I often ask prospects if they’ve done any estimates of the value that the envisioned BI solution would bring to them. The Microsoft Solution Framework actually recommends partners do this during the planning phase. Alas, the answer is almost always negative. Then I ask what criteria would be used to evaluate if my price (I give fixed value-based prices as I don’t sell time) would yield a good ROI and then there is an awkward pause. Instead, the buyer typically uses a top-down approach for selecting a consultant. The buyer either has some budget constraints and solicits multiple quotes to find the “best” fit. There is nothing wrong with this, of course, given that ROI for BI is notoriously difficult to determine.
Consultancies and advisory firms have some sort of a “seat-of-the-pants” methodology to help the customer come up with ROI if this is deemed important. But you might not have to go through this exercise as research companies has done the math for you. For example, Nucleus Research has estimated that BI delivers 1300% ROI!
“In analyzing Nucleus ROI case studies on analytics, we found the average returns from analytics have been increasing, reaching $13.01 for every dollar spent in 2014 from just $10.66 in 2011.”
Often, the benefits of an effective and insightful BI solution can only be realized after the customer has started using the solution. I’m always delighted when customers report that our solution has paid for itself in the first year or so. For example, an insurance company that has found that customers underreport their risk exposure and justifiably increased premiums. Or, another client that has found that data analytics transformed the organization’s data into a key strategic business asset, empowering employees like never before.
What’s your ROI for BI?