So often when companies are considering a business intelligence project or software purchase, a question arises that seems to stump everyone involved.
“Where is the ROI in this project?”
This question has stopped many a business intelligence project in its tracks. Maybe it’s asked by the CFO or CEO. Maybe it’s brought up in one of the meetings with a vendor or consultant presenting a solution. The sad truth is if you can not answer this question with hard numbers in specific areas, the ROI probably isn’t there.
I.R.A.C.I.S. is a simple acronym that can be used to quantify a business intelligence project’s worth to a company. It stands for the following:
Increase Revenue – How will this application and functionality drive more sales to new or existing customers, shorten the sales cycle, and/or bring down the cost of sales?
Avoid Costs – By far the area most focused on in BI project justifications. How will this application help us improve efficiency, put more information in the hands of our business people and eliminate wasteful processes?
Improve Service – Will this application affect our client base noticeably? Will we be able to provide more timely and valuable information to our customers, prospects, and suppliers?
Many times in a business intelligence effort, there are outcomes that are deemed desirable. Things like ad-hoc report generation, more informed operations staff, and less lag time in financial reporting are nice. But they will not justify the investment in a business intelligence solution from a quality software vendor without direct and secondary benefits quantified in the there areas mentioned above.
Let’s face it, business intelligence solutions are not cheap. There are many scalable solutions on the market today that range from traditional software implementations, to SaaS (Software as a Service), and even open source solutions. Large companies have long embraced the benefits of business intelligence and now with these diverse offerings the small and mid sized companies are also taking advantage. However, any business intelligence project is only as good as the planning, effort, and data that go into whatever software platform you are using. Hence another phrase often heard in many BI projects, “garbage in, garbage out.”
By using the I.R.A.C.I.S. model to quantify the value of the solution to the company, you provide everyone with a clear roadmap to what is deemed a successful project. From the executive sponsor at the company, to the vendor you are working with, there is no ambiguity as to what is expected as a final outcome. I would challenge any company that is considering a business intelligence project of some sort, that if you can’t find a solution that addresses at least one of the three areas above, if not all three, that the project is probably not worth doing at all. And if the solution or software product is incapable of scaling to address all three areas in the long run, then it probably isn’t the best product for you. This may seem like harsh criteria, …