Measuring the Return on Investment for Business Intelligence

23 Jan

Justifying the value of business intelligence (BI) investments is unambiguously disputing, according to the senior management. Although business intelligence is rendering impressive returns in a variety of industries, perhaps it is very difficult to ideate an industry that doesn’t have a need for BI. On the other hand, the ROI for BI is centered on a business management debate that possibly results in the ROI assessment which is considered as one of the most important key for any organization. However there are no direct ROI equations or Industry standards to prove or measure the benefits of business intelligence. However, organizations have to accept the fact that the benefits of BI are worth the costs, and that the risks of not constituting those investments are outstanding

Is there a way to calculate ROI for BI?

Yes, of course there are ways to calculate ROI for your BI investments. Determining the ROI and value of a BI software investment is often an infuriating task, but not an impossible one. At an initial stage, most companies were determining the value of a BI deployment based on IT-centric, quantifiable criteria, including improved operational efficiency and minimized total cost of ownership. But today companies have started to focus on optimizing business process; the metrics have changed and are more difficult to interpret

Tactical issues like reporting are no longer into existence because BI ROI and value are increasingly linked to performance management frameworks. It’s not just about getting the right information to the right people at the right time, but determining that the information is in fact being used to make better decisions. Although there are no ready-made sets of metrics for measuring improved decision-making capabilities.

What companies can do for measuring business intelligence software ROI and value?

Companies can evaluate user satisfaction, based on a set of predefined BI objectives, 18 to 24 months after deploying the BI software. By zeroing in on user satisfaction with the relevancy, accuracy, consistency and timeliness of data being used to make decisions ROI can be determined. However, they need to verify whether they have the sufficient information required to manage their business.

Another maneuver is to looking at the risks of not using BI. It costs money to store, secure and archive the astounding amounts of data floating around a distinctive enterprise. If it isn’t used to improve business processes, data becomes little more than an expensive liability.

Organizations that aren’t utilizing BI are also positioning themselves at a competitive disadvantage, as more and more companies are investing in BI today than ever before. As a matter of fact, BI is a top priority platform for most CIOs and CTOs as they are progressively anticipated to backup business processes, not just put out IT-related fires.

What if your competitors are translating all their data into some fantastic information that will give them the edge?

The risk is that your competitors are bringing in these kinds of investments and are able to react rapidly to manage their business better or react to changes in the market better and, as a result, may be they have better earnings than you.”

Legal compliance is another key condition when it comes to valuing BI. By furnishing a detailed view of a company’s performance, BI let companies to distinguish movements and other behavior that may fall against the rule of federal compliance regulations. The risk of being noncompliant is difficult to quantify financially, but it is certainly important.

It’s all your “mindset”

Clearly speaking calculating the ROI on a BI project is not a rocket science and it often depends on an organization’s mindset. It call be well illustrated by comparing BI to a student’s career: It may be expensive and time-consuming, but there are many less tangible benefits, like increased earning power and overall improved quality of life, which come years later.

“It’s not easy to force someone to choose their career based on a strictly financial or numbers game, and the same thing goes for BI. We will have to just believe that BI is absolutely essential for you as an organization to investment, that this is a fundamental core competency that you have to have.”

Calculating the ROI on a BI project is one means of measuring the benefit to the organization. But even more critical to the success of the BI project than the calculated costs, benefits and ROI is the extent of buy in for the project from the executive leadership and the business operations of the organization. Having support for the BI project from senior management as well as user involvement in the configuration of the application(s) is essential to its success. Without the necessary support and involvement, the ROI calculation for the BI project is meaningless.

How can your organization measure business intelligence software ROI and value? Email your scenarios to Shaughn Knight, AVP, Business Development and Inside Sales Operations. We can help you out to reduce

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