Last week I did a webcast for the IBM Cognos Innovation Center on the topic of BI ROI.  The focus was on how to build a strong ROI case in the face of budget constriction.  What was refreshing was that when surveyed many respondents said they are still able to justify BI investment based on the intangible values it brings to the organization such as:

- Faster, more informed decision making
- Process Improvement
- Resource Efficiency

But there are also many businesses where BI struggles to compete for funding against initiatives with more tangible "hard" ROI.  My advice is to monetize the intangible ROI whenever possible.  But what is the monetary value of  things like faster decision making?  At face value it seems difficult to define but it is possible to dive deeper into the intangible value to find pieces that can be monetized.


Here are a few ways to consider monetizing the above examples of intangible value:

Faster, more informed decision making
Look for an event at your company that had a negative impact.  For instance a under performing region, an increase in materials cost, a missed sales forecast etc.  What impact did that have on share price?  There's a number to attach to faster, more informed decision making.  Also, look for examples in your industry of how BI enabled faster decision making.  One example that comes to mind is a medical supplies company that was $25M under forecast with 2 weeks left in the quarter.  Through analysis of their customer database they were able to run a very targeted campaign at specific customers and made up the entire deficit in the two weeks.  Without BI they would not have been able to make the "faster, more informed decision" that resulted in $25M in revenue.

Process Improvement
Aberdeen Research found leading companies that leverage BI on top of their ERP experience a 18% reduction in administrative costs.  What would be the monetary impact if your business reduced admin costs by 18%?  This is an easy one to calculate but for credibility sake cut the proposed savings in half and you will still likely come up with a sizable number.

Resource Efficiency
 There is certainly value in freeing up resources to work on things that contribute more value to the organization but if the CFO wants a number on that try this.  Calculate your cost of IT or of Finance and benchmark it against industry standards (The Hackett Group is a good source for this).  What would be the cost savings if you reduce your cost to the industry standard?  Now calculate these as a percentage of revenue.  Let's say your cost is  2% of revenue and you are a $1B business, that's $20M.  If you plan to grow your business by 10% your cost to support that growth will be $2M.  Let's say resource efficiency allows you to cut that in half.  There is $1M in savings.

These are generic ways to monetize the intangible value of BI.  The more specific you can make them to your organization the more effective they will be.  I'm always interested in hearing of unique approaches to ROI, if you have one take a minute to share it.