Measuring the Success of Business Intelligence

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Like any investment, a business intelligence implementation project needs to be justified and once taken on, the impact will need to be monitored and measured.  The politically astute will use the BI metrics to make a case (either for or against the project) and broadcast it to the powers that be.  Others will use the metrics and measurements to pinpoint areas of success or areas for improvement.   For whatever purpose, you will not be able to report on the success of your business intelligence project if you do not collect and analyze the necessary data.

There are lots of measures of business intelligence success.  Dr. James Thomann in his excellent webinar titled “Determining the Success of Your BI Initiative” suggests there are three types of measures of BI success:  political, technical, and business-level.  The political metrics are those that show that the usage of the application is healthy with measures like number of users and number of requests for enhancements.  The technical metrics are those that show how well the application itself is performing measured in response time, down time, and the like.  These metrics are relatively easy to collect and use.  But they do not tell the whole story.

In my opinion, the lions of BI measures of success are those that measure the business success of the implementation.  These measures are generally some form of ROI.  In order to calculate ROI, you’ll need to isolate the revenue and expense impact of the project.  Isolating the expenses is fairly straightforward, but isolating the revenues attributable to your business intelligence project will be much more difficult.  Since BI is part of the infrastructure, contribution to revenue and even to indirect expenses will be imprecise estimates at best.  But reasoned, consistent allocations of these streams can give a good idea of the contribution of BI to the bottom line.

Nearly every BI primer expresses the need to align your strategic and tactical goals for your business intelligence system with the strategic and tactical goals set forth for your company.  This step is done before any other step in the implementation process—before requirements gathering, before product comparisons, and certainly before you purchase BI software.  It is at this time that you should be establishing your measures of success.

For instance, if your purposes in implementing business intelligence are to find economies of scale to save 17% of cost of goods sold, increase sales by 20%, and reduce IT headcount by 5% over the next two years, you’ll need to attribute some portion of those savings and increased revenue to the BI project.  Consider all other contributors to the desired results, like increased marketing budget, additional sales headcount, and a new automated IT support system and allocate percentages to each in the plan.  Later, allocate the same percentage when looking at actual data.  This won’t be an accurate measure of the exact dollars attributable to the BI implementation, but it is a reasoned and consistent way to look at the actual impact compared to what you had in mind in the beginning of the project.  The idea is to establish measures aligned with your business goals in the beginning of the project so you can collect the data along the way.

In summary, measure, measure, measure, right from the beginning.  Establish a base and some reasonable allocations before your BI system goes live.  BI can help you pinpoint problems and save money.  But equally if not more important, BI can enable you to do things you couldn’t do before.  It can help you make smart decisions about investment and revenue opportunities.  And these decisions can result in a significant increase to your bottom line.  So be sure to measure the full business impact of your BI implementation.  Then tell your boss, tell your execs, tell the world.  And get a nice promotion.

You can find Jim Thomann’s webinar, “Determining the Success of Your BI Initiative”, here.  Don’t be put off by the 2007 date—this webinar is just as relevant today as it was then.

BIO for Microsoft Dynamics is a robust expandable business intelligence solution for Microsoft Dynamics that provides all of the functionality you’ll need to run your business.  Yet it is affordable and easy to use.

By Sandi Richards Forman of BIO Analytics Corp., a Business Intelligence (BI) Microsoft Dynamics ISV

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