As companies expand, having a high-level view of the health of the organization becomes more difficult and also more important. This is where effective business intelligence (BI) tools come in, enabling reporting on and analysis of how each department’s initiatives are contributing or detracting from the business’s bottom line using concrete metrics of success, aggregating business data into something actionable. By having each component of the business measured, return on investment can be calculated and future initiatives can be prioritized.
However, if the BI solution is not efficient to use – for instance, if it doesn’t enable a sufficient degree of automation when it comes to gathering data – it can create additional time and expense without a sufficiently demonstrable benefit for the organization. In other words, you need to make sure that the solution that is helping you in the ROI measurement of your business initiatives, does itself, offer a substantial ROI. What does ROI measure? This article will help you understand the key details of ROI and what to look for when evaluating your BI tool.
This is not to say that every benefit of a business intelligence solution can be readily measured in terms of dollar amount. Some of the advantages related to identifying and analyzing market trends are definitely needed when mapping out a company’s next steps, but projected revenue may be difficult to determine at a granular level. However, not having sophisticated software that can compare market trends to dollar amounts will inevitably leave you with only a vague sense of how your roadmap intersects with your bottom line and ROI measurement. And being able to retroactively see the results of what you’ve done and feeding that data into an AI-powered business intelligence solution can give you a more accurate, holistic view of what shape your product and service roadmap should take.
The nature and breadth of the data your business intelligence tool needs to aggregate and analyze will be different depending on your industry and market; so how to measure ROI for the BI solution will be different as well. Knowing your target market is more than crunching numbers, especially if your business model relies on a great deal of face-to-face interaction with your customers, that can’t be easily traced to a dollar amount (yet). But even in largely regional markets, being able to track the historical effects of each business initiative can help take some of the uncertainty out of your business decisions.
Seeing the Big Picture
Being able to calculate ROI for each specific part of your business is important, but seeing how the costs and revenue of each part of the business intersects with the other parts is where business intelligence offers the greatest insight. If you miss seeing areas in which redundant processes and other forms of wasteful spending can be eliminated, or areas where one initiative might be unintentionally undermining another, you could be losing more than just dollars. Potentially, you’re losing revenue from not having an effective business intelligence solution. In other words, the increase in ROI across your organization from having actionable business intelligence at your fingertips has the potential to pay for itself – that’s an ROI that’s easy to measure.