What you need to know about business intelligence TCO

Companies of any size and from any industry today have one thing atop their business agendas: business intelligence.

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Even if user adoption is high and BI projects swell in scope, any lingering issues like those revealed in the Aberdeen survey will become only more intensified, Hatch warns. "Most companies start small with this," Hatch says. "And it either grows, or it doesn't. But once it gets to the enterprise-size level, some of these issues can get ugly."

David O'Connell, a senior analyst at Nucleus Research who covers BI, says that while overall cost is important, he sees a different type of problem right now. "I think [companies] are spending too much time on TCO and not enough on identifying and estimating attainable benefits," O'Connell says. "If you strive to minimize costs, you'll minimize functionality, adoption, benefits and ultimately ROI."

While O'Connell concedes that not all BI vendors' pricing models are "always flexible," he does note that some vendors, such as Cognos (now owned by IBM), have pricing structures that offer a "price point that can accommodate just about any project size." In addition, the recent growth in on-demand and SaaS BI options, which offer quicker implementation times and lower costs to get started, is another route for companies to go.

"Flexibility like this is important," he says. "Without it, potentially high-ROI projects that should be pursued die on the white board during the cost analysis."

That's the real hidden cost of BI implementations, O'Connell says: "Non adoption."

In the course of analysing the Aberdeen survey data, Hatch identified the top three strategies in which "best in class" companies managed the TCO of BI. (Aberdeen's best-in-class performers scored the highest compared with other surveyed companies in these three categories: time-to-completion of BI projects; on-budget completion of BI projects; and cost-per-user of BI applications.)

These companies understood what the end-user requirements were for the BI applications. They were able to identify data sources for BI applications. And they defined business rules and calculations required for reports and analytic views.

Not surprisingly, understanding what the end users want is a critical factor, Hatch notes. "This highlights the importance of planning BI implementations based on user requirements as a primary cost-management factor," he writes in the survey report. "If the end-user requirements are not well-understood up front, a lot of time and effort ends up being wasted."

O'Connell suggests that companies pursue BI projects that they know will result in direct benefits. "By this, I mean tactical benefits such as improved productivity, tightening of the value chain or sales improvements," he says. "Use these benefits to pay for the larger more indirect benefits such as improved visibility and better ability to detect and respond to changes in the business environment."

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