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The Elusiveness of True ROI for Business Intelligence

by Lyndsay Wise, President, WiseAnalyticsTuesday, July 13, 2010

Part of any IT project success involves looking at the return on investment (ROI) received through implementing a new solution. In some cases this means identifying the costs and benefits associated with the implementation.  While in others it requires discovering overall time savings or long-term hardware and software costs versus the financial benefits of changing or upgrading the current IT infrastructure. Either way, organizations and solution providers alike can be hard pressed to define the value associated with any solution beyond actual financial savings over time. Alternatively, creative organizations may look at how much time they save by automating processes, freeing up valuable resources to enable better decision making or to ensure that overall employee time is spent more effectively and efficiently.

BI projects specifically have had a hard time regarding ROI and TCO justification.  Although many vendors develop their own ROI calculations, and organizations look towards the time they are saving or the infrastructure being made more efficient, actual business value related ROI could be elusive at best to detect.  Some ROI determining factors include:

  • Cost savings - as mentioned above and may include hardware/software, licensing, maintenance fees, etc.
  • Time savings – employee production and better decision making
  • Process automation – includes the time saved on report/analytics creation

These are quantifiable ways of identifying the value of BI and the ROI attained through BI adoption. However, other aspects such as enhanced productivity, information visibility, and increased profitability are more difficult to ascertain.  For instance, marketers are constantly trying to identify the success of their marketing campaigns.  This may include defining the correlation between individual campaigns and lead generation or online marketing activities or advertisements and an increase in sales.  Unfortunately, it is not always easy to identify where opportunities are generated and the correlations that exist between marketing initiatives and sales. 

The same difficulty exists in identifying ROI for BI.  The quantitative aspects may be easy to define, but the qualitative factors that make BI beneficial to organizations is said to be elusive by many. Even ROI calculations developed by industry experts and solution providers tend to lack the evidence to prove BI’s value conclusively beyond time savings and general process automation.  How do organizations define the extra value they incur through BI adoption and calculate ROI to take into account the additional factors that bring added business value beyond the quantifiable BI benefits?  

Please post your comments and share your stories of BI success and qualitative ROI.

About the Author

Lyndsay Wise is an industry analyst for business intelligence. For over seven years, she has assisted clients in business systems analysis, software selection and implementation of enterprise applications. Lyndsay is the channel expert for BI for the Mid-Market at B-eye-Network and conducts research of leading technologies, products and vendors in business intelligence, marketing performance management, master data management, and unstructured data. She can be reached at lwise@wiseanalytics.com. And please visit Lyndsay's blog at myblog.wiseanalytics.com.

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