Dresner Advisory’s 5th Annual Business Intelligence Value Index®: Focus on Revenue to Deliver More Business Value From BI

2023 was a good year for growing revenue through the application of business intelligence (BI). Initiatives focused on revenue generation, compared to those focused on reducing costs, showed three times better results.

Consequently, the Dresner Advisory Services BI Value Index® rose to 10 percent in 2023, reversing a three-year downtrend. Most of the increase in the index came from a significant increase in organizations reporting the highest level of return on investment (ROI) from BI.

Organizations also tend to attach roughly equal importance to using BI to increase revenue or reduce costs. However, achievement data show that in 2023 organizations did a better job increasing revenue than cutting costs.

This difference in results makes sense—although both revenue growth and cost cutting have theoretical limits, gains from reducing costs tend to be fleeting and often difficult to implement in a sustained manner at significant levels and tend to contribute to profitability more as one-time events. Revenue growth, on the other hand, drives business expansion and is easier to achieve and sustain, albeit it can be slowed by other factors (such as access to resources, competitive advantages, and market opportunities).

For the long-term sake of the organization and all data and analytics programs, data leaders not already doing so need to align BI ROI measures more toward growing revenue and away from cutting costs—and not treat them fairly equally, as the data show they do. In most organizations, finding the right opportunities for new growth is one of the hardest business problems to solve. Finding areas in which to reduce costs on a one-time basis (or as a special project) tends to be much easier—even if the data used to determine areas in which to reduce costs requires intensive analysis.

That does not mean data leaders should let the ROI pendulum swing fully to a focus on revenue. Cost reduction and revenue generation both are key to most business-meaningful measurement of ROI—just not in nearly equal parts. Data leaders need to work with executive management to determine the ideal mix of these efforts and allot data and analytics resources accordingly to support achievement of these efforts throughout the organization.

Data leaders not already doing so need to join colleagues in other functions in using ROI as the primary benchmark against which to measure BI investment decisions and more strongly weight revenue-generation initiatives over cost-savings activities. BI teams not already doing so should collaborate with the finance function—specifically, the financial planning and analysis (FP&A) team—to learn how to calculate ROI for BI projects that align with and conform to established organizational financial standards.

However, our data show that 16 percent of the time the determination of BI ROI and value fails to include revenue growth; and 11 percent of the time it excludes cost reduction. Failure to include these elements in ROI is a mistake for two reasons. First, other measures (such as customer satisfaction, user satisfaction, or BI utilization rates) do not translate readily for comparison across functional projects and cross-organizational initiatives. Second, and more importantly, data leaders not measuring and reporting BI ROI—with significant weighting toward revenue growth—are probably selling their BI initiatives short.

Data leaders not already doing so also should create a communications plan for regularly conveying the ROI of BI initiatives: specifically, how well they contribute to increasing revenue and reducing costs and their alignment to top-level business objectives. This could take many forms: as simple as a report or dashboard, as complex as a formal program (for which the marketing function can provide excellent guidance and assistance), or something in between. Shining a light on BI ROI in a time of rising value and ensuring that key stakeholders understand the business potential from the application of BI will help improve perceptions regarding the use of data and analytics.

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