Business Intelligence: Can't Live Without It

Business-intelligence tools can provide value, but measuring return on investment still presents a significant challenge. That was the consensus of panelists--including IT execs from Best Buy, Zurich U.S., and Alliant Exchange--at InformationWeek's Business Intelligence Forum, held Wednesday in Chicago.

It's difficult to demonstrate that a business-intelligence implementation has led to a certain reduction in staff positions or a specific percentage in revenue gain for a company, says Ted Balzano, manager of information management and distribution at Zurich U.S. in Baltimore, a division of Zurich Financial Services. And that's why executives sometimes see big business-intelligence initiatives as failures. "They take some time, and they are very hard to measure," he says.

A recent InformationWeek Research survey illustrates the problem. Of the 100 respondents, only 18% say their company has achieved full ROI from implementing business-intelligence tools. Sixty-five percent say they have seen a partial return on investment, while 22% say there is no ROI.

To help gain support for enterprisewide business-intelligence initiatives, Balzano suggests that companies find vendors who will first help support a small project, where it may be easier to demonstrate cost savings or other benefits. Then IT managers will have an easier time making the case for a larger project.

Troy Zierden, business-intelligence capability manager at electronics retailer Best Buy in Eden Prairie, Minn., says it's very difficult to get project approval when returns on investment are intangible, since there's a team of accountants at his company who watch the numbers very closely. But some business-intelligence initiatives can show quantifiable savings, he says. "If we do save time in stores for associates to get the reports they need, we have the option of staffing less, so we do see labor savings."

At food-service distributor Alliant Exchange in Deerfield, Ill., Bob Woollen, VP of information and data management, has been able to identify a tangible return on investment for some analytical apps. That was the case when the company began closer analysis of purchasing and rebates from suppliers. "We hadn't looked at that area in the same way we'd been analyzing sales," Woollen says. As a result, "we were able to find products we should have been getting rebates on and compare suppliers across different locations to find opportunities that never surfaced before."

If pure ROI can't be measured, Woollen says his company always establishes other tangible objectives for business-intelligence projects, such as driving more sales through its Web site by letting customers generate their own reports online.