Control Shift

First published in Research World July/August 2010

Chris Forbes

What cloud computing and Saas technology mean for the research industry

The growing popularity of cloud computing as a platform for accessing Saas-based applications is having a profound effect along the entire research value chain.

Cloud computing is where data is stored on remote servers and accessed through the internet. Software as a Service (Saas) is where an application is stored on a remote server and accessed by users over the internet. This will lead to dramatic changes in the client-agency relationship, and the structure and economic viability of what we now call the research industry.

Let’s look at what this means for survey design and data collection, data analysis and insight communication, the new opportunities for clients and the implications for research agencies.

Traditionally, the economic success of mid-to-large sized research agencies has relied on a combination of research expertise and technological infrastructure. The high cost of technology meant that it made more sense for clients to outsource to agencies that had research expertise and were capable of generating economies of scale from their technology by conducting research on behalf of multiple clients.

Saas removes the requirement for agencies to own the technological infrastructure, effectively unbundling the combination of expertise and infrastructure offered by traditional research agencies.

Saas-based applications were originally seen as low cost solutions for small businesses but are now being accepted by IT departments of larger corporations.  As a result, many corporate service functions, including market research, are now taking control of Saas-based applications specifically developed to support their activities.

Saas applications are likely to become more prevalent with client-side research teams because there is a minimal need for IT resources in setting up or using them. No capital expenditure is required, because Saas application providers typically charge on-going access fees rather than a large once-off charge.  Application access is usually over the internet, so client-side researchers can give agencies access to specific tasks, without losing visibility or control of their projects. This shift in technology control to the client will affect key activities along the value chain.

Survey design and data collection
Saas already provides a platform for one of the more controversial disruptions to traditional market research – do-it-yourself research which is criticised based on the assumption that because clients control the application they also design and deploy the surveys, and possibly do not have the skills or experience to do so.

With Saas-based applications, this argument is moot, as clients can design and deploy surveys themselves, or grant access to chosen agencies on a project by project basis. The use of these applications is likely to increase, as major survey software providers including SPSS and Confirmit have joined smaller providers in making their applications accessible though the Saas delivery model.

Saas-based survey design and deployment applications give clients the opportunity to rapidly develop and deploy their own simple questionnaires, extend access to external agencies for more complex projects and work more collaboratively with agencies to ensure surveys produce reliable data, and meet the objectives of the study.

In addition to reducing costs and time, control over survey design and deployment will allow clients to track, collaborate, approve and deploy questionnaires in real time, collate questions and answers from multiple projects to reduce research overlap and ensure consistency in key questions (eg demographics) to promote cross-project analysis.

As Saas becomes the dominant delivery channel for survey design and deployment applications, the long-term success of agencies will be based on the skill and experience of the individual researcher, not the technological investments of the agency. Agency consolidation will therefore not yield economies of scale in the core activities of survey design or data collection.

This evolution will mean that without the opportunities for economies of scale in survey design or data collection, larger agencies will have three strategic options:

1. Focus on data aggregation by controlling the flow of information from other sources (examples include Nielsen Scan Data, IMS Midas, IRI etc.)
2. Provide comparative data from other projects (eg Millward Brown Link Test, JD Power’s Customer Satisfaction etc.)
3. Develop a competitive advantage and market positioning based on sharing broad skills, knowledge and expertise of staff.

With a diminishing need for survey design and data collection and limited opportunities for scale, bespoke design and data collection is likely to become an art form practiced only by smaller agencies with minimal overhead that provide outsourced services to their clients.

Data analysis
The effect of Saas-based data analysis has not yet been felt on the research industry, but if recent investments by VC firms are anything to go by, it’s coming. Interest in data analysis is based on a recognition that data sets sourced through customer POS behaviour or on the web, or via opinions through online communities and blogs, are now more available, and are increasingly driving marketing decisions at the expense of traditional market research.

The growth of analytics is not new. SPSS’s decision to focus away from market research into analytics in 2005 was early recognition of the trend. What is new is that Saas provides a platform where relatively small teams such as market research departments can now afford to control their own analytical processes and outputs.

Access to Saas-based analytics allows clients to interrogate data sets to discover new insights long after the original project has been completed and contrast and combine results from multiple studies. They can also expand the scope of the market research function to include analysis of data from sources other than primary market research projects and grant restricted access to third parties that provide analytical services on a project by project basis.

The increased use of alternative data sets and Saas-based analytics is leading to the disaggregation of data collection, undermining the positioning of integrated research providers. While client-side researchers are likely to take control of data analysis, they may still want to outsource analytical tasks opening up opportunities for analytically-focused agencies to work on a broader array of data sets than integrated providers.

Should the trend to Saas-based analytics continue, full-service market agencies may want to reconsider their strategy as their positioning is likely to be under greater threat and smaller agencies with strong analytical capabilities might consider broadening their scope to provide outsourced analytical services regardless of data source.

There will continue to be a market for ‘high-end’ providers where the reputation of the provider is critical to the analysis being accepted by stakeholders but these agencies will also be competing with high-end management consultancies.

Communicating insights
New Saas-based systems, marketed as Knowledge Management Systems (KMS) or portals, allow client-side research teams to access and re-use past research. The outputs from most research projects are still contained in large PowerPoint files which may be effective as a presentation tool, but critical information contained in research reports is being overlooked as this is an ineffective means of distributing information through a browser whilst many other marketing information providers have reformatted their outputs to maximise their impact through the browser.

Saas-based KMS give corporate research teams the opportunity to be more efficient by giving internal clients on-line access to past research. Researchers can thus position themselves as a source of competitive advantage for their organisation by converting research from a series of once-off expenses to a cumulative strategic asset that can be used and re-used over time. They can also broaden the scope of the research function, by incorporating other marketing information sources into their systems and track the extent to which their research is being accessed across the organisation.

If web-based delivery becomes the dominant channel for communicating research, the way output is packaged and presented will need to change to ensure information from these projects is not overlooked. Successful examples include automated collation of past research matched to marketer’s specific responsibilities or the creation of separate key findings that are integrated into annual marketing planning processes. Other possibilities are the capture and dissemination of lessons learned when doing research to increase the collective knowledge of the research team and cross-project collation of objectives and outputs, to pro-actively identify knowledge gaps as input for future projects.

Agencies could repackage their results into multiple smaller files that more closely match the way people consume information through a browser to extend the use of their findings beyond the final presentation.

While agencies are often requested to add broader insight, the use of client-controlled research repositories is likely to see this task shift to internal research teams, as the task requires a deep understanding of the organisation’s markets, strategy and decision making processes. Agencies wanting to provide greater insight to their clients should therefore aim to develop knowledge of specific market sectors.

The growth of cloud computing and Saas-based applications undermines the structure of the research industry by fragmenting and distributing tasks traditionally managed by corporate market research teams to other business functions. It also removes the technological economies of scale that traditionally defined the structure of the agency business model.

However, the technological shift does not undermine the relevance of research.

In ensuring the relevance of research, perhaps we would be better served to think of research as a profession, rather than an industry attempting to maintain boundaries between tasks carried out by client or agency. By focusing on increasing skills in data collection, analysis and communication that leverage new technology, corporate decision makers are more likely to recognise the value of internal research teams as a source of strategic advantage, and the development of vibrant agency businesses in support.

Chris Forbes is Co-founder and VP business development at Research Reporter