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Calculating Business Intelligence ROI: Four Examples

Adam Jacobson July 7,2015

Research the topic of business intelligence ROI, and you’ll find a huge range of estimates. Some promise a whopping 1300-percent return (!), while others vaguely promise “soft benefits,” which means they have no idea.

We can only speak to the issue based on our experience as a small firm of business intelligence consultants. The cost side is fairly straightforward to calculate, and we’re working on a series of posts on how much everything we do costs. (If you’re interested, sign up for the newsletter (see the box to the right), and we’ll keep you posted.)  

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Tags: Business Intelligence ROI

Seven Keys to Cost Effective Business Intelligence: Part 7

Adam Jacobson May 5,2015

Use the Tools You Have

The best way to achieve return on investment is to minimize investment. And the best way to minimize investment is to use the tools you already have. Fundamentally, after years of work in this industry using multiple tools and platforms, we believe all the tools out there do the same basic things. Sure, each tool has strengths and weaknesses. But if you’ve already invested in one, it’s really hard to justify switching to another.

We understand our philosophy may disqualify us from your consideration. For example, you may have made a major investment in SAP BusinessObjects. We’ve worked with it in the past, and it’s certainly a powerful tool.  But unless you're migrating away from it, we’re not going to work with it.

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Tags: Business Intelligence ROI

Seven Keys to Cost Effective Business Intelligence: Part 6

Adam Jacobson April 30,2015

Use Your General Ledger

When you start down the Business Intelligence road, you’ll often hear people talk about data marts, data warehouses, reporting databases, etc. All these are useful. (See our posts The Data Warehouse Scorecard and Data Warehouse vs. Data Mart: What’s the Difference?) But, if you want to be cost effective, you have to ask, “What do I already have that can give me what I need?” Often, your need is for a central repository.

Fortunately, you already have one: it’s your general ledger. All your systems feed numbers into it. (Granted, you can’t put marketing leads in a ledger, but our focus is on the hard cash associated with them, so the ledger works fine.) As an added bonus, when you use the general ledger it puts an end to the most asked question of any report: “Does this tie to the ledger?” When you start with the ledger, you tie to the ledger.

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Tags: Business Intelligence ROI Financial Reporting Software

Seven Keys to Cost Effective Business Intelligence: Part 5

Adam Jacobson April 28,2015

Ask: Is Your Data Clean?

Whether you need dashboards, pivots or reports, there’s one thing you need first: Your data must be clean. We all know the phrase “garbage in, garbage out.” What most people don’t understand is that their data—the data they love; the data they prize; the data they’re basing million dollar decisions on—may be garbage.

But maybe you’re different. Maybe you recently installed an ERP system where the setup was consistent and no one entered a strange transaction just to “get it done.” Maybe everyone in your organization agrees what “gross margin” and “contribution margin” mean. Maybe your data quality is good, and you can get started with dashboards, pivots and reports.

But that’s not the world we live in. Just like happy couples don’t go to couples therapy, straightforward businesses don’t need consultants. Our clients often have one or more of the following challenges:

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Tags: Business Intelligence ROI

Seven Keys to Cost Effective Business Intelligence: Part 4

Adam Jacobson April 23,2015

Think Reports First

Put broadly, Business Intelligence software creates three kinds of output:

1)    Dashboards. Allow executives to “grasp the big picture.” They’re often filled with fancy charts, KPIs, etc.

2)    Pivots. Data sets that allow advanced analysts to slice and dice. Generally, pivots resemble the good old Excel Pivot Table.

3)    Reports. Detailed listings and reports so people can get their jobs done and see the details they need.

Many of you have probably attended demonstrations of Business Intelligence software. You’ve seen lots of dashboards and charts, many with special colors to show whether your key metrics are “red, yellow or green.” You’ve seen how someone can see a number, ask a question about it, and then drill down to get the answer. You’ve seen how a tool can present all kinds of data to a skilled end user, allowing them to pick and choose. And that’s all wonderful. And at Red Three, we’re happy to do that for you.

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Tags: Business Intelligence ROI

Seven Keys to Cost Effective Business Intelligence: Part 3

Adam Jacobson April 21,2015

Users Aren’t Report Writers

Mark Twain said, “There are lies, damned lies and statistics.” He also said, “Your users can write their own reports.”  Well, maybe not, but he would have if he’d been a data consultant today.

But seriously, many of you have been involved in the purchase of an ERP or other complex software. You sat through demonstrations. You asked about reports—because you know everyone needs good output to do their jobs and senior management wants nicely printed reports on their desks. When the report you wanted wasn’t there, you were assured it wasn’t a big deal to create it. Heck, even your end-users could become report writers!

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Tags: Business Intelligence ROI

Seven Keys to Cost Effective Business Intelligence: Part 2

Adam Jacobson November 21,2014

You Don't Have Big Data

In previous posts, I wrote about how a financial data consultant differs from a regular data consultant and why it’s important not to oversell financial data projects.

In this post, I want to talk about big data. Because, contrary to what you might believe, you don’t have big data. Most financial executives work with regular data. As financial data consultants, we work with regular data. Even if you have $3 billion in sales and 100,000,000 transactions, it’s still regular data.

Let me explain how big data and regular data differ:

  1. Big data is unstructured. Regular data isn’t.

Let’s use an example. We often start projects with the general ledger. (For more on this topic, see Using the General Ledger as a Data Warehouse.) General ledger transactions have a standard structure. Every record has an accounting string, a posting date, and a currency amount (or maybe several). The consistency of this structure works perfectly with standard relational databases—tools that have been around (if evolving) since the 1980s. For our clients (and we’ve worked with companies with multiple billions in revenue), there’s no need for anything else.

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Tags: Business Intelligence Consultants Business Intelligence ROI

Seven Keys to Cost Effective Business Intelligence: Part 1

Adam Jacobson November 19,2014

Don't Oversell

Data is hot. So, as with any trend, folks begin thinking that data is the way to solve their problems. As financial data consultants, this is great.

But while we love the enthusiasm, we want to acknowledge that what we do is rarely transformative in itself. Don’t be oversold. As our data consultants like to say, having good data can keep you from being stupid. But being smart is a whole lot harder.

Here’s why:

1. Past performance is no guarantee of future results.

We hear that disclaimer in mutual fund ads. It’s a cliché, but it’s absolutely true. Things change. For example, in the early 90s, my family’s chain of men’s clothing stores had a mediocre year. Why? Because sweaters, which had been a leading category for years, stopped selling. This impacted the entire clothing industry. Consumer desire changed and suddenly everyone had too many sweaters on hand.

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Tags: Business Intelligence ROI Financial Reporting Software

If You Build It, They May Not Come: Six Reasons For A BI Project

Adam Jacobson September 10,2012

The sad fact is that much business intelligence software is really shelfware. Stuff that someone bought once upon a time, but it was never used and instead sits on the (virtual) shelf. Even worse, sometimes people did something with the software, but it gradually fell out of use.

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Tags: Business Intelligence ROI Financial Reporting Software

Should You Use an ERP System for all Your Data?

Adam Jacobson May 16,2012

I?m generally a big advocate of making your software go as far as possible, even to the extent of using your general ledger as a simple data warehouse. But sometimes, trying to make your packaged software do everything doesn?t yield the best result. Here?s an example:

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Tags: Business Intelligence ROI Financial Reporting Software