Not your average ROI

Before making investments in any IT solution, most companies will perform calculations to measure the ROI that may be achieved. In the area of business intelligence (BI) and enterprise performance management (EPM) solutions, some of the benefits are easy to identify, quantify and document. Some of the more common ROI calculations will focus on:

• Employee productivity: Employees will spend less time validating, questioning and searching for data and more time analyzing and making effective use of information.
• Inventory management: The cost of inventory can be reduced as a result of improved matching of supply with demand.
• Sales and marketing effectiveness: Increased sales profitability based on more effective price and discount setting, marketing offers and redemption measurement and individual item profitability analysis.

By placing a value on these anticipated areas of improvement and projecting them out over a number of years, companies will usually generate a tremendous financial return on their BI investment. When these systems are properly implemented, supported and maintained, the financial returns will continue far beyond the initial ROI projections. For the majority of companies I have worked with, these documented tangible returns are more than enough to gain support to develop these systems and have these projects recognized as a huge success.

In several situations, I have found it helpful to look beyond the common elements of calculating potential returns.

Hidden values

What I have observed in many of the BI projects DataSense has supported is that many potential benefits are not initially obvious to clients or it may be difficult to quantify how they can be related to the bottom line. Evaluating and uncovering some of these hidden values may be necessary if you need to gain needed support from management and an expanded user community to help drive and fund initial projects; help secure additional funding and support for extending capabilities of existing systems; promote career development and advanced opportunities for responsible team members; or enhance the company reputation with employees, clients, vendors and suppliers.

Let me share with you some examples of what I am talking about.

Difficult to quantify
There are a number of indirect benefits that are difficult to quantify. For example:

• More productive employees: A more productive employee will be able to perform additional activities. Determining what those employees will do may vary based on your business and individual employee responsibilities; however, in many cases new and unanticipated results will occur.
• Increased employee satisfaction: Providing easier access to more reliable information reduces stress and frustration for most employees. Ease of access (often remote access) to information can significantly improve ‘quality of life’ surrounding work related issues.
• Improved customer satisfaction and retention: A good BI implementation with extranet capabilities can often provide improved and even customizable online statements, an improved merchandise return process, improved dispute resolution, improved product selection, availability, pricing and discounting and faster order fulfillment.
• Improved external company image: Supplying value added reporting solutions to suppliers and vendors can increase the competitive advantage your company has over the competition.
• Trend response: By rapidly identifying emerging trends an organization is better positioned to exploit them in the marketplace.
• Reporting compliance: A company can avoid costly audits and fines when it is consistently able to satisfy internal and governmental compliance requirements for financial reporting.

If you take time to identify and quantify the value of these indirect benefits, you will expand the recognized success of your project and recognized ROI.

Priceless intangibles

In addition to the direct and indirect returns mentioned above I have experienced some intangible returns that are priceless. These benefits often reach far beyond the walls of an organization and affect many people in invaluable ways. Some examples include:

• A hospital that now allows doctors to quickly and accurately access patient treatment history and relevant research data can better manage patient care, improve research quality and enhance patient treatment outcomes.
• A non-profit organization that is able to more efficiently and effectively raise funds can provide greater assistance to deserving families and individuals.
• A retail chain in a very competitive industry has been able to better manage inventory, provide superior customer service and improve overall marketing effectiveness. This company was able to take market share away from its competition and did not layoff employees during difficult economic times.
• A pharmaceutical company can bring a drug to market a few months sooner because it was able to better manage reporting during all the phases of its clinical trial data.
• A hospital that improved staffing and scheduling efficiency can now provide faster treatment in ER and critical service areas, potentially saving lives.

Unexpected surprises

I once implemented a system to help a company track and analyze the shopping behavior of customers participating in the store’s loyalty program. Within weeks of going live, a sales analysts looking at some of the behavior of the most frequent shoppers uncovered a case of employee fraud that previously went undetected.

Not all BI systems can directly or indirectly save a life or identify criminal activity, but the majority of well-implemented systems will produce benefits and value far beyond the obvious ones typically recognized.

No BI project should begin without exploring the potential return it can contribute to the bottom line, but recognizing that there will be numerous, intangible, hard to predict or outright unexpected benefits can help justify the acquisition or expansion of a BI solution and ultimately give your business an edge over its competitors.

I would be interested in hearing your stories about the intangible or unexpected benefits companies have achieved as a result of BI implementations. If you would like to share your experiences, please send them to me at: garyb@datasensesolutions.com and I will post them on our website.