This is the first question that a manager usually asks himself when considering an investment in Business Intelligence: «But is a Business Intelligence tool really profitable? And if so, how long will it take to recoup the investment? »
Currently, most companies handle the concept of return on their investments. The concept of return comes by quantifying the benefits that a certain investment will entail and what is the quality of that investment based on the benefits generated by it.
With Business Intelligence systems we obtain benefits both in the generation of new opportunities, better decision making and a reduction in costs.
Information associated costs
First of all, we must be aware of the costs we incur when we do not have a Business Intelligence tool, which is represented graphically with this balance:
As can be seen in this balance, these are conflicting costs. We are going to describe and even calculate them:
Tangible Information Costs
Human costs
- Information search hours Information preparation hours Information Interpretation Costs Cost of human errors in calculation
Non-Human Costs
- Team hours processing information search Team hours preparing the information Team hours transmitting Cost of equipment needs due to oversize
Tangible Costs of Disinformation
- Cost for not having the information (not detecting the problems). Not detecting unfulfilled objectives. Not detecting tactical deviations. Not controlling the fulfillment of the strategy. Not having information for decision making. Taking decisions without all the necessary information, cost of errors.
Others
- Opportunity cost, (not detecting opportunities to generate business). Behaviors in campaigns that we would apply to decreasing markets High profitability segments, client products, mix, etc. Creation of high value information for decision-making Others
Intangible costs of information
- Internal Customer Satisfaction Costs Productivity Increase Costs Corporate Image Costs Other Minor
In any company, these two costs, those of information vs. disinformation, must be balanced, equal and add as little as possible.
Costs associated with decision making.
On the other hand, the increase in benefits will come, generated directly from the possibility of having Business Intelligence systems. These benefits are derived from the new opportunities generated by having this technology, such as:
- Increase in sales due to concentration of resources Increase in sales due to focus on customer profitability segments Increase in sales due to focus on product segments Increase in margins due to focus on product-customer mix segments Alignment of the company, (employees), according to the strategy. Decision making with all parameters Possibility of scenario simulation Decision making based on scorecard
Many more depending on the specific case
In a study carried out in the Business Intelligence implementations carried out by Improven Consultores, the results were as follows:
There are effects such as the increase in productivity of employees and managers, the new internal image of the company of modernity and advance, etc., which have not been represented in this study, but which also influence the increase in sales.
Practical case
In one of the implementations carried out by Improven Consultores of a Business Intelligence system, an exhaustive analysis of the costs described above was carried out, giving these results:
This company was losing competitiveness and its margins were falling. With the introduction of Business Intelligence systems in the key areas of the company, it was possible to achieve this success story, thanks to the work carried out by a multidisciplinary team of professionals from Improven Consultores who knew how to apply Business Intelligence where it was needed and guide the company towards decision-making with new means and a new philosophy.
Managing change and detecting the true needs of the company was fundamental to the success of the project, as well as the choice of the most appropriate tool depending on the company, its culture, its processes, environment and management's objectives.
This company is now ready to face new challenges, and convinced that the continuous changes of the market will make it more competitive, because it has known how to take advantage of the circumstances of the market and the environment to transform it into a competitive advantage and achieve success.
As a conclusion, in each specific case, the benefits that a Business Intelligence system will generate and a thorough analysis of the relationship between investment and benefits that it will generate must be studied. We remain at your disposal to help you in that task.
