Black

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Swans

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White

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Elephants

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Return

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Investment

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Business

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Intelligence

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David

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Walker

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Data

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Management

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Warehousing

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ETIS

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Istanbul

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Oct

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ReturnonInvestment

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Aperformancemeasureusedtoevaluatetheefficiencyofaninvestmentortocomparetheefficiencyofanumberofdifferentinvestments.TocalculateROI,thebenefit(return)ofaninvestmentisdividedbythecostoftheinvestment;theresultisexpressedasapercentageoraratio.

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Thereturnoninvestmentformula:

ROI=(GainfromInvestment–CostofInvestment)CostofInvestment

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Returnoninvestmentisaverypopularmetricbecauseofitsversatilityandsimplicity.Thatis,ifaninvestmentdoesnothaveapositiveROI,orifthereareotheropportunitieswithahigherROI,thentheinvestmentshouldnotbeundertaken.

SowherearetheROIMetrics?

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ClearlyvaluingBIisnotanexactscienceandoftencomesdowntomindset.ComparingBItoacollegeeducation:Itmaybeexpensiveandtime-consuming,buttherearemanylesstangiblebeneﬁts,likeincreasedearningpowerandoverallimprovedqualityoflife,whichcomeyearslater.

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It'snoteasytopersuadesomeonetogotocollegebasedonapurelyﬁnancialornumbersgame,andthesamethinggoesforBI.YoujusthavetobelievethatBIisabsolutelyessentialforyouasanorganizationtoinvest,thatthisisafundamentalcorecompetencythatyouhavetohave. 