Measuring the ROI of Business Intelligence

How do you measure a return on your BI investment?

As with any monetary outlay in business, you need to see ROI, unfortunately it’s not as simple as applying an A² + B² = C² style formula to your BI operations. The challenge lies in identifying which monetary gains can be directly attributed to your BI solution, and which may simply be a result of an entirely unrelated factor, such as new employees, an upswing in business, or exploiting a new market.In some cases, like supply chain analytics, this is straightforward. The analysis of purchasing patterns, prices, and contracts can lead to direct and measurable cost savings. In other cases, like marketing analytics, BI may lead to better targeting of marketing activities within your customer segments, although other factors such as pricing or competitor behavior will also have an affect. It follows that you must attribute some percentage of your new sales growth to your BI work and some percentage of the growth to other factors. In all cases, you can build an ROI model which can be refined over time.Unlike other business software, the most accurate measurements of the success of a BI solution are related to its adoption, engagement, and effect on a business’s decision making. If there’s real buy-in from your employees, the monetary gains will inevitably follow. This can be measured by analyzing the productivity of the workers who are using the BI solution, as well as the productivity of the workers who have taken direction from the findings of the BI solution.The data, for example, may find that on-the-road sales are higher when two salesmen travel together. The data will also identify how much money may be generated by that simple fix. The only way that these sort of gains will be identified, however, is if there is a committed employee who is searching for such potential improvements. Once you’ve got such a committed employee, and everyone sees the value of their work, the ROI of your BI solution can begin to snowball.Some effective, real-world measurements that allow you to analyze your business intelligence ROI include:

  • How granular (detailed) the data is

  • The efficiency (speed/capability) of the BI solution in taking users from high-level aggregate data to granular data

  • How quickly users can access the data they require

  • The scope of the data that is able to be extracted by users

While getting firm ROI numbers on your BI solution may prove a challenging task, others have thankfully done the hard work for you. A comprehensive study conducted by Nucleus Research in 2014 found that, on average, a company could expect $13.01 back on every dollar spent on BI. It also found that this trend was moving sharply upwards, with the same study producing a result of $10.66 per dollar spent just 3 years earlier. So, while the answer to the question of ‘how do I measure business intelligence ROI?’ might be hazy, the answer to the question ‘Will I see good ROI from my BI investment?’ is far clearer. Provided you have buy-in from your employees, and make a commitment to utilize the data produced, it’s a resounding yes.Our comprehensive guide, “What is Business Intelligence” covers this and many other topics related to Business Intelligence. If you are considering planning or deploying a solution, it is a must read. Some of the main topics include suggestions for making determinations regarding:

  • Investing in Business Intelligence

  • Ensuring success for a BI initiative

  • Measuring the ROI Business Intelligence

  • Major trends shaping the future of Business Intelligence

If you are ready to discuss your specific challenges or what CSG can offer, you can contact us to learn more about how to start implementing your solution.