The Business Intelligence ROI Challenge

Calculating the ROI for data warehouse and business cleverness projects is an extremely complicated and perplexing task. Today’s decision manufacturers can no longer accept being unable to calculate the ROI for data warehousing and business intelligence projects. This short article provides a practical platform and process for calculating ROI for data warehouse and business cleverness projects.

In the first 1990s, mantras such as build it and they’ll come or creating a data warehouse is an excellent move to make justified many data warehouses. Soft claims such as essential to the business to remain competitive, improved usage of data, and produces many intangible benefits are inadequate for most of today’s upper-level decision makers. As a result, data warehouse and business intelligence projects more often than not require business justification through ROI evaluation.

Companies now wish to know the business case, the value proposition, and the potential ROI of the data warehouse project before money are committed. Projects that are funded deliver measurable, positive impact to the financial bottom line in either revenue cost or generation savings. There is hope for project managers, executive project sponsors, and CIOs facing the duty of assessing the advantages of data warehousing projects. One of the largest studies of data warehouse ROI, conducted by International Data Corp.

1996, touts an average 401 percent, three-year return on investment for 62 organizations with data warehouses. However, many companies have no uniform, confirmed ROI procedures. A TDWI study of 1 1,600 companies released in March 2001 demonstrated only 13 percent of respondents monitoring data warehousing ROI over the value chain. Thirty-seven percent said they plan to begin tracking ROI and 27 percent said they aren’t tracking returns and have no plans to do so, underscoring that companies continue steadily to have a problem with the ROI issue. Determining the ROI for a data warehouse is difficult because of the numerous qualitative or intangible benefits provided. Furthermore, the info warehouse is generally not linked with action.

For example, the info warehouse may point out an area where sales can be increased through cross offering a certain product but a sales consultant still has to make the sales call and close the sale to increase revenue. The truth is, despite the actual tool vendors tell you, data warehousing and business cleverness don’t give a direct, quantifiable financial come back as an interest-paying connection or CD does. The return on data warehouse investment can be derived from improved decision making and productivity as a result of having better information sooner, as well as the altered or new procedures enabled by the info warehouse.

  • Good for managing cash flow, short-term financing
  • HIST.—- History Elective (AH) (3cr)
  • Recognizing Opportunities
  • Student Lines of Credit

Business intelligence leads to other new or revised processes that result in reduced costs and higher revenues. It is still important to understand and quantify the expenses and benefits necessary to make the best decision. All data warehouse and business intelligence projects must have ROI justification prior to funding and each project or phase should be able to stand on the merits of the project ROI. Business intelligence initiatives often can, and should, be justified through a comparison of estimated ROI to other uses for the money. ROI is calculated to offer an initial business value analysis evaluation that quantifies the financial rewards of a business intelligence project, allowing managers to judge and prioritize various IT initiatives within their organization.

As part of the post project review, recalculate the ROI and compare it to the initial ROI figure. Following is a step-by-step strategy for determining the ROI for your data warehouse or business cleverness task. Define and document the business problem and business objective, and identify the business goals had a need to solve the problem or meet up with the business objective. Begin by ensuring you have outlined the existing situation, including identifying the key business problems or “pain” the business is experiencing, combined with the overall need for the project.