The real cost of business intelligence

The idea behind business intelligence is to profit from having better quality data on which to make better business decisions. But research shows BI systems can, in fact, end up costing companies dear. Aberdeen analyst David Hatch identifies the four unexpected cost factors and how to deal with them.

Business intelligence (BI) is supposed to help organisations make more money by enabling them to make better business decisions based on solid data, yes? Well, that's the theory. But what if your BI investment is actually costing you money rather than helping you earn more? That's the question that's been posed by Aberdeen Group analyst David Hatch, who has identified four unexpected cost factors that might arise if you're not careful.

In a survey, some 41% of respondents said that software and services are too expensive, while 31% cited a lack of top management commitment to projects and 28% named lack of IT resource as an inhibitor. “IT and business management are increasingly expressing alarm at rising costs associated with BI,” notes Hatch. “The fear of hidden costs has kept many companies from making an investment and many adopters have found that the costs related to ongoing support and maintenance of an ever-changing set of analytical and reporting requirements inhibits user penetration and the ability to manage the total cost of ownership.

“There are several indirect costs that come into play at the time of purchase that must be considered, such as ease-of-use, end-user requirements and data integration issues. The prioritised direct and indirect cost criteria are not the only factors to be considered. Much of the costs associated with BI implementations are realised over time, such as ongoing maintenance/support and upgrades, the effect of changing analytics requirements, the growth of data volumes, the potential effects of mergers and acquisitions, and the increasing footprint of BI in the enterprise as it matures from a departmental to a group - and potentially to an enterprise application.”

Overcoming the challenges

 Specifically, four areas of concern cited by Hatch are:

• Year-on-year budget increases that can be as high as 9%.
• Total cost per user which can rise as much as 7%
• Time to complete projects, which in the best performing firms can take about 14 days, can stretch to 39 days in other cases and can take as long as 177 days for particularly poorly performing organisations.
• Customisation and modification of software which can take up to eight days for poor companies, as opposed to one for top performers.

Some 54% of the top performing companies have implemented BI at a strategic enterprise level and can make the most of BI investment and see substantial returns, including a 5.8% improvement in on-budget completion of BI projects - more than five times the rate of industry average companies - and a 4.3% decrease in the cost-per-user of BI applications - more than four times the rate of industry average companies.

So how do firms achieve that top performing status? Aberdeen recommends the following:

• Automate the process for collection and integration of data.
• Start with end-user requirements, making sure to match BI tools with existing non-technical end-user skill sets.
• Investigate new licensing and deployment options - challenge solution providers to offer flexible and digestible approaches.
• Invest in back-end data integration, data cleansing technologies and corresponding skills.
• Investigate new licensing and deployment options, including concurrent user licensing, open source software, software as a service (SaaS) and hybrid approaches.

Hatch also observes that customer service and accounting are the top two BI investment areas, with 45% of those companies polled reporting that they have made investments in those two key areas. Some 64% of the top performing companies are using BI within customer services and support operations, while 68% of them are using it for corporate-wide performance management.