Q

Help with justification of BI investments

William McKnight explains how to calculate ROI to justify a BI investment.

Can you recommend authoritative sources (books, articles, web sites, etc.) of metrics and methods for calculating the ROI of large, multi-vendor, long-term BI projects? I am developing a value proposition for my executive leadership, and must justify it with lavish ROI.
We're seeing more and more requirement for ROI justification of business intelligence investments. I believe this to be part of a response to the unfocused BI excess spending of the past as well as a realization that, if done correctly, BI CAN drive ROI to a business.

You can download my ROI spreadsheet here. Hopefully it's self-explanatory.

The hard part is framing from where the returns will come and getting agreement to the measurement process. This must be done by establishing a firm linkage between the BI program and business returns. It's not easy, but doing this will help focus the program where it needs to be. This is not just a financial exercise. It really needs to be surrounded by business buy-in from multiple levels.

I have an article on the subject that you might find useful. Keep in mind most of what you need may come from business/ROI resources rather than BI-specific resources so be open to those as well. This is especially true early on when you're learning the lingo and structure of ROI. Your company may have a format you need to use as well.

The places where returns can be found with BI are many. They are very industry- and company-specific. Common returns come from an increase in sales (via cross-sell, up-sell, new product introductions, and timely promotions) and more efficient use of marketing or supply chain funds.

You can also take my BI ROI class in San Diego. Get more information here.

Keep it as simple as possible. It need not be lavish to be done well. All the best.
This was first published in October 2003
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