Waseem bari eexcercise 2

Business Intelligence Project Case Studies : Exercise 1

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-2.25

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Cumulative Net Value (M)

Cumulative Net Value(M)

Waseem Bari Instructor: Bill Chadwick SCS 0245-026 Business Intelligence Fundamentals

BUSINESS CASES FOR BUSINESS INTELLIGENCE PROJECTS

Case No. 1

1st Year 2nd Year 3rd Year 4th Year 5th Year

Project IT Costs 2M 0.5M 0.5M 0.5M 0.5M

Extra Customer Upkeep 0 0.375M 0.375M 0.375M 0.375M

Cumulative Total Costs 2M 2.875M 3.75M 4.625M 5.5M

Extra Revenue/year 0 3.1M 3.1M 3.1M 3.1M

Cumulative Benefits 0 3.1M 6.2M 9.3M 12.4M

Cumulative Net Value (2M) 0.225M 2.45M 4.675M 6.9M

Benefit/Cost Ratio () 108% 165% 201% 225%

Evaluation of Case 1

Benefit/Cost Ratio

Payback Period

Net Cummulative Value

If we look at the Total Cost and Cummulative benefits, we will get

to know that our business is covering the cost it is incurring, that is

108% in 2 years

This project is feasible for the company because the benefit/cost

ratio is greater than 200% within 5 years.

If we look at the Cummulative Net Value and Cummulative Total

Cost, the project cost is being covered, so its feasible.


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Case No. 2A


Project IT Costs 4M 1M 1M 1M 1M




Cumulative Benefits 0 3.1M 6.2M 9.3M 12.4M

Cumulative Net Value (4M) (22.275M) (0.55M) 1.175M 2.9M

Benefit/Cost Ratio () 58% 92% 114% 131%

Evaluation of Case 2A

Benefit/Cost Ratio

Payback Period


Although the increase of CNV is steady, it is too slow. If the main purpose

of building this DW is to decrease churn rate, Extra Revenue/year should

be better for the Project

This project is not feasible for the company because the benefit/cost ratio

is less than 200% (131%) in 5 years.

If we look at the Total Cost and Cummulative benefits, we will get to know

that our business is not covering the cost in 2 years


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Case No. 2B


Project IT Costs 4M 1M 1M 1M 1M




Cumulative Benefits 0 6.2M 12.4M 18.8M 25M

Cumulative Net Value (4M) 0.825M 5.65M 10.47M 15.3M

Benefit//Cost Ratio () 115% 184% 229% 261%

Evaluation of Case 2B

Benefit/Cost Ratio

Payback Period


This project is feasible for the company because the benefit/cost ratio is

greater than 200% within 5 years.

If we look at the Total Cost and Cummulative benefits, we will get to know

that our business is covering the cost it is incurring

If we look at the Cummulative Net Value and Cummulative Total Cost, the

project cost is being covered, so its feasible.


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Similarities amongst cases:

1. Same project time period

2. Beginning of the project in first year value went in to minus (-)

Differences amongst Cases

1. Payback Period for Case 2A takes more than three years, compared to other two accomplish that by the end of year two.

2. To reach to 200% Benefit/Cost Ratio within 5 years, the initial Project IT cost and yearly IT cost of Case 1 leads to the quicker accomplishment without improving Extra Revenue/year.

3. In Case 2A, because Project IT cost and yearly IT cost is double the Case 1, it is impossible to meet 2 year Payback Period without improving Extra Revenue/year by reducing churn rate. Also, 200% Benefit/Cost Ratio in 5 years will not be accomplished.

Having identified the dimensions and the measures we then need to make some business judgments about the feasibility of a BI solution or solutions. Here are some points to consider

· Look for the easy wins, tactical solutions delivering business benefit that can be achieved quickly and cheaply.

· Identify measures where no current data exists, these are more difficult to implement as data collecting systems will have to be build and put in place before they can be used.

· Watch out for high data volumes, if they are very large it may be that data has to be summarized to reduce the volume.

· Strategic, cross-departmental solutions will need board level sponsorship · and support to be successful.

Waseem bari eexcercise 2

Technology

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