Next to the overall price and cost of ownership, the BI ROI is probably the biggest number that execs want to see for the project. After all, the whole idea of business intelligence is to improve efficiencies, find new market opportunities, and otherwise make a company more profitable.
The problem is that tracking this number can be difficult. In addition, many projects may not really have a return on investment in a direct way that can be measured. For example, a new report that allows slice and dice and granulatity. Its improved functionality over the old static report, but what is the net value to the bottom line? It can be tough to judge. Other systems may need to be implemented simply to satisify accounting or legal obligations. While the business may get some internal value from them, typically this is just going to be a sunk overhead cost.
Some projects can be relatively easy to see impact on the bottom line though. Replacing a legacy system with tons of costly upkeep with a cheaper per user reporting system may be a no brainer. Using a new BI system to produce sellable reports for external vendors could end up being a lucrative profit point.The reality is that most projects fall somewhere in between. There may be some elements of improved visibility and efficiency, combined with some expected cost savings.
This is why many implementations are recommended to start with a pilot program, in a department or for a line of business. This should usually be a project with a current reporting scheme that can be easily measured for the key KPIs. Efficiency and costs should be measured before the new system is rolled out, so a before and after comparison can be done.
We understand that formulating a good number for return on investment for an IT project can be difficult. Business intelligence is no different. Contact us for free assistance on formulating an ROI analysis for your proposed project. We can provide an idea of key metrics, assumptions, and calculations to get a good sense of the overall expected return for your BI project.
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