How to Evaluate Business Intelligence Software Costs/ROI

Typically, in the early stages of a BI deployment, companies measure value based on IT-centric, quantifiable criteria such as improved operational efficiencies and minimized total cost of ownership. But as more BI deployments mature and companies start focusing on optimizing business processes, the metrics have changed and are more difficult to interpret.

Business intelligence ROI is increasingly seen in performance management frameworks, according to Gartner. That means using BI to define new sets of performance metrics and making more decisions through fact-based analysis. It’s not just about getting the right information to the right people at the right time, but also verifying that the information is being used to make better decisions.¹⁷

Gartner recommends that companies measure user satisfaction based on a set of pre-defined BI objectives, 18 to 24 months after deployment. This can be done through a simple survey. Zero in on user satisfaction with the relevancy, accuracy, consistency, and timeliness of the data being used to make decisions to determine whether they are getting the intelligence necessary to manage the business.

Another ROI tactic is to consider the risks of not using BI. It is expensive to secure, store, and archive the incredible amounts of data an enterprise generates. If it isn’t used to improve business processes, data can be an expensive liability.¹⁸

Before implementing a BI solution, an organization typically develops some key organizational objectives and key performance indicators that the software can help achieve. Measuring BI performance on completing these goals may be rigid in and of itself, but using it as an indicator of BI performance per se can be useful.

Utilization can also be a good measure of return, if it can be correctly quantified. A common problem with this type of parameter is that it is sometimes quantified too late in the measurement process to be able to make any constructive changes. By then, interest has been lost.¹⁹

Measuring ROI should start by going back to your overall BI strategy: Why are you doing what you are doing? Whom are you trying to influence, and what do you want them to do? Goals of the BI project have to be defined in advance to create a foundation on which to measure and calculate ROI.

Some ROI determining factors include cost savings in areas such as hardware/software, licensing, and maintenance fees; time savings through enhanced employee productivity and better decision-making; and process automation, including the time saved on report and analytics creation. These are quantifiable ways of identifying the value of BI and the ROI attained through BI adoption.

Other factors are more difficult to gauge in direct relation to BI, such as enhanced productivity, information visibility, and increased profitability. While quantitative aspects may be easy enough to define, qualitative factors that make BI beneficial to organizations can often be elusive. Even ROI calculations developed by industry experts and software providers tend to lack the hard evidence to prove the value of BI conclusively beyond time savings and general process automation.²⁰

Valuing BI is not an exact science and often comes down to mindset. At one level, you can compare it to a college education: it may be expensive and time-consuming, but many less-tangible benefits come later and prove invaluable over time.²¹