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A typical implementation of SAP BI will go through the following stages: Define –> Configure –> Develop –> Deploy. image  There is also a critical stage before starting the Define phase of Implementation like Pre-Sales, Evaluation of product, Relevancy of product features to business etc. All these pre-implementation phases provide inputs to process of final decision making on product implementation. And then starts the Product Implementation Process.  Once there is Go- Ahead granted that means a cost is committed for this (It is a cost to start with and when Returns start coming in, post implementation, then will be termed as Investment).This cost may have various heads like Hardware cost, Software licensing cost etc.  Once deployment of the solution is done, there is “Point of Inflection” (I prefer calling it point of inflection because it will shift your perspective from ”Cost” to “Investment” and beyond this point you will start looking at “ROI – Return on Investment” and “Payback Period”) in terms of you cost curve changing to “Return on Investment” curve. Beyond this point you start getting the returns on Committed Cost (Investment).  Let us look at decision making process little more in detail, before committing cost / investment for implementation, “ROI” figures and “Payback Period” are calculated as well. Bigger challenge is to ensure that not to loose the track after implementation and to ensure “Payback period” does not increase (Decrease rate of ROI) and more importantly look at the possibility of reduced “Payback Period”?  Getting to know ROI is a painstaking process as it includes Qualitative & Quantitative measures both. Here is an attempt to evolve the model which clubs both the measures and provide direction to track / improve ROI in order to reduce Payback Period. This model presents a way to look at ROI with some quantitative measures.            The Model Model has three stages and can be applied to any product. Model presented here is a framework. One needs to evolve one’s own model with the help of this framework.  image •     Stage I – EVALUATE – Evaluate the Product Capability (PCI) •     Stage II – RELEVANT – Shortlist Relevant Capabilities for organization  •     Stage III – CURRENT – How much Capability is currently being used?       The Model – An Application  Let us take a simple example & go through these stages step by step. Say one need to evaluate SAP BI as Intelligence product and three major areas of SAP BI for evaluation are: •     Extraction •     Modeling Capabilities •     Information Dissipation Capabilities  After evaluation SAP BI product is selected for implementation and also expected “Payback period” is calculated. Post implementation challenge is to meet “Calculated Payback Period”. This model suggests to evaluate major areas of product (preferably those which has gone into selection of this particular product)   For this example assuming Information Dissipation Capability to have influence on ROI, need to evaluate SAP BI’s Information Dissipation Capabilities –  (Note: all the major areas like extraction capabilities, modeling capabilities etc have to go through these stages)  Stage I – Evaluate the Capability –   SAP BI has got strong Information Dissipation capability & it can be elaborated and evaluated on various parameters like –   •     Channels (maximum 2 options) 1.     Email 2.     Enterprise Portal  •     Formats (maximum 4 options) 1.     HTML 2.     MHTML 3.     BEx Analyzer Workbooks 4.     ZIP Files  •     Sources (maximum 3 options) 1.     BI Web Applications e.g. Dashboards, Cockpits etc. 2.     Workbooks 3.     BEx Queries  •     BI Analytics Modes ( maximum 2 options) 1.     Online 2.     Pre-Calculated  •     Timings (maximum 3 options) 1.     Event Based 2.     Adhoc 3.     Scheduled  Calculate “Product Capability Index” –  •     “PCI” = Channels + Formats + Sources + Modes + Timings (maximum options of each)   •      PCI = 2 + 4 + 3 + 2 + 3 = 14 •     (Note: for simplicity purposes each capability is assigned equal weightage (i.e. 1 for each). These can be changed organization to organization, product to product etc.)    Stage II – Find out what is relevant for Organization? –    During the evaluation of product it was decided that only capabilities below are the relevant ones  •     Channels (maximum 2 options – relevant 1) 1.     Email  •     Formats (maximum 4 options – relevant 3) 1.     HTML 2.     MHTML 3.     ZIP Files  •     Sources (maximum 3 options – relevant 1) 1.     BI Web Applications e.g. Dashboards, Cockpits etc.  •     BI Analytics Modes ( maximum 2 options – relevant all 2) 1.     Online 2.     Pre-Calculated  •     Timings (maximum 3 options – relevant all 3) 1.     Event Based 2.     Adhoc 3.     Scheduled  Calculate “Relevant Product Capability Index”       “RPI” = Channels + Formats +   Sources + Modes + Timings (relevant options of each)        RPI = 1 + 3 + 1 + 2 + 3 = 10 Stage III – How much Capability is currently being used? (Post Implementation)?  During the evaluation of current status, it was found that Only below RELEVANT capabilities are being used:  •     Channels (maximum 2 options – relevant 1 – currently being used 1) 1.     Email  •     Formats (maximum 4 options – relevant 3 – currently being used 2) 1.     HTML 2.     MHTML  •     Sources (maximum 3 options – relevant 1 – currently being used 1) 1.     BI Web Applications e.g. Dashboards, Cockpits etc.  •     BI Analytics Modes ( maximum 2 options – relevant 2 – currently being used 1) 1.     Online  •     Timings (maximum 3 options – relevant 3 – currently being used 2) 1.     Adhoc 2.     Scheduled  Calculate “Current Product Capability Index”  •     “CPI” = Channels + Formats + Sources + Modes + Timings (current being used options of each)   •      CPI = 1+ 2 + 1 +1 +2 = 7 •      Analysis image •      Read the Measures 1.     Measure A – % of relevant product capability for your organization. I.     If this value is low probably you haven’t chosen the right product (unless you plan to use other capabilities in future). Why should you pay for a luxury car while what you really need is a simple small car? II.     May be you should look at the other products (probably cheaper) or look at the leveraging more of chosen product.  2.     Measure B – % of relevant capability which is being used currently. I.     If this value is low probably you haven’t really leveraged the capabilities of solution fully, which were decided at the start of the project. II.     At the start of the project your expected ROI and Payback period calculations were based on relevant capabilities. Not using chosen capabilities may have its impact on actual ROI & Payback period.   3.     Measure C – % of product capability, which you are using currently.  I.     If this value is low then may be you need to revisit “Stage II” again as there may be few capabilities which were not relevant earlier, may be relevant now. In turn can help you increase ROI & reduce Payback period.  •      Word of Caution 1.     One needs to develop own model considering the product one needs to evaluate and other exogenous factors critical to organization capability etc. 2.     This Model throws a perspective on ROI and Payback period, this should be used along with other qualitative perspective rather than using it in isolation.
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  1. Adolfo Colin

    Vikash, do you know if there is any public white paper with this info already published? We need to show this ROI to a public sector customer her in Mexico. TIA

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