Defining Business Value For BI And Analytics Initiatives

Words: 2146
Pages: 9

Publication Date: 26 September 2011

ID Number: G00218934

Examples of Defining Business Value for BI and
Analytics Initiatives
Bill Hostmann

There are different ways of measuring the business value of business intelligence (BI) and analytics initiatives. The definition of "business value" depends on whether it is being evaluated by IT or the business organizations. The business values cited by the top 10 finalists in the 2011 Gartner BI Excellence Award program are used to provide examples of a model defining the dimensions and categories of business value.
Key Findings
The measures of business value for BI investments must be defined from an IT and a business perspective. The measures of business value are
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To the business organizations, information and technology are contributors to delivering business value. They are necessary, but they are not the end measure of value. The measure of BI and IM value is stated in business terms, such as contributing to agility, efficiency and scale, or the level of business transformation enabled.
As shown in Figure 1, organizations realize value from BI investments the following ways:
Directly. IT directly enables the following values, which are the easiest to quantify in terms of costs and number of users:
Lower total cost of ownership (TCO) comes from the more-efficient use of technology. Consolidating the technology and skills and removing technical and operational obstacles lower the TCO.
Economies of scale result from making information and analysis available to more users. There are higher levels of quality and support in the use of information and analysis in making decisions. This means measuring how relevant, accurate, consistent and timely information and analysis is from a user's perspective, as well as how skillful the users are in using the analysis provided.
Indirectly. IT indirectly contributes to the following values, which should be defined by the business sponsor of the initiatives:
Higher business agility and scale come from business process optimization.
Analytic capabilities are embedded in products, services and operations.