IT Strategy

Total Cost of Ownership for Business Intelligence Application

December 26, 2007 by Raj Sheelvant

The cost for implementing the BI tools is rising and therefore the CIO and other business managers are becoming aware of new licensing and implementation costs. There are several options. The BI tools are rolled up into the Enterprise applications. Some vendors provide stand alone BI tools. Then there is Open Source BI application. Both Traditional and Open Source Vendors now provide SaaS delivery model. How can anyone compare open-source options versus Traditional BI? How do you calculate Total Cost of Ownership (TCO) for the BI application?Information Builders has a good white paper on this very subject (Click here to read the white paper). There are several components for the BI application that need to be taken into account while calculating the TCO.

I am happy to see Software Functionality in Information Builders’ white paper diagram (as shown above). Many organizations will look into Hardware, Software, User Training, Support and Maintenance and Time to implement when comparing BI applications. Some organizations also compare Software Architecture Scalability and Data Architecture to calculate TCO. But, many organizations do not do a good job of analyzing and assessing Software Functionality. They mainly go through the list of all the functionality that exists for that application. If the list of Software Functionality for BI tool A is greater than B, then the conventional thinking is that Software A is better. But what if that functionality is not relevant to that firm? In my view, the first thing the firm needs to do before analyzing the TCO of the BI tools (or any other Enterprise Application) is to understand WHY they want to use Business Intelligence Application after all. What data have they been collecting and are willing to collect (it depends of how easy it is to collect good quality data)? The firm need to have a clear understanding of HOW BI application is going to enable their Business Strategy. Once the organization begins to do the detailed analysis of what data they have and need (in the context of their Business Strategy), only then the functionality of that software application begins to become relevant. If a firm implements the functionality of BI application that in no way provides any competitive edge, it’s a total waste of valuable resource. What ‘intelligence’ the organization will gain looking at some irrelevant data?

Popularity: 60% [?]

Related posts:

1. Next Gen Business Intelligence Tool
2. Pervasive Business Intelligence
3. Next Generation Business Intelligence Tools
4. Coca Cola’s Business Intelligence Strategy
5. Business Intelligence for HR Department