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The Descriptive Part of the Cost/Benefit Analysis for the Business Case

In relation to the radio station example, the description could look like this:

Title: "Know the current listeners' preferences and adapt the broadcast to these."

Current status: The current status is that nothing targeted is done to adapt the radio production to current listeners' wishes. It's completely random which news is read and which music is played. DJs frequently attempt to estimate who their listeners are at different times of the day, but it is pure guesswork and not based on factual knowledge.

The consequences of not implementing: The radio station's production department cannot work in a targeted way to adapt processes to current listeners' preferences with a view to improving the "Average listening time" KPI. The consequence is less than optimal advertising revenue and less than optimal return on equity. In other words, the radio station's production department is not fulfilling its potential and is therefore underperforming.

Critical success factors: Since it's the first time that a BA initiative has been implemented in the production department, the operational decision makers' change readiness is critical to the success of the project. Another critical success factor is whether we succeed in collecting the desired data about our listeners' characteristics and preferences at different times of the day and whether this data is of

Risks

Consequence

Likelihood of Event

It is uncertain whether the radio station will succeed in collecting the desired data about its listeners’ characteristics and preferences at different times of the day in the right quality via a questionnaire on the radio station’s Internet portal. Note, however, that the radio station is budgeting with advertising jobs from sponsors to motivate listeners to fill in the questionnaire on a regular basis and in a qualitative way.

5

2

There is also uncertainty in terms of the operational decision makers’ change readiness.

5

1

Exhibit 8.7 Risk Involved in the Radio Station's Case Study

the right quality because it was obtained through a questionnaire on the radio station's Web site.

Target group: The radio station's production department is the target group of the BA initiative, which aims to increase average listening time.

Risk: As illustrated in Exhibit 8.7, the risk is associated with the data collection via the new data source and the electronic questionnaire as well as the operational decision makers' change readiness. Note from the exhibit that it is not considered likely that these events will occur.

Consequence (what is the consequence if the risks of the project occur):

  • 1 = No effect
  • 2 = Minor delay
  • 3 = Delay
  • 4 = Considerable delay or drop in value
  • 5 = Impossible to implement the project

Likelihood of event (what is the probability of the risk occurring):

  • 1 = Very low probability
  • 2 = Low probability
  • 3 = Sometimes
  • 4 = A good chance
  • 5 = Almost certainly

The Cost/Benefit Analysis Used for the Business Case

The cost/benefit analysis of the project may consist of an assessment of the eight factors in Exhibit 8.8 before and after implementation. They have been plotted into a radar diagram with numbers between 1 and 4.

As illustrated by Exhibit 8.8, the BA project is expected to add strategic value to the radio station along with improved competitiveness, improved processes, increased knowledge, and significantly improved measurement of operational processes. An executive brief could therefore look as shown in Exhibit 8.9.

 
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