If you do decide that your proposed BI initiative requires a full, formal business case it is worth noting that this is likely to be made more than normally difficult because the data you are likely to need to inform it is also likely to be of the type that you are hoping your proposed system will enable you to gather!
Benefits measurement is intimately linked to the business case. A business case often includes a set of predicted benefits; benefits measurement, on the other hand, is the identification and capture of the actual benefits, measured at two or three points after the BI system has been installed. Both depend on a baseline that expresses what your processes cost now.
A business case takes the baseline of present costs and says:
our proposed system will affect [reduce, you hope] these costs by X and Y’
A benefits measurement says:
our new system [perhaps after 6, 12 and 24 months] has affected these baseline costs by W and Z’
The way to make progress is to figure out what you want the BI system to do. What teams, processes and areas of work it will affect in the first and subsequent phases and then to identify the baseline costs for the teams and processes likely to be affected.
We have produced a freely available ‘impact calculator‘, a tool specifically designed to help you predict and measure the benefits (both tangible and intangible) of any change initiative, such as the implementation of a BI system.
The impact calculator requires you to accurately measure the baseline ‘as is’ performance of the processes in question – as suggested above – and then allows you to identify an (unlimited) series of benefits which you hope to achieve through the change initiative being undertaken. Each of these benefits can then either be predicted (as part of the kind of business case being discussed here) and/or measured based on actual performance changes: thus making it possible to compare the actual benefits realised with those predicted as part of the initial business case.
What will the BI system do?
A good place to start is by asking yourself and your colleagues what purpose (or more likely, purposes) the BI system is needed to fulfil. It will help to divide your BI goals into phases and to focus the initial business case on the earliest goals.
Consult as widely as possible within your organisation, and make sure you include senior management (vice-chancellors, principals, deans…), student records, academic departments (schools or faculties), finance, facilities management, HR, IT and planning (or management information).
Even if all of these units will not be involved in the first implementation phase, they should be invited to comment. You also want to be sure your project does not create accidental barriers to future expansion and that you do not accidentally clash with other information or data management projects, something which early liaison with your IT department should ensure.
It is likely that the responses you receive from such consultation will include a range of requirements, some of which can probably be measured quantitatively; others will almost certainly need qualitative (anecdotal) evidence. These distinctions are indicated in the lists below.
Likely phase one goals for a BI system include:
- Improved decision-making (anecdotal)
- Better strategic planning (anecdotal)
- Better risk management (anecdotal)
- Competitive advantage (quantitative)
- Income generation (quantitative)
- Efficiency gains (quantitative)
- Performance benchmarking (anecdotal and quantitative)
- Student satisfaction (quantitative)
- Student retention (quantitative)
- League table ranking (quantitative).
Of course, a successful project is unlikely to attempt all of these at once. Pick the few that from your consultation seem to be the most important to your organisation, and place the remainder in phase two or phase three of your BI project.
Measuring the present baseline
In order for you to be able to demonstrate how much your BI system has improved things it is clearly essential that you have captured an accurate picture of the processes to be affected prior to any change. In order to do this it is necessary to gather as many data as you can to define the present baseline costs and performance of your management information processes. Again, you may find the impact calculator a useful tool for achieving this. Some potential areas of investigation may include:
- How many people are directly employed on data gathering - for statutory reports, for internal reports, for finance, facilities, or student management?
- How many people are directly employed producing reports - both statutory and other?
- How much time from other administrative and support staff is used in data gathering? In preparing or formatting or distributing reports?
- How often do staff or departments disagree about data values or data meanings? How much time does this use?
- How often are reports late? Do these or other delays cost you money and/or opportunity?
- What are the costs of preparing reports and data for your intranet and your public website?
- What are your present software costs? What do you pay for reporting software? Include reporting modules in finance, HR and other systems. What do you pay for other software that gathers, shares or reports on data?
You may also find it useful to ask questions relevant to the goals you have identified for your organisation, for example:
- Improved decision-making
Level of satisfaction with decision-making speed, quality and accuracy at present
- Better strategic planning
Level of satisfaction with planning speed, quality and accuracy at present; any evidence of the success of plans
- Better risk management
Level of satisfaction with risk estimation and alleviation speed, quality and accuracy at present; any evidence of risks successfully managed; or of risks that were not managed
- Competitive advantage
Are you receiving more applications from students, faculty, staff? Are the candidates better? Are more of them accepting your offers? Are you getting more research funds? Are you competing better for grants, events?
- Income generation
Is your income, by category – such as undergraduate faculties or schools, graduate faculties or schools, housing, food, events, research etc – up or not?
- Efficiency gains
By whatever measures you have available now (before your BI system!) what are your costs per unit output?
- Performance benchmarking
Anecdotal and quantitative comparisons with similar and competing organisations
- Student satisfaction
Quantitative survey results
- Student retention
- League table ranking
Approaches to consultation
In addition to more formal methods of consultation, such as one-to-one interviews and surveys you may find it useful to conduct more creative, ‘freewheeling’ ideas sessions. Such events may well help to identify potential areas which may benefit from your BI initiative, or novel applications for the system which had not been identified by the project team.
Calculating the costs of a new BI system
Your business case will be more convincing if you include full, realistic costs for the proposed BI system. To calculate the real costs of a new system it can help to obtain answers to the following questions:
- Is new computing hardware needed? Include costs for buying, installing, operating, managing and maintaining the hardware
- Is supporting software needed? Include costs for any new operating systems, database software, etc.
- Are there any licence costs of your BI software?
- Are there any annual maintenance costs of the BI software?
- Are there any installation and configuration costs? Include internal staff time as well as consultants
- Are there any training costs? Include internal staff time, and internal trainers, if they will be used
- How will the BI system be managed? Will internal staff be devoted to, or partly assigned to, the BI system?
The above list should only be viewed as a starting point for your calculations and should be added to any other costs associated with the project that may be specific to your organisation. Identifying such costs (many of which may be ‘hidden’ or indirect in nature) may well make a useful exercise as part of a participatory workshop.
Predicted benefits: the business case
Ultimately, a significant part of the business case is likely to be constructed of a comparison between the predicted costs and the predicted benefits.
Realistically there are two hierarchies of benefit for any BI project. In the first, actual cash savings have the most weight:
- Cash savings (e.g. from retired software and hardware, from redeployed staff)
- Income generated
- Improved speed and efficiency
- New capabilities and opportunities
- Improved quality and reduced risk.
Most organisations, when reviewing a business case, will give more weight to well-demonstrated cash savings, and less weight to improved quality and reduced risk, though this balance may well differ even within different parts of the same organisation, depending on the nature of the function they perform.
The second hierarchy depends on your budget holders and senior management. They will tell you which benefits they are most concerned about, providing they are given the right opportunities to do so. Some of these may echo the benefits outlined in the list above, whereas others may be non-tangible in nature.
We must also acknowledge that it will not prove possible for your BI project to meet all the requirements people may identify. Open admission of such shortcomings, together with an explanation for them and, if appropriate, their inclusion on a list for future development plans should help manage expectation and avoid undue disappointment.
Once your business case has been accepted, and your BI system is installed, you are likely to have two main ways of measuring benefits.
The first way to measure benefits, is to use (as close as possible) the same measures you used on your baseline for the business case and the benefits. Even though these initial measures were not taken with the BI system, and might therefore be inefficient or cruder than information which the BI system could provide, it is important to measure changes (and therefore benefits, positive changes) by the same measure that was used for the baseline.
The second way to measure benefits is to use the BI system. If you identify new benefit measures which the BI system could give you, gather a baseline measurement (or a ‘near-baseline measurement’) as quickly as you can after the BI system is installed. Then repeat the measurement at intervals to obtain the benefit and its trend in time.
Both should be used, and benefits should be measured more than once. Measuring benefits at 1, 2, and 3 years after implementation allows you to show the positive effects of staff training and familiarity, and the incremental improvements as people begin to use the BI system in new ways. It also gives you a basis to forecast future benefits, and to propose further phases of the BI system. Our impact calculator allows actual benefits to be measured for up to five years.