Big Data ROI: A Rant

I recently hosted a well-attended webinar on Big Data in the public sector. It went reasonably well enough and, at the end, I answered some questions from inquisitive listeners.

Now, most were fairly standard queries. I sensed that there was a little skepticism about the power of Big Data among attendees. To be sure, there’s no shortage of hype these days. I also received the completely expected question, “How can you determine the value of Big Data? How do I calculate its ROI?”

I’ve ranted on this topic before, and I just don’t agree with those who won’t move before they have precisely quantified the ROI of Big Data. At best, these are SWAGs. At worst, they are biased calculations driven by vested consulting firms and vendors trying to hawk their wares.

Replicating the Old in the New

With any new technology or application, employees and enterprises often seem to fall into the same traps. We are creatures of habit, after all. Over my career, I have repeatedly seen organizations deploy new technologies and make similar mistakes. Among the worst: employees simply replicated what they were doing before in the old system or reporting application. It became old hat: I would often just help people just create their previous standard reports in the new system.

Many people just didn’t care about the new system’s enhanced functionality. Put simply, these people just didn’t want to learn.

Again, I understand this mind-set, but I don’t agree with it. When you’re doing what you just did before, you squander massive and unprecedented opportunities. You fail to explore and discover new insights. In these types of organizations, I’d wager that pre-implementation ROI calculations exceed real-world results.

On occasion, however, I have worked with people curious about the enhanced functionality of the new system or reporting tool. They didn’t just want to set up old standard reports. They wanted to learn and explore new things. What could they do now that they couldn’t do before? In cases like these, I would “take the over” on any ROI estimate.

Simon Says

First, don’t think of Big Data as “another application.” It’s not.

Second, realize that ROI calculations are often imprecise at best. What’s more, as books like The Halo Effect: … and the Eight Other Business Delusions That Deceive Managers manifest, the world doesn’t stand still. How can any ROI model account for what may happen when many of the unknowns are unknown?

Either way, if you get Big Data or you don’t, you can twist ROI calculations to prove your point.

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Category: Information Management, Information Value
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