Evaluating Business Intelligence: A Balanced Scorecard Approach

Abstract

Adoption of new information technology often has an indirect effect on an organization’s bottom line; however, many organizations require some minimum financial return on investment before undertaking a major investment. The return on investment in business intelligence (BI) such as data warehouses, data marts, reporting and query tools, and analytic applications are even more challenging to measure since many of the benefits are intangible. How can a company objectively measure the value of improved communication and information for decision-making?

It has been noted that traditional financial performance measures do not measure the increase in value when companies improve their capabilities through the use of new technology. Further, traditional financial measures such as return on investment (ROI) appear to show improvement even when the technology is not being used effectively. In this chapter, we discuss the nature of the Balanced Scorecard and illustrate how it can be used as a measurement tool to evaluate the return on an investment in technology such as BI.