What is Analytics ROI?
The Return on Investment on embedded analytics. The ROI formula is:
ROI(%) = (Benefits / Costs) -1 , over a specified Time
Time – Time period of technology investment
Benefits – Revenue increases and cost reductions
Costs – The investment needed to develop and maintain the solution.
“-1” –assures positive ROI only when benefits exceed the costs.
As an example, consider a Data Analytics company brings in $8 million in revenue per fiscal year. The company expects to drive a 5% increase in sales each year. Over two years that comes out to $800,000 in added revenue. If the total cost is $200,000 over two years, the ROI is 300 percent.Back to Glossary