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Analytics ROI Is Strong, and Getting Stronger

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Posted October 15, 2014 By Ann All     Feedback

Nucleus Research found that organizations get an average ROI of $13.01 for every dollar they spend on analytics applications, up from $10.66 in 2011.

Analytics is at the center of technology spending for many enterprises. "Analytics is the most desired function across all applications, as it’s where enterprises feel they have the largest gap,” Gartner analyst Bianca Granetto recently told Enterprise Apps Today, noting that a desire to leverage analytics is driving investments in CRM, ERP and enterprise content management, among other areas.

A new study from Forrester Research finds companies are boosting their spending on technologies that help them better serve their customers, the Wall Street Journal reports, with analytics a key area for investment.

But do they get a good return on their investments? A new study from Nucleus Research shows that organizations can expect an average ROI of $13.01 for every dollar they spend, up from an average ROI of $10.66 in 2011. The study encompassed companies of all sizes, from a broad range of industries, using a variety of analytics solutions, from best-of-breed specialists as well as major vendors.

Nucleus Research analyst Nina Sandy said productivity is a key driver of ROI for analytics, and it's one likely to get an especially enthusiastic reception from finance executives.

"CFOs know the struggles they are going through trying to get a clear picture of the numbers from all the different spreadsheets in an organization," she said. "They definitely see the value of developing proper workflows and getting better productivity out of their people."

Noting that many organizations still run their business largely on spreadsheets, Sandy said, "When you go from spending months trying to consolidate the data from different spreadsheets and asking, 'what formula did you use?' and 'which version of the spreadsheet did you use?' to being able to say, 'here are the numbers so we can make a decision,' that is huge."

Self-service Analytics

In addition to productivity, many organizations experience corresponding gains in user engagement, Sandy said.

"Once people start getting a consolidated view of information, they start doing more things than they used to and gaining confidence in the data and the systems," she said. "They are much more proactive, they are part of the process, and they share and collaborate. They become more engaged, as opposed to just saying 'Here is my number. I don't care. I am shutting my door and moving on to another task.'"

CIOs and IT organizations are also beginning to realize that self-service analytics applications, especially cloud-based apps that offer implementation flexibility and ease of use, are a good way to build user engagement and enhance productivity, Sandy said.

"Instead of having to spend its time building reports, IT can now spend its time optimizing the environment , making sure the organization has the right data, making sure the patch levels are appropriate , and making sure the right security and governance is in place," she said.

While IT professionals used to worry that cloud-based apps might present a threat to job security, Sandy said they increasingly see the cloud as facilitating career advancement.

"The context is changing from 'I'll lose my job if we roll out a cloud solution' to 'now I can build apps we can use in the cloud,'" she said. "If your resume shows all you have done for the last 15 years is build reports, that is probably not going to get you very far."

Cloud Analytics

Sandy expects adoption of cloud-based analytics applications to continue to grow. She recently surveyed some 70 Nucleus Research clients and found a nearly even split between those that had on-premise analytics apps and those that had cloud analytics apps. But 60 percent of those with on-premise apps plan to move to the cloud within two years, she said.

"It's becoming more of a mandate within IT departments to consider cloud for new deployments," she said.

Cloud can also make it easier to push out new functionality to users, which is the single biggest factor for companies evaluating analytics software, she said.

"Usability is important, but functionality is more important," she said, noting that  60 percent of the companies she surveyed said access to new functionality was a driving factor in selecting analytics solutions, whether in the cloud or on premise.

Another factor beginning to influence buying decisions is a desire to analyze a wider variety of data types, Sandy said. "They are beginning to say, 'What about all that unstructured data Excel cannot handle? Is there something in there we can get value from?' After they get their processes in order, they want to make sure they can bring in all the data that they want."

Ann All is the editor of Enterprise Apps Today and eSecurity Planet. She has covered business and technology for more than a decade, writing about everything from business intelligence to virtualization.

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