Tableau: Managing the data explosion
At the crossroads of truly understanding how to leverage data..
90% of the World’s data was created in the last two years. Currently doubling in size every couple of years, it is likely to reach 44 zettabytes by 2020. That is 44 trillion gigabytes.  Helping manage this kind of exponential growth in data, Tableau was an idea that originated out of a Department of Defense project in conjunction with Stanford university to help organize and visualize data from relational databases.  Founded by an ensemble cast of an academy award winning university professor, a computer scientist and a savvy business leader, it has grown from an obscure startup to a $6 billion dollar company in little over a decade. We’re going to explore the reasons for this runaway success story in the below report.
Tactical to Practical : Mission to simplify data
While it might have started off as a defense project, Tableau’s founders were quick to identify its potential and expand it to commercial applications. As the number of smart devices touches 2 billion, the number of people uploading photos, videos, text and other content is rapidly increasing. With a mission to make breakthrough products that help “people see and understand data”, Tableau wants to give users the power of data at their fingertips. And this is Tableau’s niche: Simplifying the opportunity for individuals and enterprises to use data to learn about customers habits, demand patterns and supply side constraints.
A Solution For Everyone
To achieve their strategic goals, Tableau needed to find widespread adoption across sectors and industries. They did this and created value for their customers by allowing their customers to connect large databases and parse through the data quickly and easily. This also includes interpreting data realtime (when connected to a live database), enabling dynamic filtering and converting SQL entries to immediately usable visual reports. Simultaneously, the products needed to be priced in a manner to allow for both large corporations as well as small industries to be able to use their service. Most importantly, people without significant experience in SQL should be able to easily and intuitively learn adopt it. Finally, it needed to be scaleable such that once a consumer is on Tableau, they should be able to enhance features and services when new terminals were added without having to lose data or configuration in transition.
“The fundamental innovation is a patented query language that translates your actions into a database query and then expresses the response graphically. The breakthrough was the ability to do ad-hoc analysis of millions of rows of data in seconds with Tableau’s Data Engine.” 
Keeping in mind their industry application but wanting to reach out to large as well as smaller customer accounts, Tableau primarily offers three products to consumers 
- Fast Analytics for Everyone: Desktop version
- Analytics in the Cloud: Tableau Online
- Business Intelligence: Tableau Server
With a VizSQL powered front end and analytics using a high performance data engine, they managed to create such an offering. Due to its ease of use and reasonable pricing, it is already being used in a wide range of model building and analysis. Included below are few samples pulled out from ‘Viz of the day’.  From Aerospace to Retail and Banking to Entertainment and all the industries in the middle, they already count amongst their customer base over 35,000 companies and customer accounts.
Transition and Evolution
In addition to offering a differentiated product suite, another ingenious move by the company is to keep all the products on an annual licensing fee. Not only does it give the consumers the option to try out a new product at a reasonable price, it allows Tableau to retain control over future pricing of their product. And while the initial euphoria over the IPO has died down , Tableau continues to perform extremely well vis-à-vis their competitors. As the number of devices and content generated grow, the significance of analytics and data security will only increase from here on. And while staying competitive and continuing to innovate, Tableau needs to look at including predictive behavior into their analytical tools as they evolve to compete in an increasingly competitive Artificial Intelligence landscape.
Student comments on Tableau: Managing the data explosion
We actually used Tableau in my last job at the edtech startup, and we actually had terrible experiences with them and ended up cutting our contract. Specifically, we found their data visualization tools to be insufficient for our more custom needs (not unexpected), and their customer support was lacking (should not have been the issue).
In a world where data tools have to become increasingly sophisticated, and the question of interoperability becomes more core to the usage of any tool, what do you think is going to be Tableau’s remaining competitive advantage? More and more tools that are similar (and cheaper!) are hitting the market, and I was curious to know what you thought about their future “edge”.
Kathy, appreciate the feedback. I had very similar experiences with Tableau at the beginning. That kept evolving and version 8.3 was much better than anything in the 7 series. By 9, it had evolved quite a bit. You do bring up a fair point about there being many lower priced competitors. Currently, I think their competitive advantage is their ability to compress data. Large amounts of data are compressed to a very small file size which makes them easier to manage. That said, any competitor that can build a better compression algorithm will win in the long run. In the world of big data, compression is going to be the biggest edge.
Nice analysis, Sagar! I used Tableau fairly extensively a couple of years ago and was quite pleased with its functionality. Compared to other BI tools I have used, its ease-of-use is clearly near the top of the pack. Although I used some SQL in conjunction with the product, this was by no means required depending on the datasource. In particular, I enjoyed the intuitive drag-and-drop interface, as well as the easy-to-use location-based graphing functions. Additionally, the speed with which it crunches data is quite impressive. I was also impressed by Tableau’s efforts on mobile functionality. I began using Tableau Public (which is free), and eventually lobbied my manager for a desktop license.
I do share Kathy’s concern about custom data needs, however – in some cases we found it a little to inflexible to consider implementing more broadly across the company. Additionally, although prices of some of their products are quite low, I have heard that Tableau Server can get very expensive very quickly. Finally, I have read a few concerns about their approach to data security. I imagine that as the company grows, this will be an increasing area of focus.
Gerritt, thanks for the feedback. Clearly, you know the tool well. I think that they are an evolving company and have improved features significantly. The fact that they can convert numbers to so many different types of visualizations allows you to share a report with a large audience which will not be able to parse through all that information. Also, in most cases, the exceptions are easy to spot and deep dive. Data security is certainly a concern, but till Tableau has built significant credibility, there are workarounds. Since Amazon has so much customer data, they were paranoid about compromising it. Tableau is not allowed to connect to any of the databases and they can only connect to text file data dumps in Amazon’s Eco-system.
Very interesting article. What do you think is their fastest growing segment is right now? Is it their desktop, cloud, or local software? Are we likely to see greater usage of this software in the consumer software space?
I think that managing all the data being collected every minute is a growing concern these days. Tableau is well positioned to grow in the next 3-5 years.
Thanks, SJ. I think at the beginning their fastest growing segment was desktop but that is has since evolved to server (cloud). Even at Amazon, we first bought a few hundred desktop licenses and gave it only to Subject Matter Experts on each team. Once it found wide spread acceptance across teams and more people saw the value, leadership started requesting for additional server licenses. This type of licenses is more for people that do not want to build reports but actually just pull it up online and make small tweaks to get what they are more specifically looking for.
Agree with you that Tableau is well positioned to grow in the next 3-5 years. But they are also in an extremely competitive space and they need to keep the innovation at high levels to capture market share that is extremely crowded with competition.
Great read, Sagar!
I also used Tableau quite extensively in my last job, and one of the challenges we ran into is its limited implementation when not all users have licenses (mainly due to cost constraints). Tableau is powerful in its dynamic data visualizations, so it’s often not as useful when one person in the group (or on the client side receiving the reports) does not have the Desktop Licenses to modify the dashboards.
In our usage, we found Tableau’s competitive advantage in its ease of use for the more basic data users and business needs. This likely will be the space that Tableau will continue to differentiate itself in, as evidenced by its ranking in the Gartner’s Magic Quadrant year after year.
Since you brought up the IPO, I’d be interested to explore further if Tableau’s operating model and/or business model has changed now that it’s a public company. Thanks Sagar!
Yvonne, thanks for the feedback. I’ve answered some of the questions that you asked in the other answers. And they are definitely hoping more people buy the licenses and that’s why they’ve used this model. They’ve IPO’ed not too long back so will be interesting to see how they evolve to quarterly reporting expectations.
Great analysis, Sagar! There is definitely huge value in being able to quickly cut and visualize data. A few thoughts and questions:
1. How does Tableau’s organizational culture and structure support its mission? Is it built in such a way to facilitate innovation?
2. I wonder how Tableau will be able to keep its competitive advantage given the low barriers to entry in the marketplace. They could potentially embed or partner with other frequently used software to make it more of a staple for users.
3. I am also curious about how Tableau thinks about continuing to scale. This might involve being used as a policy making / government tool or thinking about adjacent products (ed. tech?).
Francesca, thanks for the feedback. All very insightful questions. I feel like at this point, their competitive advantage is the intuitive way to build visualizations and good data compression ability. But as you mentioned, their competitors are indeed cheaper. The only way for Tableau ahead will be to continue to differentiate themselves as having the superior since they are unlikely to want to get into a price war. More than partnering with software vendors, I feel like they can partner with companies directly. This would use the Microsoft office model of distribution. Even office does not come embedded with Windows since it would increase its price significantly and users who need just windows will not buy that product. Plus I think Tableau would prefer a subscription model vs a one time fee to avoid the sticker shock and have an ongoing source of revenue.
I believe as they scale, they’ll need to ensure that there is significant focus on data security. Companies will drop it in a heartbeat if it ever gets hacked. Also, I think they can continue to innovate by looking into incorporating Artificial Intelligence, which will keep getting better as they collect more and more data.