• April 27, 2012
  • By Leonard Klie, Editor, CRM magazine and SmartCustomerService.com

ROI of Business Analytics Increases Significantly as Solution Matures

Defying typical enterprise software ROI cycles, business analytics increase return on investment substantially as the solution matures and is extended to handle big data beyond the firewall, including social media and partner ecosystems. A Nucleus Research analysis of 60 deployments shows that an average ROI of 188 percent in the initial automation phase grows to an average of 1,209 percent in the later predictive phase.

Business analytics include business intelligence (BI), performance management (PM), predictive analytics, and supporting data management technologies.

Nucleus identified four stages in the evolution of analytics. They are the following:

  • The initial stage of automating reports, which yielded an average ROI of 188 percent;
  • The tactical stage, where organizations leverage analytics to improve decision making rather than just increase productivity yielded a 389 percent return on average.
  • The strategic phase, where enterprises deployed analytics across most of the organization and used them to align daily operations with the goals of senior management, yielded and average 968 percent return.
  • The predictive phase yielded the highest average ROI of 1,209 percent, as organizations tapped into big data and extended their analytics to larger data sources beyond their firewall to include partner ecosystems and social media.

"With increasing rates of return on investments in analytics, companies are benefiting from even small initial deployments and are using analytics to drive continuous improvements to business process and decision making. Few investments, financial or otherwise, generate a higher return with increasing levels of investment. Analytics should be a top priority for future investments for most organizations," said Hyoun Park, principal analyst at Nucleus Research, in a statement.

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