I tell this story to emphasize an important point: Make sure you know whether or not the platform will seamlessly integrate with your existing software. If not, you’ll run into many problems along the way.

Expense
If you’re a software vendor, licensing is a huge consideration. Many vendors charge distribution fees, which drives up the cost substantially. Distribution fees mean you pay a fee for every customer who uses the embedded analytics you create.

I like to refer to distribution fees as “success fees.” The more customers you have, the more you pay. The more your business grows, the more expensive the solution will become. Keep in mind that licensing options vary by company. Not all of them charge success fees.

Summary

Hopefully, this article gave you a clearer view of embedded analytics. Do you have questions or comments? Feel free to comment below!