IDC Study: ROI for Business Analytics
There is a growing concern among the companies now considering building or buying business analytics that some evidence of business benefit exist before investment commitments be made.
According to the just-released findings of IDC’s study, “The Financial Impact of Business Analytics,” analytics projects positively impact an organization’s bottom line. Investments in analytics are providing enormous benefits to companies in a wide range of industries and geographies.
- Analytics projects yield 431 percent average ROI. Organizations that have successfully implemented and utilized analytic applications have realized returns ranging from 17 percent to more than 2,000 percent with a median ROI of 112 percent.
- Business analytics implementations generated an average five year ROI of 317 percent. More than half (63 percent) of those studied had a payback period of less than one year.
- The best results are achieved when analytics goes hand in hand with business process change. Each case had a strong business process focus, in one of these three areas: 1) Operations/production analytics (related to the production or delivery of a product or service) showed the highest return with a median ROI of 277 percent; 2) Financial/business performance management analytics had a median ROI of 139 percent; 3) Customer relationship management analytics had a median ROI of 55 percent.
“Buy” projects (implementing a packaged analytic application) yielded a median ROI of 140 percent, while “Build” projects (custom development) yielded a median ROI of 104 percent. The approach adopted depends on the problem addressed, the level of skill within the organization, and the availability of packaged solutions.
IDC pioneered this research with its 1996 groundbreaking study, “The Financial Impact of Data Warehousing.” Our new study investigated the return on investment realized by organizations that have successfully implemented and utilized analytic applications. It included 44 in-person interviews in North America and Europe with IS managers, business managers, department managers, and system users spanning a range of industries. For more information go to http://www.idc.com/en_US/promoPage.jhtml?promoID=50.