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BI Best Practices: A Measure of Success...

BI Best Practices

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A Measure of Success...

I find it interesting that at this week's inaugural launch of TDWI's BI Best Practices web site, there are numerous articles on Return on Investment (ROI) for business intelligence applications.

If you are feeling a little left out because you have not calculated your project’s ROI, you are not alone. Survey after survey, including the latest in my upcoming book, shows that few calculate the ROI for their BI application. It might be used as a way of securing project funding but rarely as a way of measuring success or determining if the project achieved what was intended.

In judging the TDWI applications, we don’t look at ROI … much. We do, however, look at specific business benefits though – savings of N million dollars, X increase in campaign effectiveness, Y lift in revenues, and so on. We try hard not to let the big numbers sway us. If someone claims they saved $4 million dollars and they have not provided an ROI, I look at what percentage is that $4 million in respect to the size of the company and the capital budget. In some cases that $4 million savings is still a big deal; in others, it’s small change.

The reality is that ROI is a very precise number, with wildy imprecise inputs. Can anyone accurately say how much a 10% increase in revenues is attributable to the BI project? No. Cost is pretty much the only accurate component. The numerator is a guestimate. In that regard, do the ROI, even if it’s just a quick calculation on the back of an envelope. It’s a wonderful promotional tool when convincing business users of the value of business intelligence.

Sincerely,
Cindi Howson, founder BIScorecard.

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Comments

I agree with you there. ROI may be great tool to secure funding, but rarely is it a good measure of the success of the BI initiative itself. More often than not, BI initiatives help identfiy loopholes in the information value chain, which if fixed might themselves provide lot more in return.

Agree wholeheartedly on both posts, but moreso on the ROI to be discovered on the potential process improvement initiatives that are driven by BI "answers". After all that should be the primary long term, end-deliverable from BI analysis and reporting. It'd be interesting to hear from those who used ROI projections to justify their BI initiative as to how many times (if) they were asked for and were able to report achievments
of those ROI goals after implementation.

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