IRACIS – A roadmap to business intelligence ROI

So often when companies consider a business intelligence project or software purchase, there’s a question that seems to be asking everyone involved.

“Where is the ROI in this project?”

This question has stopped many a business intelligence project. It might be asked by the CFO or CEO. Perhaps it will be brought up in one of the meetings with a vendor or consultant presenting a solution. The sad truth is, if you can’t answer this question with hard numbers in certain areas, the ROI probably isn’t there.

IRACIS is a simple acronym that can be used to quantify the value of a business intelligence project to an organization. It stands for the following:

Increase Sales – How will this application and functionality generate more sales to new or existing customers, shorten the sales cycle and/or reduce the cost of sales?

Avoid Costs – By far the most focused area in BI project justifications. How will this application help us improve efficiency, provide our business people with more information and eliminate wasteful processes?

Improve Service – Will this application noticeably impact our customer base? Will we be able to provide more timely and valuable information to our customers, prospects and suppliers?

Often times in a business intelligence endeavor, there are outcomes that are deemed desirable. Things like the creation of ad hoc reports, more informed operations staff, and fewer financial reporting delays are nice. However, they do not justify investing in a business intelligence solution from a quality software vendor without direct and secondary benefits quantified in the areas above.

Let’s face it, business intelligence solutions don’t come cheap. There are many scalable solutions on the market today, ranging from traditional software implementations to SaaS (Software as a Service) to open source solutions. Large companies have long since embraced the benefits of business intelligence, and with these diverse offerings, small and medium-sized businesses are now reaping the benefits. However, any business intelligence project is only as good as the planning, effort, and data that goes into the software platform you use. Hence another sentence that can often be heard in many BI projects: “garbage in, garbage out”.

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By using the IRACIS model to quantify the value of the solution to the business, you give everyone a clear roadmap to a successful project. From the senior corporate sponsor to the vendor you’re working with, there’s no ambiguity about what’s expected as the end result. I would challenge any company considering some kind of business intelligence project that if you don’t find a solution that addresses at least one of the three areas above, if not all three, the project probably isn’t worth it. And if the solution or software product isn’t able to cover all three areas in the long run, then it probably isn’t the best product for you. This may seem like tough criteria, but at a time when most large companies own three or four separate business intelligence tools, it’s evident that more critical thinking is required before purchasing any solution or platform.

Not only is this acronym a great way to quantify a project’s value to a company, but it can also become a brainstorming tool for the types of applications you want to build. I noted above that the “avoid costs” portion of this acronym is by far the most heavily used for business intelligence projects. Why is that? Is business intelligence only good for eliminating waste and making an organization more efficient? Can’t it be used to increase sales by presenting valuable information to potential customers that you haven’t reached yet?

I would argue that some of the best and most successful business intelligence applications I know of focus on the first category of revenue growth. Business Intelligence is about putting the right information in the right hands at the right time. For some companies, this could be an in-house business analyst. But for so many others, it means presenting information to your customers, prospects, and partners to provide new insights into a purchasing decision. When companies sell complex products and services, sometimes you need to find out where the customer lives. You need to reach them with a compelling message about your product or value proposition and give them a reason to act on that information.

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When you receive an email from a major auto insurance provider listing your current auto insurance provider and the estimated rate you pay, and then a chart showing a $700 saving comparing rates for the same coverage over one year , this would be the case to receive a convincing email. It would probably motivate you to pick up the phone or go to a website to incite further.

This in turn would improve service and avoid costs. Being able to present this type of accurate and timely information to a prospect shows them that you have systems in place to save them money and provide the best possible service. It shortens the sales cycle and cost of sales, increasing margin and profitability. It builds trust in the company from a customer perspective and gets people talking about your product or service.

In the information age we live in, the data and information that companies hold are by far their most valuable assets. Getting this information to the right audience in a usable format can be the role of business intelligence in any organization. This should be a goal when looking at what business intelligence can do for a business. Don’t just limit yourself to eliminating waste and automating internal processes. I definitely think that projects that focus on these topics are worthwhile and valuable for a company. But if you expand your thinking and remember that using the internet to deliver information in a variety of formats is the most cost-effective way to reach a critical mass of people, only then can you realize your full ROI from purchasing a Achieve Business Intelligence Solution.

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So the next time a discussion erupts about a business intelligence project or initiative, think of the IRACIS model as a way to discuss and evaluate a project that is valuable to your organization. You’ll be surprised what comes to mind when you start thinking about revenue generation and service improvement. Remember to ask your boss for a commission after you start a new business or grow an existing one.