Various factors contribute to a decline in return on investment (ROI) on business intelligence (BI) projects, as more investments are being made by stakeholders.
Investments are easy to measure; however, the ways in which BI returns are quantified differ from company to company, with each company having compelling reasons why their method is better than the other. In fact, quantifying ROI on a BI investment requires time to determine.
What are some of the factors that drive BI project costs to be high, yet push returns beyond reachable proportions?
Changing business cases or requirements:
Very few companies initiate their BI projects from a solid and clear business case. Often, a business case is defined as a set of reporting requirements, which more often than not are incomplete or only represent the current view of the company's reporting and BI needs. Reporting requirements will always mutate at the same pace as operation wavelength, and as it becomes clearer as to what more could be done with BI in the business.
Often, business requirements contain clauses or items that are broader in translation and do not suggest what is to be done. This would include statements like 'increase knowledge to archive foresight to lead' and similar sentiments.
Change is inevitable and welcome in BI projects, but requires close monitoring and strict change control processes and procedures to ensure it does not unnecessarily escalate the cost and make ROI unachievable.
Loosely defined requirements:
Most BI consultants will concur that all clients prefer loosely defined requirements coupled with fixed cost BI projects. This is often pushed under the 'agility' umbrella, because it works well for clients as they get the benefits to try different requirements for the price of one.
The success of the project is threatened due to blurry end goals. Agility does not bring benefits without risks - risks that should be managed accordingly.
Immeasurable success factors:
Immeasurable success factors are the most difficult for BI projects to pin down. Some believe success to be completing a project within budget and sticking to the original schedule. Although this might suffice for other projects, BI projects often have success factors that cannot be accurately quantified as a set of variables within a formula. These might include factors like 1) gain improved insight into economic trends; or 2) boost operational effectiveness and efficiencies. A mix of measurable success factors for short-term goals is usually advocated as a balancing act.
Resistance to change:
It is hard to push through new ideas and technologies unless there are clear and direct benefits set out for the target audience. The benefits vary depending on the audience in question. Top management would mostly likely be convinced by the cost reduction notion, while mid-level managers might be enticed through operational efficiency-related gains.
Immeasurable success factors are the most difficult for BI projects to pin down.
Various strategies have been published to sweeten the change for BI projects, and should be used to ensure resistance to change does not become a costly component of the BI implementation project.
Budgetary constraints:
When companies reach their cruising altitude, within an oversaturated market, operational efficiency becomes the only promising alternative to increase revenue. Companies typically start looking for cost-cutting opportunities while maximising returns from their existing client base.
Likewise, cost and price negotiations for a BI project start getting convoluted. This is also propelled by the nature of BI project benefits that cannot be easily attributed to a revenue figure comparison to cost. Project cost requires close monitoring through tight scope controls and strict change management. Budgetary constraints will always be there.
Unusual collaboration with business users:
BI projects present new challenges to companies of all magnitudes and industries in terms of required collaboration with users. Typical IT projects are transparent to the business users, such as a project to change the storage server or technology which does not require any business user involvement.
User collaboration in delivering a BI system is critical to the success of such an implementation. Without contribution from business users who stand to benefit from the better understanding of internal and external environments through the interpretation and exploitation of information delivered by BI projects, the deliverables will be of limited value.
The process of soliciting valuable input from business users warrants training about the complexity of a typical BI system adjacent to its benefits to them.
Surprising reality:
It is rare that a testing phase will go without surprises. Either the reality does not match the user expectations and/or the poor quality of the data is rudely exposed. As usual, someone has to take the fall and there is nobody better suited than the one delivering the reality.
BI and IT personnel, as well as consultants, should expect no less, as the reality often discredits or undermines employees who have built their reputation in the company over a long time.
There are many other factors that affect project return, such as technology disruptions, demand for self-service, more sophisticated users, legislations and regulations, demand for agility and BI to be operationally entrenched.
The bottom line, however, is that these could potentially increase the scope of the project, which in turn could demand more time than originally planned, and time is money! More may be spent than what was planned, so make allowances for budget variations upfront.
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