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How to Improve Business Intelligence Software ROI

IT loves to blame vendors when business intelligence projects fail to deliver on lofty goals, but what factors are really to blame?
Posted November 1, 2010
By

Jeff Vance

Jeff Vance


(Page 1 of 2)

Business Intelligence (BI) software promises to deliver fast ROI and an array of corporate insights, but the promises often fall short of the reality. IT loves to blame vendors, but how many projects failed because they were underfunded, abandoned halfway through the process or ignored by the rest of the organization?

“One of the problems is that BI comes in a lot of different forms and shapes. Users scratch their heads and ask, ‘what the heck is it, exactly?’” said Anandan Jayaraman (A.J.), Chief Product and Marketing Officer for Connectiva Systems.

Connectiva Systems, a provider of subscriber data monetization solutions, believes that one of the main obstacles to BI ROI is that people look at it backwards. The typical BI project launches when someone within the organization realizes that they have a ton of valuable data, but it’s lost in a sea of other information in data warehousing systems.

The next logical step, then, is to unlock that data, right?

Not according to Jayaraman. “It’s a mistake to start with the data first. The first question to ask before any project, not just a BI one, is: what outcome do you want?”

This is not uncommon advice, but few seem to be following it. Jayaraman gave an example of a broadband promotion that failed because outcomes were not clearly defined.

A Canadian telecom company wanting to boost its new subscriber numbers launched a marketing campaign that offered new users 60 months of free service. As the campaign progressed, the company found that large numbers of new subscribers were canceling during the free trial.

The free trial hook had an outcome that was opposite of what the company wanted. Instead of luring in new customers who would become loyal, long-term ones, they attracted a slew of broadband mooches who bailed before they’d paid a single penny.

As the telecom company drilled down into demographic details, they figured out where they had gone wrong. They had assumed that one particular demographic segment would be swayed by 60 days of free broadband, so they marketed heavily in their direction.

That segment turned out to be the campaign’s Achilles’ heel. So, who were these people jumping ship on day 59? College students. Cash-strapped students love getting things for free and would trial hop indefinitely if they could.

With this information in hand, the telecom company shifted gears, stopped marketing the promotion to students and turned their numbers around.

“Too many companies believe that all they have to do is get the customer to sign up,” Jayaraman said. “If that’s all you want, often that is all you will get. A better approach would be to figure out how to convert customer-related data and the insights you clean from that data into cash.

“Once you know what appeals to your customers, what they respond to and what drives them away, you can turn that information into marketing campaigns, cross-selling strategies and up-selling offers – all in a way that has real value for both you and your customers.”

Most companies aren’t even measuring BI ROI

False assumptions have doomed many a project, but they can also prevent successes from being even more so. To know that you are achieving ROI, you have to measure it, obviously. But according to David White, Senior Research Analyst with Aberdeen Group’s BI Practice, “Most companies aren’t even calculating return. They’re just assuming they have one.”

Aberdeen Group studies the practices of BI adopters and places them into three categories: best in class, middle of the pack, and laggards. As you would expect, best-in-class adopters are much better at delivering BI projects on time and on budget.

One of the key behaviors they exhibit is that they take the time to build cost projections into the deployment process and develop early warning signals for when costs threaten to spiral out of control.

Conversely, laggard organizations fail to set concrete budgets, establish clear goals and, most importantly, fail to get the buy-in from CEOs for the projects.

Another barrier to the kind of high ROI that vendors hype and adopters hope for is lack of coordination across the organization. If one part of the organization has a solid BI plan in place, it would make sense to repurpose that plan for the rest of the organization. Many intend to do just that, but few actually follow through.

Worse, this lack of organizational coordination can mean paying for the same thing over and over again. One of my sources, who preferred not to be quoted on this particular point, found examples of companies paying for software licenses that they already had on the shelves.

The BI buyers simply didn’t know what was available to them within their own companies, so they bought the same things over and over again.

Turner Broadcasting saves time and money by leveraging what they already own

Turner Broadcasting avoided falling into the buy-it-twice trap simply because an executive, before buying a new BI solution, paused and thought, “you know what, I bet we already have something in place.”


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Tags: business intelligence, BI software, business intelligence software, business analytics, business analytics software


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