Measuring the ROI of Business Intelligence

Business Intelligence

Once you’ve got a fully operational BI solution, it’s then a matter of making it work for you. As with any monetary outlay in business, you need to see ROI. So how do you measure a return on your BI investment?

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 effect.

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 is 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 show that on-the-road sales are higher when two sales people travel together. The data may also lead to predicting how much money would be generated by that simple fix. The only way that these sort of gains will be identified, however, is if there is a commitment to searching for such potential improvements. Once you’ve got such a commitment, and everyone sees the value of that work, the ROI of your BI solution can begin to snowball.

The keys that lead to good ROI from your BI solution include adoption and its impact on decision making. To get a sense of your ROI as relates to efficient, improved decision-making, ask yourself: 

  • Can your employees find insights quickly?
  • Can they move easily between aggregate data and the underlying granular data?
  • Is the data accurate and trustworthy?
  • Does the solution include the right data – broad enough in scope to provide a full picture?
  • Does the solution allow them to visualize the data and communicate their insights effectively to others?

Getting firm ROI numbers on your BI solution is often a challenging task for companies. If your goal with your BI solution is to specifically increase revenue, decrease inventory and spending, or improve efficiency, be sure to adequately measure your current performance in those areas long before implementing your BI solution. For example, if your goal is to improve employee efficiency in certain departments and you'd like to be able to track your ROI to measure the value of your solution, be sure to have measured the amount of time it takes to do those tasks before you implement your solution. Planning ahead will make the benefit of your investment easier to quantify after deployment.

So while the answer to the question of ‘How do I measure BI ROI?’ might require some thought and effort, the answer to ‘Will I see positive ROI from my BI investment?’ is very clear. With a commitment to make use of data, provide the tools, and develop a data-driven culture, the answer is a resounding yes!


Business Intelligence Ebook

Looking to learn more about business intelligence and how to get the most out of a BI solution? Start with our guide "What is Business Intelligence," which will help you make determinations about:

  • What business intelligence is
  • The benefits of investing in BI
  • How to get BI working for your business
  • Measuring ROI on a BI solution
  • How to optimize your investment in BI by building a data culture
  • and the top 8 changes that will shape the future of BI

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.

 

develop a data-driven culture

learn how to create a community around your data

read more