What You Need to Know About Business Intelligence TCO

How can you manage your BI system's total cost of ownership better? Avoid these common stumbling blocks that add big costs to any BI project.

By Thomas Wailgum
Fri, March 28, 2008

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

Two pieces of research from Aberdeen Group illustrate business's growing and insatiable need for actionable reporting and analytics data. A 2008 survey of 4,300 companies found that the number-one technology that could have the greatest impact on businesses during the next two to five years was BI and analytics. That's not surprising because Aberdeen's 2007 research showed that the number-one technology spending item for companies was "reporting and analytics."

IT departments, in particular, are feeling the heat to give line-of-business executives and their demanding end users exactly what they want and need—even if it's clear that IT doesn't have the necessary application development and integration abilities.

And in the rush to achieve BI bliss, many critical questions surrounding the ultimate costs (as in, "What's our total cost of ownership going to be with this BI system?") are left unanswered by many companies at the outset. Perhaps, it's for a good reason. "That's a difficult thing to determine," says David Hatch, a BI research director at Aberdeen Group. "There is no standard for a BI scenario."

Hatch's research shows that those companies that have recently rolled out a BI system notice financial pressures coming from several areas. The first, and most important, Hatch says, is the pressure to improve data integration from multiple applications (noted by 42 percent of the respondents). From interviews with those who took part in the survey, Hatch notes that "this single factor alone can dictate the success or failure of a BI initiative."

"What I'm finding is that companies don't really understand the extent of the data management challenges to BI until they get into it," Hatch says. And if internal IT does not have the skill sets or resources to solve these data challenges, that can become pricey for many companies. "You have to invest internally or look outside for help," Hatch says, "and both are expensive options."

No Value if Users Ignore Tool

IT departments also report feeling BI implementation pressures related to the need to: deliver BI to more end users (29 percent); improve ease-of-use of BI for nontechnical users (27 percent); and speed the development of customized BI capabilities (19 percent), according to Aberdeen's survey.

Unresolved and combined, those three problems can lead to substantial decreases in user adoption—a pervasive problem with BI applications, and one that makes determining TCO a "cloudy exercise," Hatch notes.

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."

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