Position and Agree on ROI to Maximize the Impact of Data and Analytics

Data and analytics ROI strategy is based on the business problem being solved and agreed-upon value being generated.

Analyst Perspective

Missing out on a significant opportunity for returns could be the biggest cost to the project and its sponsor.

		This research is directed to the key decision makers tasked with addressing business problems. It also informs stakeholders that have any interest in ROI, especially when applying it to a data and analytics platform and practice. While organizations typically use ROI to measure the performance of their investments, the key to determining what investment makes sense is opportunity cost. Missing out on a significant opportunity for return could be the biggest cost to the project and its sponsor. By making sure you appropriately estimate costs and value returned for all data and analytics activities, you can prioritize the ones that bring in the greatest returns.
Ibrahim Abdel-Kader Research Analyst, Data & Analytics Practice Info-Tech Research Group	Ben Abrishami-Shirazi Technical Counselor Info-Tech Research Group

Executive Summary – ROI on Data and Analytics

Info-Tech Insight

ROI doesn’t have to be perfect. Parameters and measures of success need to be agreed upon with the key decision makers.

Glossary

Return on Investment (ROI): A financial term used to determine how much value has been or will be gained or lost based on the total cost of investment. It is typically expressed as a percentage and is supported by the following formula:

Payback: How quickly money is paid back (or returned) on the initial investment.
Business Problem Owner (BPO): A leader in the organization who is accountable and is the key decision maker tasked with addressing a business problem through a series of investments. BPOs may use ROI as a reference for how their financial investments have performed and to influence future investment decisions.
Problem Solver: A key stakeholder tasked with collaborating with the BPO in addressing the business problem at hand. One of the problem solver’s responsibilities is to ensure that there is an improved return on the BPO’s investments.
Return Enhancers: A category for capabilities that directly or indirectly enhance the return of an investment.
Cost Savers: A category for capabilities that directly or indirectly save costs in relation of an investment.
Investment Opportunity Enablers: A category for capabilities that create or enable a new investment opportunity that may yield a potential return.
Game Changing Components: The components of a capability that directly yield value in solving a business problem.

ROI strategy on data and analytics

ROI roles

Typical roles involved in the ROI strategy across the organization

CDOs and CAOs typically have their budget allocated from both IT and business units.

This is evidenced by the “State of the CIO Survey 2023” reporting that up to 63% of CDOs and CAOs have some budget allocated from within IT; therefore, up to 37% of budgets are entirely funded by business executives.

This signifies the need to be aligned with peer executives and to use mechanisms like ROI to maximize the performance of investments.

Source: Foundry, “State of the CIO Survey 2023.”