Many business intelligence (BI) programs calculate the financial ROI, and this calculation is being made with increasing frequency. The very act of considering how BI will improve the bottom line of a company through increasing income and/or reducing expenses will help to put BI on the path to success. This success could be the actual measured financial ROI, or it could just come about as a by-product of the initial focus on ROI. Sometimes, well-meaning programs will use ROI calculations to justify a program; however, the measurement of the actual ROI can be a daunting experience, especially if the calculation was entered into lightly.

The difficulty arises because BI seldom provides a first-order (i.e., easy to calculate) ROI. Most BI programs do not simply sell subscriptions to customers and thus generate the income to offset the expenses involved in the build activities. Instead, BI usually triggers a decision that enables an activity that triggers another activity that eventually leads to a sale or an expense reduction. For example, by examining retail sales patterns in the Midwest, it is determined that bread is purchased in 60 percent of the cases in which butter is purchased. In response to this finding, a retail outlet decides to place bread and butter at opposite ends of the store to create more product impressions. Average ticket, overall sales and profit increase over the next few months. We learn that those who purchase the bread and butter have slightly higher measures.

Register or login for access to this item and much more

All Information Management content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access