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How is your business intelligence analytics working out?
We implemented a full BI analytics solution last year, and aren’t seeing the results that we were hoping for. How is your business intelligence analytics system working out for you? Did you immediately see an ROI, or does it take time? Any ideas on how we can start getting better results?
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3 Answers
David:
To increase the ROI of a given investment in BI you need to maximize the extra profit (return) the company makes a result of the BI implementation.
Based on the Theory of Constraints (TOC) metrics, there are conceptually two ways to increase this extra profit:
1) Increase Sales Throughput (T) or contribution margin by increasing volume and/or price of your product or service.
2) Decrease Operating Expenses (OE).
Note that you can decrease operating expense to a point beyond which servicing your customers would suffer. On the other hand, the potential to Increase Sales Throughput has no limit, as long as you offer products or services that create value for you customers faster or better than your competitors (Apple, Google, Cisco). Therefore to maximize the ROI of a BI investment one should focus mainly on increasing Sales Throughput.
Unfortunately, most BI implementations aim at decreasing OE as they populate sophisticated BI software with just internal raw data from the ERP. The problem is that while this supports tactical functions, it doesn’t provide the immediate strategic analysis and direction necessary to grow Sales Throughput.
In order to increase Sales Throughput, BI needs to be implemented to provide a competitive advantage to the company.
Business Intelligence should be a reliable, analytical process that transforms raw data into relevant, accurate and useable strategic knowledge.
Strategic Knowledge is the result of the seamless integration of internal transaction data with external market intelligence.
The key is to use BI software to integrate enterprise data with market intelligence and execute this analytical process fast and effectively so strategic marketing and sales teams can focus on growing Throughput and this should maximize the ROI of you BI implementation.
You can find the Company Strategic Knowledge I.Q. Test at http://www.strat-wise.com/Strategic_IQ_Test.html
Very interesting, am working on a BI ROI and NPV and really Bill has hit the nail on the head. Its not easy to quantify the satisfaction value gotten from BI which is what it gives the Decision makers when using BI.
They can rest assured knowing that everything is clear and can be managed. But other than that, if they have a process driven system. BI cannot easily give quantifiable ROIs
David, I am getting into this several months after you asked the question and hope you are seeing better results from your efforts. I suppose I have to start by asking a few questions.
Before you implemented your BI solution did you have a problem you wanted to solve or specific solution you wanted to achieve. Too many companies (not judging, just speaking from experience)choose a technology and solution without ever discovering what it is they want to accomplish or how they want to improve their business. Was the business involved in defining what they wanted to see from a BI perspective and how they wanted to use it? Is the BI tool user friendly so non-technical business users can simply and easily use to manipulate the data? If it is not intuitive and/or helps them do their job better it will never be a success. Finally measuring impact or ROI can be tricky. In my opinion you can't measure ROI from a technical stanpoint. You have to measure the impact on business results and that goes back to what you designed your BI solution to solve. Is it understanding your customers better so you can drive sales. If so, sales as a result of strategic inititive derived from the data will show an increase (or not). ROI has to be measured in terms of impact on the business and if it is not being used properly you may need to go back and define what it is you want to accomplish and train people to better use the data and outcomes they are getting. Good Luck.
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