Build a Case for BI with ROI Figures

Editor's Notes

• #3: Dave - This topic is relevant today, as it is always
• #4: We’re going to keep the agenda today pretty simple, After establishing that the need for BI and analytics is growing and is more important today than it has ever been I’ll present four paradigms for how to think about positioning BI and analytics as a driver of business value. We’ll also look at a few case studies. And we’ll wrap up with some specific and actionable suggestions for building a business case in your organization. The intent is to help you advance the usage and investment in BI and analytics in your companies
• #5: Touch on three pillars here We don’t have software to sell, but we’ve helped hundreds of companies get more value out of their data and analytics tools
• #6: Agenda says – The Growing Need for BI
• #7: Lots of data, doesn’t guarantee digital transformation Forbes, Gartner, Forrester Adv cap – “availability of compute resources” “You can snap your fingers and spin up a super powerful cloud computing resource, as big and powerful as you eat”
• #8: And yet there’s a challenge internal to most organizations – data and analytics can be a hard sell It’s easy to speak to the inherent business benefits But the benefits of a usage of data and analytics are a step or two removed from the actual business benefit. But, just because something is a good idea doesn’t mean it’ll be profitable for the company or beneficial to an organization’s members or constituents Need to move beyond ideas being subjectively good, to being objectively good. And that comes from anticipating the impact of the solution by calculating the financial benefit
• #9: In order to combat the difficulty of tying business benefits to analytics initiatives being able to build – and speak to – the business case is critical
• #10: Most healthy organizations are willing to invest in initiatives that will bring a positive ROI. This includes businesses of all sizes, non-profits, education institutions and local, and all levels of government organizations There’s an effective way to win support, and plenty of ineffective ways Would your boss/leader/decision maker rather have you… Unless we can talk in the language of the decision makers we’re not going to gain buy-in or build a coalition of support to build the data culture that we expect to bring so much improvement to our organizations Who is interested in the business value of BI: CFO/Finance Upper management, who make spending decisions Procurement PMO/Portfolio boards
• #11: BI has potential applications all over the enterprise The question is whether we can directly tie business benefits, or a financial impact, to the effort Too often we think about BI as a tactical solution, so “Mary in Marketing needs to see a report on how the most recent email campaign performed across customer segments.” Or, ”Frank in Finance needs to see a projection on how a new product will impact sales in the next quarter.” An ROI on these requests doesn’t exist. BI can be strategic when organizations think about leveraging it to improve the business, not just as a means to answer tactical questions. The possibilities are endless because what we’re really trying to do here is help the organization become smarter by relying on data – at least partially – to make decisions.
• #12: OK, so there are numerous good ideas across the organization. What does it look like to begin to put these into financial terms? Let’s look at a few examples.
• #13: Let’s look at a couple paradigms
• #14: BI reduces costs in IT is one of the most approachable places to start quantifying the financial return of data and analytics projects Reducing hosting fees by shutting down servers not needed outside of business hours or by Considering a reserved pricing model instead of on-demand for workloads that run full-time Consolidate BI tools Automate data aggregation and report sharing – rely on tools to do this instead of manual effort moving to cloud Certify reports to eliminate effort of validating data Save time with improved software support for quicker responses, faster fixes Reducing costs is a simple way to measure the ROI since costs are known and reducing them is a benefit to the organization. IT is often a cost center
• #15: Trendline provides end-to-end email marketing solutions for Fortune 1000 companies. They’re based in Austin, TX and owned by private equity. They had an old system that was holding them back and costing them a frustratingly large amount annually.
• #16: Moving from IT to different business units, reducing manual effort is a way to reduce costs… Eliminating the effort of analysts to search for, combine, rationalize data in multiple spreadsheets and send out those spreadsheets via email could save countless hours. Not to mention the effort in validating data. Modern BI tools allow sharing and collaboration within the tool itself. Even a tool, which is not a new concept, such as a parameterized dashboard, to consolidate similar data in in one place, reduces time chasing down answers to follow-up questions. Automate decisions based on metric heuristics, or a rule of thumb. For ex., a variance over a pre-determined acceptable amount on a supplier’s invoices may trigger additional scrutiny for that vendor. All this time saved means that employees will be able to focus on higher value tasks… and, as a side benefit, increase their job sat in the process.
• #17: A biotech firm had come to rely on a bloated Excel based solution that had evolved during a period of fast growth but that required significant manual intervention each week. This meant executives were working with outdated information. Good to get information to users, especially if those users are executives, but the financial case is tied to the reduction in effort. $25k weekly?
• #18: Moving beyond some of the tactical cost savings – that, by definition, will be limited in how much cost savings they bring, broader initiatives that affect the organization’s balance sheet hold tons of promise for improvement through analytics Good places to start are use cases with highest potential Such as those that relate to Customer or Product Maybe optimizing most organization’s biggest expenses, such as inventory, labor or supply chain There are opportunities in Customer service Get customer lifetime value scores into the hands of representatives ideally encourages upsell opportunities Market basket analysis or next best product To determine which products to place in physical proximity to each other or which products are commonly bundled together Marketing optimization 360 view of customer allows for more effective marketing Location analysis Determine best location to open new store or branch locations Or maybe to determine which branches are redundant
• #19: We implemented a geo spatial mapping solution for Citi which is a large bank and financial services firm we all probably recognize. They wanted to have a view of their locations relative to their customers to gain an understanding of how far their customers needed to travel to get to the nearest branch. The solution also, of course, provided a view of which areas were underserved; in other words, where some potential areas are for expansion. Through this solution they could also map their competitors branches to see, for example, how many other banks customers had to pass by in order to get to a Citi location. One of the features of the solution that brought a “wow factor” was the ability to leverage street view to see things like parking capacity, drive through access and the presentation of the store front to passers by of both their branches and their competitors.
• #20: For a logistics prover based in the midwest United States, we built a data warehouse that brought together data from multiple acquisitions. The efficiency of their truck loads as well as their routes critical to driving (pardon the pun) profit. Having all the data consolidated allowed them to optimize across the entire company and opened up new opportunities to consolidate loads and minimize milage. This represented a significant cost savings for the company.
• #21: Have you considered whether your data or analytics tools would have value outside your organization? Possibly to partners, organizations in ancillary markets or even competitors? Other organizations are monetizing this asset there’s many ways to profit from data – providing raw data, an analytics tool or fixed reports Takes the mentality that data is an actual asset – every bit as much as physical inventory is or as the collective knowledge of employees is This assumes you’ve reached a certain level of maturity, quality and sophistication with your data and tools – something we’re all working towards generally. Retailers have been doing this for years by sharing sales data to their vendors and getting in return the benefit of better sales strategies or product assortments
• #22: EDUCAUSE is an organization that serves the higher education market, so colleges and universities One of their services gives member organizations insights into what other institutions have done with respect to many aspects of IT, such as spend, FTE, organizational structure, compensation to inform IT strategic planning and build the case for new initiatives. They are also able to monitor usage of the tool which gives them perspective on what benefits their members are taking advantage of.
• #24: IDENTIFY YOUR ROI ASSUMPTIONS Vendor support Mitigate by having their participation in steering committee Workforce turnover Add training to on-boarding Operationalization of insights Have upper management lead by example Enablement for impacted staff Employ change management techniques WATCH OUT FOR COMMON ROI CALCULATION PROBLEMS ROI calculations can be made to look too rosy with unrealistic expectations about benefits Project benefits may be attributable to more than one improvement Take care to prevent double counting Being unrealistic about payback time It may take years
• #25: 1) Can quantify their impact on the business: Every analytic project should be able to clearly outline how they are helping improve the P&L in some way.  2) Have clearly defined success before project kickoff: No fluffy strategies. Crisp, clear definitions are needed. Without this, success is next to impossible.  4) Are accessible and usable by a “casual data consumer”: The business needs to be able to use your amazing solution! Keep it simple. Less is more.  5) Internally market success stories: When you start landing wins, let the business know about them. Success breeds success and credibility. When these things happen analytics projects can meet lofty expectations, will make project sponsors look good, and will deliver tangible P&L results.
• #26: Though they are important, they are very difficult to quantify financially. Instead, intangible benefits should be fully explained within the business case and where possible details given of any quantification or measurement. I’m not saying these things can ‘t be measured customer satisfaction can be measured with a customer poll/feedback mechanism, surveys user/staff satisfaction can be measured with tool adoption rate, surveys staff with access to data can be measured with tool adoption rate But, difficult to tie to financial impact
• #27: No project has an automatic right to approval and a budget. Demonstrating positive ROI and high NPV / IRR with a quick payback will get your proposal noticed! No project has an automatic right to approval and a budget. Decisions to invest in BI and analytics projects must compete with the needs and proposals from all other business areas and IT. If anyone needs help filling it out, reach out for a discussion
• #28: No project has an automatic right to approval and a budget. Decisions to invest in BI and analytics projects must compete with the needs and proposals from all other business areas and IT.