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Forrester's Evelson on ROI for BI

Forrester BI superstar Boris Evelson writes about several topics that we deal with consistently with our clients. A common question we get involves estimating ROI for BI initiatives.

While there are many successful BI projects out there with tangible ROI (either cost savings/cost avoidance or revenue/profitability increase), they are indeed just that: individual projects, solutions, and applications. There is no business case — or at least none that I am aware of — for “enterprise” BI out there with tangible, proven benefits that disprove reverse causality and eliminate all other variables. Many vendor-hyped white papers are out there, but there’s nothing real, tangible, and repeatable. I found one study that comes close , but it’s very academic and I’ve seen no real-life business application of that approach. However, it is a good read and I highly recommend it for everyone who’s struggling with the basic question posed in this article. If anything, it will show the readers how incomplete, thin, and overhyped most of the vendor-sponsored BI ROI studies are.

I'd echo Boris' sentiment on trying to calculate ROI for business intelligence. There's no quick and dirty answer to this on an enterprise basis. ROI needs to be calculated based on the business problem it is designed to solve. 

Another topic - evaluating the sophistication of a firm's analytic capabilities- is something we stress to our clients before they undertake a BI initiative. 

Here’s a practical suggestion. Start measuring your BI maturity on a quarterly basis using the Forrester model , compare yourself to your peers and competitors, and then — here’s the key part — start tracking potential correlations between your BI maturity and other corporate performance metrics like revenue growth, profit margins, stock price, and industry ranking. If you do find a correlation, you’ve hit a gold mine and your BI project budgets are safe for the foreseeable future. If you do not, it’s time to stop and reassess your BI strategy. Why isn’t it having an impact on your top and bottom lines? Are you concentrating on the right applications? Are your business stakeholders on board with you and convinced that they are getting real value from BI? Are you addressing key business pain points? Or are you, God forbid, doing BI just for the sake of BI?

I can't get to the article on Forrester's BI Maturity Model (it's behind the Forrester pay wall), but I'm glad to see someone besides the boffins here at NorthBound touting the value of evaluating an organization's analytic capability (as we have several time on our blog here and here). 

Finally, were you aware you could analyze your analytic tools? Turns out there are apps for that: 

In order to implement this approach, you need BI on your BI environment to understand who uses (or doesn’t use) your BI applications — and when and how. You can get this data from most of your BI tools and/or databases. If you have multiple tools, consider Appfluent or Teleran, which will provide you these statistics on multiple BI tools and multiple DBMSes. If much of your BI environment is locked in spreadsheets or file-based desktop applications like Microsoft Access, you can monitor their usage using tools from vendors like CIMCON Software, ClusterSeven, Finsbury Solutions, Lyquidity, and Prodiance. If it sounds like BI on BI may become a project of its own — well, you’re right, it certainly will. We strongly advocate that BI on BI become a function of your BI center of excellence (COE) or competency center (CC).