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Three steps for demonstrating the benefits of business intelligence

Read our expert’s tips and advice on showing the business benefits of business intelligence (BI) and justifying proposed spending on new BI systems and BI applications.

I'm required to justify the proposed spending on our small business intelligence (BI) system through demonstrable, direct cost savings and/or income growth over the next 3-5 years. Any ideas about what benefits of business intelligence (demonstrable, direct, financial, etc.)  I could cover?

So, your boss read On Becoming a Leader, too, huh? Thought so.

But this is actually good practice for you, because if you can accomplish this now, in this role, you’ll be able to do it anywhere. So consider this a great lesson in discipline. There are very rigorous ways to approach this (I’m a consultant, I have to say that), but since you say that your environment is small, go right now and do these three things:

1. If you’re in IT, call someone on the business side you can trust and take her out for coffee. Ask her what’s in the business pipeline. Don’t even talk about BI. Ask her what information she and her colleagues are hungry for, and what information she looks at every day. (If you’re on the business side, you know these answers already and can use them to formulate your approach.)

2. Then, in the interest of time (there’s a more rigorous process for this, but you need to get going), make a list of all the information needs. Go to other friends and colleagues if you have to, but be careful not to take too much time or be too disruptive. The list might include items as disparate as “Year-over-year revenues by franchisee segment”; “Sales forecasts by region and territory”; “What products a given customer has purchased”; or even “Usage duration of online product by high-value customers.”

3. Next, run these items through a scoring matrix that includes higher weights for “saves costs,” “increases revenue by product,” “drives efficiencies” and “streamlines development.” Add other benefits that meet your criteria of “demonstrable, direct, and financial.” You should have a list of prioritized requirements attached to your value drivers. (There’s also a more rigorous process for this, but explaining it here would be crazy!) If you can, enlist your business friend(s) in estimating a hard dollar value for each of the drivers. Then, extrapolate the benefits to other lines of business or user organizations and multiply those values.

Obviously, this is a back-of-the-napkin approach. There are more formal ways of circumscribing BI applications and determining the value proposition of each one. But if you really need to justify BI in a well-scoped environment, the fact that you’ve applied discipline to the value estimation process is often enough to justify getting started. As I told another courageous reader who asked about setting up a BI program: “God bless…”

This was last published in May 2010

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