The new definition of ROI: Return on Information

Given a choice, would you rather see data presented in raw form, as numbers in a spreadsheet, or as a pie chart or scattergram? The beauty of charts and graphs is that they paint a picture much faster than raw data can. And those pictures can help you connect with your organization’s business goals and enable you to drive business critical decisions—faster.

As we move into the Big Data era, the way we collect, analyze, store, manage and act on the tidal wave of information coming from enterprise systems must become a top priority for CIOs. By 2020, IDC estimates that the digital universe will surpass 40 zettabytes, or 57 times the number of all the grains of sand on all the beaches on Earth.[1] IDC defines Big Data technologies as “a new generation of technologies and architectures, designed to economically extract value from very large volumes of a wide variety of data by enabling high-velocity capture, discovery and/or analysis.”

I bolded “economically extract value” above because this should be your objective when it comes to handling Big Data, evaluating Big Data solutions and setting Big Data strategies.

The dramatic increase in the volume, velocity, variety and complexity of information is transforming the core of businesses and governments because it’s revealing new patterns and insights and helping them paint a more accurate picture of where they stand. To help enterprises get started, we’ve coined a new definition of ROI—Return on Information. It’s a straightforward equation that we hope will help organizations achieve greater return from all their information assets.

After all, why do you invest in IT? One fundamental reason is to extract business value from your information, to paint pictures with your data and, as a result, derive value from it.

Return on Information expands traditional ROI—based simply on dollars in, dollars out—to encompass a more comprehensive measurement. There are three key components to Return on Information:

1. Insight
2. Time-to-value
3. Cost

Insight is the value extracted from all types of information. The value of that insight is derived from how much data that an organization analyzes, how deeply it analyzes that data and how many people benefit from the analytics. Would your analysts prefer to make decisions based on analyzing100 percent of relevant data, or make “gut calls” based on a thin slice of data? Insight is about analyzing 100 percent of relevant data and ensuring that everybody understands what should drive critical enterprise decisions. It’s a matter if skimming the surface rather than truly understanding what your data is telling you.

Time-to-value is the speed at which information insight is made available to the right people. Our world demands near-instant decisions. The right people need the right information at the right time to maximize the value of the information. Speed matters. If the insight comes after decisions have been made, it’s not insight; it’s hindsight.

Total cost is how much enterprises spend on their information. Total cost comprises the capital and operational expenditures (CapEx, OpEx, respectively) required for storing, managing and analyzing data. Even when you’re not managing or analyzing 100 percent of relevant data, you’re still paying ever-increasing costs to store inert data. Why not reduce your total cost by actively managing your information? In doing so, you lay the groundwork for deriving the full value from that data.

Maximize your Return on Information

The value derived from actionable insight is inversely proportional to the time-to-value. The sooner the insight is delivered so it can help inform key business decisions, the greater the data value. The greater your data value is after dividing by total cost, the greater your Return on Information.

Over the next five years, we expect that Return on Information will become the defining measure of success by helping measure the value organizations derive from their Big Data investments. Every CIO’s goal should be to efficiently and cost-effectively extract insight from 100 percent of relevant data to drive actionable insight and timely enterprise decisions. Harnessing the power of Big Data will deliver the maximum Return on Information.

We look forward to hearing about the projects and innovations you’re leading, the goals you’ve set for the coming year and the business problems you’re determined to solve through IT innovation.

For details on HP’s Information Optimization solutions for your Big Data challenges, see www.hp.com/go/information.