Your company’s data has gotten to a point where Excel spreadsheets simply aren’t cutting it anymore. You need something more to help organize and analyze the information you’re accumulating.
Any company can benefit from the analytical power of Business Intelligence (BI). However, when it comes to finding a tool and implementing it, there is no one size fits all. Worst yet, measuring the return on investment (ROI) of a BI tool can be tricky.
So how should you get started?
Importance of measuring ROI
Implementing a business intelligence tool is no small investment.
The cost you might receive from a quote is only the tip of the iceberg when it comes to a BI project. As a leader in cloud BI and analytics, Birst’s whitepaper comparing the costs of business intelligence solutions states that the overall price of BI deployment is comprised of both initial and ongoing costs.
When predicting the overall price of a BI solutions, business software solution Yurbi has come up with the following six factors you should consider:
- Initial software cost – Even though it’s only the beginning, this price shouldn’t be overlooked. The initial cost can include the price for the number of licenses your company currently needs or may need to add on in the future, as well as the hardware needed for the solution to run properly.
- Cost of deployment – To properly deploy many traditional BI solutions, you’ll have to hire a vendor or a vendor’s partner, which can add on a hefty amount. On top of that, the amount of downtime for various workflows within your company can affect the revenue coming in during implementation. Instead of only looking at price, a full evaluation of the tool before reaching this stage will determine if the deployment is worth the cost.
- Traditional project management cycle – Many BI vendors use the following strategy: requirements, installation, implementation, testing and deployment. Going through this process with a BI tool that doesn’t align with your company’s goals will add an astronomical amount to the overall price. Make sure the tool’s features align with your goals before getting to the implementation stage of the project.
- End user training cost – Training the employees who will be using the BI solution is the best way to ensure a good adoption rate, yet the cost is underestimated. When evaluating the tool, consider how long it’ll take to thoroughly train all end users in the company.
- Cost of administration – The BI software administrator for your company typically needs to complete specialized training to have a full grasp on the software’s maintenance. This isn’t just a pricey add on to the overall cost. It also takes the administrator away from their everyday tasks, which impacts your entire company’s workflow.
- Operations & maintenance – This ongoing price will affect the ROI of a BI tool the most. Be aware if an IT employee or an outside third party needs to do tasks like building reports, adjusting security settings, or performing software updates that can result in a large maintenance cost down the road.
With so much to consider for the total cost, and the amount of time it’ll take for employees to fully adopt the tool into their workflow, it’s important to determine how to measure the return of investment before getting to the implementation stage. This way, you’ll have a clear view of how well the tool is being adopted and if the investment was worthwhile.
How can you measure the ROI of a BI solution?
Determining the ROI of a BI solution is one of the biggest challenges for businesses. Most of the benefits of a properly implemented BI tool are intangible, which makes it difficult to measure success. However, it’s not impossible.
Eldad Farkash, the CTO and co-founder of business intelligence leader Sisense, said, “With BI, businesses greatly increase engagement and agility, transforming their employees from process-driven to data-driven as exploring data and reaching new insights becomes easier and faster,” Farkash said.
Unlike other enterprise software, Farkash stated the most accurate measurements of BI success are engagement, adoption, its impact on decision making, and how well the solution fits the company’s current operations. This involves measuring the productivity of workers who are using the BI tool, along with how much value they bring and how quickly they’re doing so, instead of focusing on how much money the solution saves.
However, if you need something a little more concrete, he suggests the following measurements:
- The speed and capability of the tool to take users from high-level aggregate data to granular data
- The scope of the data that’s being extracted
- How fast people get access to the data they need
- How granular the data is
Before analyzing ROI for BI tools, all users/employees in the company need to be on the same page regarding key business metrics. Other areas you should look at when evaluating ROI metrics are:
- Access to and centralization of data
- Data integrity
- Time spent handling data
- Adoption of BI tools with end-users
- Speed at which decisions are made
- Bottom-line impact of specific decisions
Ultimately, “implementing a BI tool shouldn’t be so you can trim employees here and there – it’s to make those very employees more productive and focused,” said Farkash.