# Calculating the ROI of Analytics By:: [[Brian Heath]] 2023-04-15 If someone asks you about the return on investment (ROI) of Analytics, they likely do not understand analytics. What is the ROI of thinking? How does one show the real ROI of making a better decision? These calculations can be done, but most studies amount to smoke and mirrors because the future is uncertain and all models are wrong. Have you ever seen an economic impact study for a hosting a conference or the local government paying for a new sports arena? Millions and billions of dollars will be attributed to such activities to convince people it's worth the investment. However, these models are questionable at best, especially when they start adding up things without monetary value such as "community pride." Within business, what is the value of sleeping better at night because analysts thought long and hard about a new strategy and provided coherent recommendations? It's hard to say and depends on how much you value your sleep. Furthermore, the ROI of a project is very different than the ROI of the analytics business function. Projects are smaller in scope, but business functions exist beyond scoped boundaries. Estimating the true ROI of analytics would take another team to evaluate what the analytics function was doing on a minute-by-minute basis. Hence, smoke, mirrors, and broad approximations. So, if someone asks for the ROI of your analytics work, compile reasonable numbers that make the case they are looking for. If they want to shut you down, it's best to let them eventually fire you because nothing you can do will convince them otherwise. In fact, they'll poke holes in all of your models because all models are wrong. If they are looking to justify or expand analytics, be conservative in your estimates as expensive functions are where layoffs begin. #### Related Items [[Analytics]] [[Return-on-Investment]] [[Decision-making]] [[Problem Solving]] [[Value]] [[Organizational Analytics]] [[Models]]