King ROI and Lady BI
People often talk big when they talk about BI. Exaggerations go along with the hype but they remain what they are: exaggerated. Today, we are going to talk back – about the ROI that BI can deliver.
Last week, a group of colleagues and I discussed what return on investment (ROI) people can expect from Business Intelligence (BI). Our conclusion was a multi-level scheme. Later, I did a little research on the Internet to see what other people had to day. I was shocked at what I read and my brain just shut down. Here are my modest, opposing views; the wild party is next door.
- Thinking instead of tinkering
Financial controllers often have to go to great lengths to turn their numbers into reports. Sometimes, they spend 80 % of their workday doing just that. With the help of reporting and analysis software (a.k.a. BI suite), financial controllers can reverse that and have more time to think because creating reports becomes simpler. Even if they can just scream “Stop!” every once and a while when a decision has to be made because something doesn’t fit with the numbers, that already counts as an initial ROI because less time spent tinkering means lower costs. After all, no one hires a financial controller as a graphic designer.
- Eliminating uncertainty
Uncertainty paralyzes. Almost everyone in a company wants to have at least a general idea of how the business is doing. When employees don’t even know that, they speculate about it – on company time. Companies can save this wasted time by filling the information gap with simple reports on the status quo. I generously estimate that unproductive pondering amounts to roughly 5 % to 10 % of personnel costs for approximately 80 % of employees. That would be the ROI on this level. But I don’t yet consider that to be “BI for the masses”. After all, if bosses inform their employees and how they do it are organizational issues.
- Knowing what not to do
Yes, that is the idea: BI should show limits and opportunities. People who know their actuals well also know the limits. In this case, the computer can play out its full superiority, and we can rack our brains over charts full of integrity, consistent formatting, real-time reports, mobile formats, filter algorithms, automated workflows, smooth planning processes, clever variance resolution and so on and take action without running out of work or having to sacrifice progress or respectability. But we didn’t really need a new name for it. “Business data analysis” or “reporting” would have been – and still are – good enough. Oh, yes…and the ROI? That’s hard to measure in numbers but is as irrelevant as the costs for buying a windshield and rear-view mirror for your car.
- Knowing what to do
That is the promise of salvation given by BI, and where BI has the chance to show off what it really can do. You already have the data. Now you just need to analyze it for hints on the most promising customer segmentation based on a combination of cross-selling potential and the hidden correlations among weather, preferred tie pattern, age group, and purchase decision in order to slaughter your competition. Wrong. We have not subdued the world. People and companies are not deterministic buying robots. Entrepreneurial success is the success of man and not of machines. First people decide and then they take action. This produces data that they analyze. Then they draw conclusions and make new decisions. Data provides clues, pointers, and suspicions. But it does not capture reality as a whole. But we have to deal with reality as a whole. A BI system is thus a tool that should lie nicely in your hand. You will use it to examine questions of a magnitude that makes the sum of a BI investment look puny in contrast. We could just as easily ask what ROI a hammer has when you are building a house.
- The needle in the haystack
Although it is not impossible, it is rare that data analysis leads you to an amazing idea that is so obvious that there is data on it – but we are the first to see that. Mid-range outliers such as an out-of-control cost center, accounting errors, or structural but unnecessary cost differences in different business units are more common. In this case, the ROI is not systematic and, therefore, can’t be budgeted for – but it can be substantial.
At any rate, those were the general thoughts from our small group. We see that it works even without myths. That’s no wonder, because Lady BI’s maiden name is: financial controlling, reporting, and data analysis.