Every organization needs to have a positive ROI at a point in time to survive. So we monitor cost and benefits for our organization. And every now and then we challenge if costs are actually in proportion to the revenue.
Yet for some costs there’s no direct relationship. Offering free drinks during work hours on itself might have a negative ROI, while the increased motivation might cause higher productivity, which generates more revenue and might raise profits.
It’s not much different for data. Where some data projects can cause direct revenues, others might only empower your employees or support better customer service, hopefully leading indirectly to more revenue. Data on itself doesn’t hold value without purpose, yet we see numbers of questionable initiatives to gather and store data without one.
Today, even the most common tools open the world’s data to every individual and technology. Customer Service representatives have access to full customer profiles from multiple systems and Sales reps carry i-pad’s containing customer and business sector insights, current offerings and personal sales performance. Marketing teams have downloaded a multitude of freeware and open source software to mine data from the internet. Your website is continuously analysing visitor profiles to maximize advertising revenue and Finance works with excel to acquire aggregated corporate performance.
Data is everywhere and everybody is using data. Today, just as with IT in the previous decades it’s not a matter anymore if you’re investing in data, but when and how.
When we question our data ROI we need to think on how we position data. If data is a corporate process equal to sales, IT, marketing or operations, than it might have its own P&L, and therefore have a ROI. Yet if we see data as an integrated part of our normal business process there is no such thing as an overall ROI on data.
The rise of Chief data officers (link and link) suggests we’re more and more considering data as a corporate process, which will enable us to run a separate P&L for data. Just like with IT or operations we can than judge if costs on data are proportional.
To get control on ROI on data, data needs to be considered as a business process, and mapped and managed accordingly. When data remains as part of existing business process data returns can only be identified on individual investments by implementing a governance framework alike IT projects.