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Posted by Boris Evelson on January 23, 2010
How much does it cost to produce a single BI report? Just like typical answers to most other typical questions, the only real answer is “it depends”. But let’s build a few scenarios:
Scenario 1: Services only. Bottom up, ABC approach.
- Medium complexity report. Two data sources. 4 way join. 3 facts by 5 dimensions. Prompting, filtering, sorting ranking on most of the columns. Some conditional formatting. No data model changes.
- Specifications and design – 2 person days. Development and testing - 1 person day. UAT – 1 person day.
- Loaded salary for an FTE $120,000/yr or about ~$460/day.
- Outside contractor $800/day.
Cost of 1 BI report: $1,840 if done by 2 FTEs or $2,520if done by 1 FTE (end user) and 1 outside contractor (developer). Sounds inexpensive? Wait.
Scenario 2. Top down. BI software and services:
- Average BI software deal per department (as per the latest BI Wave numbers) - $150,000
- 50% of the software cost is attributable to canned reports, the rest is allocated to ad-hoc queries, and other forms of ad-hoc analysis and exploration.
- Average cost of effort and services - $5 per every $1 spent on software (anecdotal evidence)
- Average number of reports per small department - 100 (anecdotal evidence)
Cost of 1 BI report is $8,250. Still sounds inexpensive? Let's keep going.
Scenario 3. Top down. Information management software and services.
- Average BI software deal per department (as per the latest BI Wave) - $150,000
- Average ETL software deal per department (as per the latest ETL Wave) - $150,000
- Cost of 1Tb DW (as per latest DW Wave) - $50,000. Let's also figure in a 3x for production + development test + DR environments.
- 50% of the software (and DW) cost is attributable to canned reports, the rest is allocated to ad-hoc queries, and other forms of ad-hoc analysis and exploration.
- Average cost of effort and services - $5 (anecdotal evidence)
- Since the effort of building full blown DW/ETL environment usually go beyond one department, let's increase the number of reports by 3x to 300
Cost of 1 BI report also comes out to $8,250 since we are now using economies of scale for ETL and DW accross several departments. But that's not the end of it.
Scenario 4. Top down. Fully loaded:
- 10% of enterprise operational data quality cost of $1M and 2x for services
- 10% of enterprise operational MDM cost of $5M and 2x for services
- 10% of an enterprise portal fully loaded (hardware/software/labor) cost of about $3M (as per Matt Brown)
- Not counting (since I don't have good numbers - if you do, please provide) a) 50% of enterprise performance management applications b) servers (physical or virtual) for production, development, test, UAT and DR regions c) additional data center support and infrastructure
Cost of 1 BI report is now $15,250. Still waiting to collect more data on the 4th bullet point above, but I can easily see how the truly fully loaded cost might grow to $20,000.
Of course this is only one side of a complete picture, cost/benefit equation, since the cost of producing a BI report cannot be looked without referencing the value it provides. After all, if that one report produces $100,000K in cost savings or in additional revenues, then even $20,000 becomes very attractive.
Suggestions for bringing the cost of BI down?
- Since services and support are major parts of the cost equation - enable end user self service
- 100 reports is a very low estimate, most organizations have more. Practice agile BI to reduce the effort it takes to develop each report, and ensure that the requested reports are actually used.
- Leverage other best practices for reducing your BI costs found here.
- In certain specific use cases, consider BI Saas.
I welcome and encourage comments and will update this blog with all relevant and useful suggestions.
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