I recently went on a skiing trip with my family. A trip like this isn’t cheap, but the ROI for us is high: awesome skiing conditions, close family time, and a chance to actually do an activity with our teenagers rather than just watch from the sidelines. As the commercial tagline goes: priceless.
The ROI from a company’s investment in Enterprise Data Management (EDM) is measured with somewhat less touchy-feely metrics such as dollars and time savings, faster time-to-market, and increasing sales through more directed marketing (up-sell, cross-sell, better demographic targeting).
However, there are also benefits that are harder to quantify that may be even more significant, such as governmental and regulatory compliance, financial transparency, improved data consistency and integrity, faster data availability and using performance management to run the business. Even these benefits are not touchy-feely and you need to quantify the impact they will have to your business.
Okay, the potential for significant ROI from your EDM should be a no-brainer but… A few years ago I came across a survey from Cutter Consortium that found that only 15% of firms surveyed considered their data warehousing efforts to date a major (my emphasis) success. What would the other 85% say their ROI is? They are probably embarrassed to say.
ROI shouldn’t be an elusive goal. The key critical success factor to ensure EDM success and a significant ROI is the relationship and cooperation between business and IT. The make-or-break of your data management efforts isn’t the technical prowess of your IT staff, but whether the business is involved (wholeheartedly) in your EDM effort.
If you think of it as a three-legged stool, the three legs are: sponsorship (funding it), participation (being involved day-to-day in its creation) and governance (managing it as a key business process.)
IT and the business should form a steering committee to sponsor and govern design, development, deployment, and ongoing support. It needs both the CIO and a business executive, such as CFO, COO, or a senior VP of marketing/sales to commit budget, time, and resources.
Everyone’s got a stake in the project. The business sponsor needs the project to succeed so the business group will get the information it needs to provide strategic advice to help run the business. The CIO is committed to what is being built and how. Her job is to help the business group get what they need to succeed.
How do you calculate the ROI of a successful project? It’s going to be different for every situation. Here are some potential business benefits (that you will need to quantify for your company):
EDM projects need to be driven by business value. These projects no longer succeed by merely having the most data (the biggest multi-terabyte DW) or functionality (the hottest BI or CPM tool). There are many non-technical, i.e. BUSINESS, aspects to these projects that determine their success or failure from a business perspective.
Business and IT groups together need to implement EDM. With this business focus, there surely will be a significant business ROI.