ROI on Business Analytics – Now we have Numbers
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A recent study by the Nucleus Research says that Analytics pays back $10.66 for every dollar spent. The study is based on data from 60 case studies and relates to investments in Business Intelligence, Performance Management and Predictive Analytics. Not surprising are the areas where they saw ROI increase - revenue, gross margin and expenses.
Enterprises have used various metrics to track the effectiveness of Business Analytics. Cycle Time to Information (CTI) is a metric that measures the elapsed time between the occurrence of a significant event and the time this information is available to a decision maker who has to act on that information. Cycle Time to Action (CTA) is variation of this metric which measures the elapsed time to act on information after an event occurs. These metrics are useful to track the efficiency of a Business Analytics infrastructure and the elimination of manual processes to increase productivity. As the volume of data increases in an enterprise, automation in data management will become more and more complex in the future.
An ROI analysis is a very useful tool for business managers who are trying to allocate scarce resources to get the biggest bang for the buck. Now they have something to talk to CFO.Yet, Business Analytics adoption in enterprises has not reached its potential. A IBM/MIT study in 2010 cited that the most common barrier to implementing an analytics solution are lack of understanding of how to use analytics to improve the business. Time spent on analytics competes with other priorities for business users.
References
1. Research Note by Nuclear Research (November 2011)
2. Climbing the Ladders of Business Intelligence
3. Biggest barriers to business analytics adoption: People
Further Reading
1) In Support of Business Intelligence for a white paper on how BI CoE for Suppport can improve the effectiveness of a BI Implementation.
2) BI CoE smart ROI Calculator to estimate the Return on Investment from a BI CoE Implementation and identify the difference between BI as a tool implementation and COE as a solution to get the highest productivity, cost savings and best decision-making.