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June 1, 2009

Avoiding 4 Potential BI Cost Factors

Filed under: Data Cleansing, Data Integration — Tags: — Olga Belokurskaya @ 5:46 am

Business intelligence is considered to be the helping hand for organizations wishing to do more with less. However, David Hatch, an Aberdeen Group analyst, has outlined four potential cost factors likely to arise in a BI initiative if an organization isn’t paying attention. According to Hatch, overall cost of ownership is not about the costs of purchasing the software, there are also indirect and hidden factors which affect the real BI costs. Very often the resources the company needs to acquire to properly implement, deploy, support, and maintain a BI solution are far more greater than it was assumed in the beginning.

Here are those factors, as Hatch describes them:

  1. Year-after-year budget increases: The typical best-in-class company sees a drop in year-after-year BI budgetary costs. Average and laggard companies, however, can witness increases in BI expenses that range from 2 percent to 9 percent.
  2. Cost per user: Best-in-class companies lower per-user costs by 4.3 percent whereas average performers and laggards often see increases ranging from 1 percent to 7 percent.
  3. Time to complete projects: Best-in-class achievers complete BI projects, on average, within 14 days. Average performers take nearly three times as long (approximately 39 days) to complete a project, and the typical laggard company takes more than 12 times as long (177 days).
  4. Modifications to BI software: Altering a BI program takes less than a day for best-in-class companies; three days for average performers; and up to eight days for laggard organizations.

Then, how a company can avoid additional costs of ownership and achieve higher returns from BI initiatives? Aberdeen suggests that investments in the following areas will maximize results:

  • Data integration and cleansing: “Companies are finding it difficult to bring data together from multiple, disparate sources,” Hatch says. Investing in tools for data management can be of help in this regard. Best-in-class companies are twice as likely as their counterparts are to institute data integration and cleansing capabilities.
  • End-user requirements: “You really have to stop and think about why…so many companies have deployed tools that so many aren’t able to use,” Hatch says. Companies must understand that end-users — especially nontechnical, non-data-guru types — may need different approaches. Hatch advises companies to focus on end-user needs before deploying a solution.
  • Training: Top performers are 37 percent more likely to invest in extensive user training on BI solutions and 40 percent are more likely to have formed formal user committees to encourage adoption. Additionally, best-in-class companies are twice as likely as laggards and average performers are to sign up for vendor-provided services.
  • Operational BI: Successful users of BI use the technology on an everyday basis rather than merely getting a summarized spreadsheet version of performance and high-level trends. Hatch says that operational BI seems to be gaining traction as companies look to make comparisons over shorter time spans rather than just examine large-scale trends.

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