Gartner for IT Leaders Tool

Calculating Benefits of BI Initiatives

This tool privides a guide to, and examples of, calculating the
potential benefits of planned BI initiatives

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source document. Please refer back to that document for details.
BI Benefits Calculation

Calculating BI Benefits Worksheet

Step 1: Identify Step 2 : Select focus of Step 3 : Select target Current Target Year 1 Calculate Step 4 : Select target Current
key business planned BI initiatives quantitative metrics, (base) financial qualitative benefits (baseline)
imperatives insert Current and benefit
Target for each metric (where
(Examples of metrics possible)
below)
Business Imperative BI Initiative/application examples Select which metrics apply to your Insert the Insert the Target Note: some Select which benefits apply to your Describe the current
initiatives in this area (several of current value you expect to quantitative initiatives in this area (several of these situation that may be
these metrics could apply to each (baseline) achieve for this metrics such as benefits could apply to each type of impacted by the BI
type of initiative). This list is value for the metric - Year 1. (For customer initiative). Examples only. This list is initiative
neither exhaustive nor is it metric additional years, satisfaction may neither exhaustive nor is it exclusive in
exclusive in that metrics from copy required not be readily that metrics from other business
other business imperatives or additional columns translated into imperatives or other initiatives may be
other initiatives may be relevant to E and F) monetary terms relevant to your initiative
your initiative. It is for your
guidance only

Attract and Retain

Customers Revenue per customer Improving the customer experience

• Develop customer self-service applications

Shift in sales force activity from reporting to
• Predictive analytics to determine customers or partners at risk Customer satisfaction rate
selling activities
of churn
• Using customer analytics to define targeted marketing
campaigns Shift on marketing and sales resources to
Market share
• Analysis of customer service processes to identify higher value, higher opportunity customers
opportunities for improvement
Customer churn rate
• Using internal information sources to develop new
information-based products Supported balanced scorecard/Six Sigma,
• Data mining on limited set of customer surveys to predict at- Products per customer for example, initiatives in sales, marketing
risk customers and launch targeted campaigns to save (Telco) and customer service
• Automate sales reporting Organizational belief in the accuracy of
Marketing campaign effectiveness
reports
Product support/maintenance
Faster reporting
renewal rate
Cross-organizational use of single version
Leads-to-sales conversion rate
of the truth
Average selling price
New products, percentage of revenue
from new products
Share of wallet
Proportion of high-value customers
Cost of sales as a percentage of
revenue or per transaction
Cost of customer service as a
percentage of revenue or per
transaction
IT support costs for sales
IT support costs for marketing
IT costs for customer service

Improve Workforce
Effectiveness Labor cost in getting information for
Increased insight into operations
EOM reporting

• Provide real-time operational dashboards to field managers to Provide support for balanced scorecard, Six
Labor cost of the budgeting process
assist in dynamic resource allocation Sigma and so on initiatives
• Rationalize multiple BI tools
• Automate end-of-month reporting
• Automate data input for budgeting process
• Provide detailed customer interaction data to field sales

GARTNER LEADER'S TOOLKIT 2

BI Benefits Calculation
• Provide real-time operational dashboards to field managers to
assist in dynamic resource allocation
• Rationalize multiple BI tools Increasing depth of BI skills and
• Automate end-of-month reporting Percentage of IT cost in supporting BI
competencies
• Automate data input for budgeting process
• Provide detailed customer interaction data to field sales Percentage of manager time spent
generating reports versus analyzing Quality of decision-making
and actioning
Customer satisfaction with
Speed of decision-making
operational performance

Labor cost of doing rework on reports

Employee empowerment
due to inaccurate or missing data

Percentage of field sales time spent Employee satisfaction through doing value
reporting versus customer interaction -added activity versus data collection

BI training costs per employee Culture of accountability

Build an Agile and

Innovative Ability to identify high-impact opportunities
Revenue per employee
in products, markets and processes
Organization
• In-depth analysis to identify opportunity and threat patterns
quickly Revenue per customer Product/service differentiation
• Aggregating internal information to create a new information-
based product for customers Product/service development cycle
Culture of innovation
• Linking various internal and external information sources to time
provide decision support for resource allocation decisions Number of new products/services
Support for Six Sigma initiatives
• Minimizing lead-time between events/transactions occurring, launched
and information being available to users Percentage of total revenue/activity
• Supporting new lower-cost, lower-risk business models Barrier to competitive entry through
represented by new
through analytics and predictive modeling sophistication of the BI infrastructure
products/services
Success rate for new products

Improve Critical
Workflow and Response time to customer service Effort spent on process improvement
issues versus complaint resolution
Processes
• Customer order process analytics
• Supplier self-service Cash-to-cash cycle time
• Procurement process analytics
• Customer service analytics Percentage of on-time deliveries to Interdepartment collaboration and sharing
• Product development analysis customer of best practices
• Employee self-service applications
Support balanced scorecard, Six Sigma
Labor costs
and so on initiatives
Product returns as a percentage of Improved management decisions and
total orders better insight
Cash flow
Bad debt ratio
Supplier performance
Average time to market for new
products
Procurement costs as a percentage
of total purchase
Inventory levels
Inventory turns
Number of out-of-stock situations
Customer satisfaction
Employee satisfaction

Maximize Shift in IT management focus from reaction

Profitability and
Effectiveness
• Analysis of critical business processes (see "Improve Critical
Workflows and Processes" section)
• Analysis of IT costs to understand IT cost drivers, usage and
consumption
• Consolidation of multiple BI tools and applications
Costs as a percentage of revenue
Cost growth rate
to planning. Maintaining service-level
agreement eventually leads to less cost and
greater customer satisfaction
Provide the basis for companywide process
review and reengineering based single
version of the truth

GARTNER LEADER'S TOOLKIT 3

• Analysis
BI of critical business processes (see "Improve Critical
Benefits Calculation
Workflows and Processes" section)
• Analysis of IT costs to understand IT cost drivers, usage and
consumption
• Consolidation of multiple BI tools and applications Better understanding of IT costs and
IT spend as a percentage of revenue drivers; Improved insights of internal
customers of IT
Basis for massive cultural change ultimately
IT spend on BI as a percentage of resulting in major revenue and profitability
total IT cost improvements. Alignment and
empowerment
Procurement efforts shifted more toward
Employee satisfaction with IT
supplier management than supplier
performance against service levels
compliance and negotiations
Percentage of analyst time spent on
value-add activities

Manage
Governance, Risk Cost of compliance as a percentage
and Compliance Transparency across the organization
of revenue

• Reporting to meet compliance requirements

• Transaction and predictive analysis for fraud detection and Percentage of capital subject to Internal consistency and compliance in
avoidance regulated returns distributed organizations
• Analysis of customers to identify customer-specific risk
• Analysis of "green" drivers and performance Brand benefit from reputation as good
Percentage of fraudulent transactions
corporate citizen
Percentage of high-risk business
Bad debt provision
Time to respond to new compliance
requirements
"Green" measures

GARTNER LEADER'S TOOLKIT 4

BI Benefits Calculation

Target

Describe the desired

state

GARTNER LEADER'S TOOLKIT 5

BI Benefits Calculation

GARTNER LEADER'S TOOLKIT 6

BI Benefits Calculation

GARTNER LEADER'S TOOLKIT 7