IRACIS: a roadmap for return on investment in business intelligence
Very often when companies are considering a business intelligence project or purchasing software, a question arises that seems to baffle everyone involved.
“Where is the ROI on this project?”
This question has brought many business intelligence projects to a halt. The CFO or CEO may ask. It may be mentioned in one of your meetings with a vendor or consultant presenting a solution. The sad truth is, if you can’t answer this question with hard numbers in specific areas, the ROI is probably not there.
IRACIS is a simple acronym that can be used to quantify the value of a business intelligence project to a company. Represents the following:
Increase Revenue: How will this app 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 app help us improve efficiency, put more information in the hands of our business people, and eliminate wasteful processes?
Improve service: will this app have a significant impact on our customer base? Will we be able to provide more timely and valuable information to our customers, prospects, and suppliers?
Many times, in a business intelligence effort, there are results that are considered desirable. Things like ad-hoc reporting, more informed operations staff, and less lag time on financial reports are nice. But they won’t justify investing in a business intelligence solution from a quality software vendor without quantified direct and secondary benefits in the areas mentioned above.
Let’s face it, business intelligence solutions don’t come cheap. Today, there are many scalable solutions on the market ranging from traditional software implementations to SaaS (Software as a Service) and even open source solutions. Large companies have long embraced the benefits of business intelligence and now, with these various offerings, small and medium-sized businesses are taking advantage of it as well. However, any business intelligence project is only as good as the planning, effort, and data that goes into whatever software platform you are using. Hence another phrase often heard in many BI projects, “garbage in, garbage out.”
By using the IRACIS model to quantify the value of the solution to the business, you provide everyone with a clear roadmap towards what is considered a successful project. From the executive sponsor of the company to the vendor you are working with, there is no ambiguity as to what is expected as the bottom line. I would challenge any company considering a business intelligence project of some kind, that if they can’t find a solution that addresses at least one of the three areas above, if not all three, then the project is probably not worth doing at all. And if the solution or software product is unable to scale to address all three areas in the long term, it is probably not the best product for you. This may seem like a rigorous criterion, but in an era where most large companies have 3-4 separate business intelligence tools, it is clear that more critical thinking is needed before purchasing a solution or platform.
Not only is this acronym a good way to quantify the value of a project to a business, it can also become a brainstorming tool for the types of applications you are looking to create. Earlier, I noticed that the Avoid Cost part of this acronym is by far the most focused for business intelligence projects. Why is that? Does business intelligence only serve to eliminate waste and make an organization more efficient? Can’t you use it to increase revenue by putting valuable information in front of potential customers you haven’t reached yet?
I would say that some of the best and most successful business intelligence applications I know of are focused on the first category of Growing Revenues. Business intelligence is about putting the right information in the right hands at the right time. For some companies, that could be an in-house business analyst. But for many others, it may be putting information in front of your customers, prospects, and partners to provide a fresh perspective on a purchasing decision. When companies sell complex products and services, it is sometimes necessary to trace the customer where they live. You need to communicate with them with a compelling message about your product or value proposition and give them a reason to act on that information.
If you received an email from a major auto insurance provider, showing your current auto insurance provider and the estimated rate you are paying, and then a graph showing a $ 700 savings on rate comparisons for the same coverage for a year, that would be an attractive email to receive. It would probably motivate you to pick up the phone or go to a website to find more information.
This, in turn, would improve service and avoid costs. Being able to present this type of accurate and timely information to a potential customer shows them that you have systems in place to save them money and provide the best possible service. It shortens the sales cycle and the cost of sales, increasing the margin and profitability. It instills trust in the company from the customer’s point of view and also gets people talking about your product or service.
In the information age we live in, the data and information that companies have are by far their most valuable assets. Getting this information in a usable format to the right audience can be the role of business intelligence in any company. This should be an objective when analyzing what business intelligence can do for a company. Don’t limit yourself to simply eliminating waste and automating internal processes. I certainly believe that projects that focus on those issues are worthwhile and valuable to a company. But when you broaden 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 get your full ROI on buying a business intelligence solution. .
So the next time a discussion comes up about a business intelligence project or initiative, think of the IRACIS model as a way to discuss and evaluate a worthwhile project for your company. You may be surprised what occurs to you when your thinking turns to generating income and improving service. Just remember, after you’ve finished creating a new line of business or growing an existing one, ask your boss for a commission.