As we move into the planning and budgeting season, the time seems right to start talking about ROI. At Ipedo, we've spent quite a bit of time analyzing how our customers can save money and improve productivity using EII. In this five-part series, I'll show you how to do it.
What kicked off our study of the financial benefits of EII was a 2005 study by The Data Warehousing Institute (TDWI). In it, 69% of respondents said that data integration issues are a barrier to implementing new applications. The three main issues they listed were poor data integration infrastructure, lack of a business case and inadequate funding, and data quality and security.
This series will help decision makers responsible for data integration projects develop a business case that quantifies the potential cost savings of an EII project based on their organization’s specific information integration needs. Each installment will focus on a specific area where EII can generate cost savings and productivity improvements:
- Increased flexibility to respond to changes in IT requirements
- Better analyst utilization
- Higher developer productivity
- Lower data consolidation costs
- Less expensive application maintenance
A few housekeeping items before we start. In the scenarios, we provide examples to illustrate the potential cost savings. Each example is for a departmental EII implementation, as opposed to an enterprise-wide deployment. Most organizations start with a single use for EII and then scale it to different departments once they achieve their target results and become comfortable with the technology.
The cost savings numbers represent the ongoing annual savings, after the initial cost of implementing the EII system. This cost of an EII system will vary, depending on your specific needs. For the departmental-scale examples in this document, a 1- or 2-CPU system with matching failover server will be sufficient in most cases. A complete Ipedo deployment for a scenario, including software license, maintenance, training, and some customization through our professional services group will cost around $200,000. A bare-bones EII system can cost as little as $50,000.
Your savings may be higher or lower than what we illustrate, depending on your specific use case and the cost of implementing your EII solution. To simplify testing different scenarios, running your own numbers, and performing “what if” analysis to determine your own cost savings, Ipedo has a companion Excel worksheet. If you are interested, let me know and I can send you a copy.
So, with all that out of the way, let's get down to brass tacks and look at how Ipedo can save you money by increasing flexibility in a reporting application.
Increased Flexibility in Reporting
In today’s information economy, having access to data across the enterprise gives managers and executives a significant advantage in making real-time decisions that affect their business. EII allows companies to respond quickly to changes in market conditions without incurring a major IT investment.
What effort is involved to link new data sources to your existing reports or applications?
|
Example |
Formula |
Conventional Approach |
|
|
Cost to modify a report to integrate a new data source ($) |
$1,000 |
A |
Number of changes required annually |
200 |
B |
Cost to modify an application to integrate a new data source ($) |
$5,000 |
C |
Number of changes required annually |
50 |
D |
Reporting cost using conventional approach ($) |
$450,000 |
(A * B) + (C * D) |
EII Approach |
|
|
Cost to modify a report to integrate a new data source ($) |
$100 |
E |
Number of changes required annually |
200 |
B |
Cost to modify an application to integrate a new data source ($) |
$0 |
F |
Number of changes required annually |
50 |
D |
Reporting cost using EII approach($) |
$20,000 |
(E * B) + (F * D) |
Potential annual cost savings from EII ($) |
$430,000 |
(A * B) + (C * D) - (E * B) + (F * D) |
In this example, a business unit that modifies four reports and one application a week will save $430,000 by using EII.
Additional Upside
These are a few soft benefits. You can either try to assign a value, or you can just treat these as icing on the cake.
- By getting useful information sooner, what is the value to your organization?
- What new insights can your managers discover by having access to a unified view of disparate information that EII provides?
- As new regulations appear, how quickly can you respond to generate the necessary documentation? What is the burden on your organization to create these reports? Whose budget covers producing regulatory reports?
That's all for now. I'd be curious to hear back on how people think these numbers match their own situations.
Stay tuned for our next installment.