IDC Study Finds Analytics Projects Yield 431% Average ROI

FRAMINGHAM, MA – OCTOBER 28, 2002 – According to the just-released findings of IDC's study, The Financial Impact of Business Analytics, analytics projects positively impact an organization's bottom line. Investments in analytics are providing enormous benefits to companies in a wide range of industries and geographies. Organizations who have successfully implemented and utilized analytic applications have realized returns ranging from 17% to more than 2000% with a median return on investment(ROI) of 112%.

 

IDC pioneered this research with its 1996 groundbreaking study The Financial Impact of Data Warehousing. The key findings for the new study, The Financial Impact of Business Analytics, include:

Business analytics implementations generated an average 5 year ROI of 431%. Over half (63%) of those studied had a payback period of two years or less.

The best results are achieved when analytics goes hand-in-hand with businessprocess change. Each case had a strong business process focus, in one of

these 3 areas:

Operations/production analytics (related to the production or delivery of a product or service) showed the highest return with a median ROI of 277%

Financial/business performance management analytics had a median ROI of 139%

Customer relationship management analytics had a median ROI of 55%.

"Buy" projects (implementing a packaged analytic application) yielded a median ROI of 140%, while "Build" projects (custom development) yielded a median ROI of 104%. The approach adopted depends on the problem addressed, the level of skill within the organization, and the availability of packaged solutions.

"The study has demonstrated that companies can derive significant ROI from analytics when they maintain a focus on a pressing business problem" said Henry Morris, Group Vice President of Applications and Information Access, IDC. "Analytics positively impact the productivity of knowledge workers, across a range of industries and processes. The key is to continually apply the results of analytics in the form of corrective actions that improve a business process."

"The Data Warehousing Institute once again thanks IDC for performing outstanding research on the ROI of business intelligence systems. The study reinforces and extends IDC's 1996 landmark study, The Financial Impact of Data Warehousing, which also demonstrated that business intelligence delivers substantial ROI when properly designed and implemented. Although the favorable results of these two IDC studies are not a surprise to anyone who understands the role of business intelligence in organizations, it is invaluable for our industry to have concrete numbers to hang its hat on," said Wayne Eckerson, Director of Research, The Data Warehousing Institute.

IDC's study investigated the return on investment realized by organizations that have successfully implemented and utilized analytic applications. It included 43 in-person interviews in North America and Europe with IS managers, business managers, department managers, and system users spanning a range of industries. The study received broad industry support including sponsorships from the following: Adaytum, AlphaBlox, Business Objects, HNC Software (now Fair, Isaac), IBM Business Consulting Services, Informatica, Oracle, PeopleSoft, Sagent Technology, SAP, SPSS, Teradata — a division of NCR, and with the cooperation of The Data Warehousing Institute.

For more information on IDC's study, The Financial Impact of Business Analytics, visit our web site at www.idc.com/analyticsroi or contact Dawn Daggett at 508-935-4108 or ddaggett@idc.com.

About IDC

IDC is the foremost global market intelligence and advisory firm helping clients gain insight into technology and ebusiness trends to develop sound business strategies. Using a combination of rigorous primary research, in- depth analysis, and client interaction, IDC forecasts worldwide markets and trends to deliver dependable service and client advice. More than 700 analysts in 43 countries provide global research with local content. IDC's customers comprise the world's leading IT suppliers, IT organizations, ebusiness companies, and the financial community. Additional information can be found at www.idc.com.

IDC is a division of IDG, the world's leading IT media, research and exposition company.

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