Does The Good Old 80/20 Rule Work For Estimating BI Costs?

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By Boris Evelson

I get tons of questions about "how much it costs to develop an analytical application." Alas, as most of us unfortunately know, the only real answer to that question is "it depends." It depends on the scope, requirements, technology used, corporate culture and at least a few dozen of more dimensions. However, at the risk of a huge oversimplification, in many cases we can often apply the good old 80/20 rule as follows:

Components

• ~20% for software, hardware, and other data center and communications infrastructure
• ~80% for full time employees, outside services (analysis, design, coding, testing, integration, implementation, etc), new processes, new initiatives (governance, change management, training)

Initial softare costs (~80%) vs. Ongoing software license maintenance costs (~20% / year)

Direct (~20%) vs. Indirect costs (~80%). Here are some examples:

Direct ~20%

• Data integration for reporting and analysis
• Data cleansing processes for reporting and analysis
• Reporting and analytical data bases such as Data Warehouses, Data Marts
• Reporting / querying / dashboards
• OLAP (Online Analytical Processing)
• Analytical MDM (Master Data Management)
• Analytical metadata management
• Data mining, predictive analytics
• BI specific SOA (Services Oriented Architecture) or other types of EAI (Enterprise Application Integration)

Indirect ~ 80%

Read moreCategories:

• Information management
• ZDNet
• business intelligence

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