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Business Cases for Business Intelligence
(Continued from Page 1)
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Elements of Business Cases
for Information Projects
There is a basic assumption in the material that follows.
The following assumption is made to enable the IT department
to focus on pure business benefits:
Information has NO INTRINSIC VALUE UNTIL IT IS USED
The philosophical argument as to whether this assumption is
true or not is academic at this point. However, if an information
delivery mechanism is developed (a BI or DW application, for
example) it has no value, or ROI potential until it is used
by the business to accomplish business goals.
The business case for BI is based on how the data is used,
and what it is used for. There are three benefit areas that
can appear in an information business case:
- IT Efficiency – this is the traditional area, where
organizations justify Information Management (IM) projects
by the cost avoidance approach, e.g. what it would cost
us if we DID NOT manage information better. The metrics
achieved in this area are related to lower costs of information
gathering, storage and processing efficiencies, and lower
development costs. This is a good start, but total emphasis
on this area will not sustain any IM component (repository,
DW, BI, etc.)
- Risk Management –Government regulations (e.g. Sarbanes-Oxley,
HIPAA in the United States) have created a highly motivating
set of business benefits - those of managing the risks inherent
by NOT managing information very well. Large fines and jail
terms are proving highly motivating for executives who realize
that their information is not verifiable. The benefit to
these types of projects is manifested in goodwill and equity
valuations.
- Business Benefit – the area of most interest in
recent times, (and of the last article) and the focus of
all good business cases, are the positive cash flows, increased
profits or lowered costs the result from business units
embracing and information solution to business problems,
vs. throwing requirements at IT to deliver data.
Therefore the elements that must appear in a business case
are:
- Benefits that will stem from business processes, and recognized
and approved by the business units. This promotes buy-in,
of course. In addition, the business process emphasis also
focuses the BI delivery team on achieving a measurable goal,
vs. delivery of technology.
- Defined accountability of the business users and IT team
will be evident.
- A description of business cash flows, financial impacts,
and even presents value and internal rate of returns calculations.
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