Data Warehouse Economic Feasibility Oracle Tips by Burleson Consulting

The Data Warehouse Development Life Cycle

Economic Feasibility

DATA WAREHOUSES AND ROI

A data warehouse project should never begin unless management feels that the benefits of a data warehouse outweigh the cost. With that basic assumption under our belts, let’s look at some of the differences between how the ROI for a data warehouse compares to the ROI for other information systems development projects.

The International Data Corporation (IDC) conducted a survey in 1996 that studied ROI for data warehouse projects. IDC found the following trends in data warehouse projects:

* Very fast payback--The average ROI for a data warehouse is far above the industry average. Corporations with complex organizational and customer environments benefit the most. IDC found that more than 60 percent of data warehouse projects have a payback period of less than 2 years.

* Large ROI variance--The variance of ROI among organizations ranges from 3 percent to 1,800 percent. The low ROI values are attributed to very expensive data warehouse projects that take several years to develop and have a small amount of usage.

* Higher ROI for data marts--Larger data warehouses have a lower ROI than smaller data warehouses. IDC found that databases larger than 200 GB had smaller ROI values than smaller data warehouses. This difference is attributed to the extra work required to integrate and maintain the diverse data sources.

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This is an excerpt from "High Performance Data Warehousing", copyright 1997.
 

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