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Presented by Seth Earley at Taxonomy Boot Camp 2009
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Copyright © 2009 Earley & Associates Inc. All Rights Reserved.
Justifying Taxonomy Projects Approaches for Calculating Return on Investment
Getting the most from taxonomy, search and content processes
Copyright © 2009 Earley & Associates Inc. All Rights Reserved.
Leveraging Information Asset Investments
• Typical investments in information assets include:– Content management infrastructure– Portals, technologies for integration– Time and energy spent organizing information– Taxonomies, metadata standards, information
architecture
• How do you get the most from existing investments?– Improve search– Improve usability– Improve content processes
2
Copyright © 2009 Earley & Associates Inc. All Rights Reserved.
Content Supports Process
• Content by itself is not very useful• Content applied to solving a problem is useful• How do we measure the ability to solve a
problem?• What is the nature of the problem?• What allows the problem to be solved?• What impedes the ability of a user to solve a
problem?
3
Organizational Strategy
Business Unit Objectives
Increase customer satisfactionIncrease customer satisfaction
Expand offeringsExpand offerings Develop new marketsDevelop new markets
Business Processes
Customer SupportCustomer Support Customer acquisitionCustomer acquisition
Engineering Library
Engineering Library
Knowledge base
Knowledge base Marketing
Collateral
Marketing Collateral
Processes enable objectives
L I N K
A G
E
Alignment, linkage, measurement
Product DevelopmentProduct Development
Content Sources
Grow top line revenueGrow top line revenue
Content supports processes
Objectives align with strategy
Working here (tools,
technology, IA, taxonomy,
search, etc)
Measuring here (micro level -
effects)
Measuring here (macro level -
outcomes)
CEO- “Show me how this project will increase our revenue?”
Copyright © 2009 Earley & Associates Inc. All Rights Reserved.
www.earley.com 781-820-8080
Copyright © 2009 Earley & Associates Inc. All Rights Reserved.
Task 1 Task 2 Task 3 Task 4 Task 5 Task 6 Task 7 Task 8 Task 9 Task 10
Ecommerce site – increased findability linked to increased conversions
Copyright © 2009 Earley & Associates Inc. All Rights Reserved.
Content Reuse
• If we can’t find something and have to create from scratch, not a value producing activity
• Being able to find an asset and apply that asset to solving a problem reduces unnecessary activities
• Proposal creation– Consultants time can be measured, number of proposals,
amount of time per proposal, etc.
• Single sourcing of technical documentation– Create once, use in multiple locations
• Digital asset reuse– If a photo or illustration needs to be purchased rather than
reused, hard dollar costs
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Copyright © 2009 Earley & Associates Inc. All Rights Reserved.
Stock Photo Reuse
• Central marketing service organization manages Digital
Asset Management system
• System contained large amounts of stock photos –
average cost $125
• Cost of 10,000 photo inventory = $1.25mm
• Yearly downloads = 40,0000
• Assume 50% usage
• 20,000 x 125 = $2.5mm
• Net direct benefit = $1.25mm
• Compliance benefits = reduced legal exposure from incorrect
use of images, correct records management retention schedules
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Copyright © 2009 Earley & Associates Inc. All Rights Reserved.
Code Number of Incidents per code
Percentage of total where codes were used
Percentage of total incidents
Time per incident
Total number 25,164 (avg.) 9.6
K helpful 3,833 18% 15% 5.45K not effective
455 2% 2% 8.49
K not available
3,313 15% 13% 10.35
K not required
13,992 65% 56% 5.95
no code used 3,571 not applicable 14% 8.22
Compliance 86%
Use/Opp % 68%
KH/Use % 50%
• Average Reactive Time Per Incident (TPI) with knowledge not available (KNA) - 10.35hrs
• Knowledge Helpful (KH) Average Reactive TPI - 5.45hrs
• Knowledge Helpful Comparison to Average Time per Incident 5.45/9.6hrs = 57%
• Knowledge Helpful Time Saved Per Incident - 43%
Call Center Efficiency
Copyright © 2009 Earley & Associates Inc. All Rights Reserved.
The Challenge of ROI
• Budgets are tight – pressure to show ROI in <12 months
• Significant investment already made, yet users complain
• Financial terminology and approaches seem arcane to IT (internal rate of return, net present value, discounted cash flow, etc.)
• Soft vs. hard measures, indirect vs. direct benefits
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“Two-thirds of financial executives remain unclear about how to set IT spending levels or how to assess the business value of such spending. Only 6% of financial executives feel they have an IT strategy aligned with corporate goals.”
Fifth Annual Survey, Technology Issues for Financial Executives
Copyright © 2009 Earley & Associates Inc. All Rights Reserved.
Business Investment Drivers
• Efficiency - Cost Savings– Doing the same job faster, cheaper, or with fewer
resources than it was done before
• Edge - Return on Investment– Changing some aspect of what the business does,
resulting in growth, increased revenue, mitigation of business risk, or other strategic advantage
• Effectiveness - Return on Assets– Doing a better job than the one you did before,
making other resources more productive and increasing their return on existing assets and attainment of mission
Copyright © 2009 Earley & Associates Inc. All Rights Reserved.
Common Pitfalls in Specifying ROI
• Not knowing the expected payback period– Finance may only be approving same-year ROI projects
• Investments in infrastructure – Increased revenue can arise from a number of factors,
more difficult to attribute causality
• Information asset value varies (quality, type, applicability to process, target audience)– No single approach can account for value
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Copyright © 2009 Earley & Associates Inc. All Rights Reserved.
Framing the ROI Discussion
• What do you mean by ROI?• Is it a formal measure or informal impact?• What can be currently measured?• What measurement baselines are in place?• How can you project benefits?
– Pilot, proof of concept, simulation– Usability studies– Search metrics– Content process quality
• Subjective measures consistently applied– User satisfaction
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Copyright © 2009 Earley & Associates Inc. All Rights Reserved.
Understand and Defend Your ROI Analysis:
• Investment analysis with direct financial impact– If we invest $1mm in _________ it will provide new
capabilities that will have a measurable financial impact on:
• New revenue streams• Reduced costs
• Analysis of various metrics with indirect financial impact– Customer satisfaction– Asset quality– Customer retention– Employee productivity– Time to market
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“49% of survey respondents said that finding the information needed to do their jobs is ‘difficult and time-consuming’ - 55% averaged 4 hours per week and 24% spent 8+ hours per week looking for information.”
AIIM, July, 2008
Copyright © 2009 Earley & Associates Inc. All Rights Reserved.
Create a Compelling Cost Justification
• Need capabilities whose benefits are difficult to quantity – look for hard business numbers
• New methods for doing business – models not established, e.g. reusing content from a travel book and sending to cell phones as “travel tip of the day”
• Focus on direct cost reduction, better return on existing assets, business benefits with competitive edge
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“An enterprise with 1,000 knowledge workers wastes $48,000 per week – $2.5 million per year – due to an inability to locate and retrieve information.”
The High Cost of Not Finding Information, IDC
Copyright © 2009 Earley & Associates Inc. All Rights Reserved.
Taxonomy Benefit Examples
ECM Taxonomy Framework1. Reduced IT cost for unified
information architecture development
2. Reduced cost of deployment for successive migrations (taxonomy development, content tagging, governance)
3. Increased operational efficiency and search accuracy
4. Unified business process context for content drives increased enterprise agility and strategic BI visibility
Records Management Taxonomy1. Reduced labor costs for
retention classification
2. Reduced administrative support costs for records tracking and retrieval
3. Increased effectiveness of Legal Department for records retention policy enforcement
4. Mitigation of business risk for legal discovery compliance
Copyright © 2009 Earley & Associates Inc. All Rights Reserved.
Projected Value of Benefits
312,500
117,188
312,500
468,750
146,484
312,500
468,750
244,141
$0
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000
$800,000
$900,000
$1,000,000
$1,100,000
$1,200,000
Year 1 Year 2 Year 3
3-Year Benefit Contribution
Mitigation of business risk for legaldiscovery compliance
Increased enterprise agility andstrategic BI visibility
Increased effectiveness of Legal Departmentfor RM policy enforcement
Increased efficiency and accuracy forWorkers’ Compensation LOB
Improved return on assets for more effectivedeployment of ECM/RIM SW
Reduced cost of deployment for successiveLOB migrations
Reduced IT cost for unified informationarchitecture development
Reduced administrative support costs forrecords tracking and retrieval
Reduced LOB labor costs for retentionclassification
Copyright © 2009 Earley & Associates Inc. All Rights Reserved.
• Information on content management strategy
• Free webinars• White papers and research
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Contact:Seth EarleyPresident, Earley & Associates, [email protected]
Register at www.earley.com and download:
• Topics include:– Content analysis– Taxonomy and metadata– Search and search integration– Content lifecycles
Earley & Associates is now offering the AIIM Information Organization and Access course.
Copyright © 2009 Earley & Associates Inc. All Rights Reserved.
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Core CapabilitiesDocument/Content/Management:• Strategy and requirements planning• Taxonomy, Metadata, Object modeling• Audit and analysis• Migration • Tagging and indexing • Lifecycle and workflow planning• Technology selection, RFP development• Governance
Taxonomy & Metadata:• Taxonomy strategy• Taxonomy development (for e-
commerce, faceted search, ECM, DAM, enterprise taxonomy, thesauri)
• Taxonomy evaluation and testing• Taxonomy implementation • Taxonomy governance and training• Taxonomy tool selection• Metadata standards development• Metadata schema design• Metadata governance
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Digital Asset Management:• DAM strategy• DAM taxonomy• DAM technology evaluation• Asset lifecycle management• Marketing resource management (MRM)
Information Architecture/Usability:• Usability studies (site, navigation, taxonom
y)• Wireframes and IA design
Search:• Search audit and user testing• Search strategy and ROI analysis• Taxonomy for faceted search and search
optimization• Search deployment • Search and business intelligence• Search tuning and SEO• Search technology evaluation/tool
selection