The 5 Steps Every Analytics Team Must Use To Identify ROI-Positive Projects | 7wData

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Building a data and analytics roadmap is quite like planning your financial investment portfolio. You have too many options, and every choice has big implications. It doesn’t have to be this daunting. Here are five steps to help you navigate the risks and pick the most impactful projects.

Today, when it comes to financial investments, we are spoilt for choice. How do you pick a stock portfolio that can beat the market? Should you invest in real estate during a bull run? How about snagging some cool crypto assets, such as NFT (non-fungible tokens) digital art?

Building a sound financial portfolio involves several considerations—risks vs. returns, short vs. long-term, and cookie-cutter portfolios vs. personalization. These options hugely influence your immediate lifestyle and your retirement plans. 

Similarly, organizational leaders run into several dilemmas while choosing their data and analytics (D&A) investments. With numerous technology capabilities within reach, which ones will deliver the best business returns? What are the quick wins, and which ones are for the long haul? Which competitor moves are worth replicating, and how should you tailor them for your organization?

After all, 80% of analytics initiatives fail to deliver business value. Over 79% of artificial intelligence (AI) projects end up with a zero or negative return on investment (ROI). Ultimately, 81% of industry leaders fail to build a data-driven culture.

Here are five steps to pick the most impactful D&A projects and build a portfolio that will deliver business ROI. We’ll see how each step has striking parallels to investment planning.

Never base your financial bets on the killing your friend made from dogecoin. Financial investments must be planned by reflecting on personal goals. How do you envision your retired life, and what critical life events should you anticipate? When you know what’s needed to sustain your lifestyle, you can identify financial instruments to consider.

Similarly, plans for data analytics initiatives should never begin with the big data you’ve collected or the AI algorithm that can do cool tricks. Instead, think up organizational goals. Review your business strategy and priorities for the financial year. This will help identify the target stakeholders you must enable and the challenges they need to address. These problems and priorities will translate into the long list of D&A initiatives to prioritize.

How to accomplish this step: Plan a brainstorming session by pulling together your business and technology leadership. Use the organizational strategy to kickstart these discussions. Identify the problems that your stakeholders want solved. Conduct market research and study industry best practices that can address the pain points. These ideas will inspire conversations and germinate potential initiatives to evaluate.

Once you’ve shortlisted a set of financial instruments for your portfolio, it’s time to assess how they fit your goals and validate the likely outcomes. Factor in the potential returns, periods for the intended payout, and risk levels. This can help you contrast an investment in NFT digital art from small-cap equities or angel investments in startups.

Likewise, for every D&A initiative identified, check their alignment with organizational strategy. Some ideas could generate terrific returns, but if they don’t align with your organization’s direction, they aren’t suitable. Assess the likely business impact of each idea: can you quantify the return on investment (ROI), and how easy is it to attribute impact? Assess whether this impact will materialize in the short, medium, or long term. Finally, check urgency: is it needed as of yesterday, or is it nice to have?

How to accomplish this step: Score each D&A initiative on the four factors discussed—alignment, impact, timeline, and urgency. Rate each attribute as low, medium, or high. Arrive at the overall score to rank-order the projects.