The Business Case for Adopting a Content Management Platform


Sun 11 December 2011 By Roland Benedetti


Wrong estimated maintenance cost badly impact ROI Poorly estimated maintenance cost negatively impacts ROI

On this last post of this series, we will look at different ways to evaluate the real business value of a content management platform technology. This can of course be seen in many different ways, qualitative and quantitative ones, and this article provides insights for that, in order to help any user to make its own business analysis.

Most architects know, or at least suspect, that implementing a platform centric approach to building content-driven applications has some organizational value. Ad-hoc processes, multiple tools and inconsistent practices are rarely in the best interest of any enterprise. However, “just trust me” is typically not a sufficient justification for an executive to champion changing business processes, introducing or changing staffing and/or investing in new technology platforms.

It is critical that architects define or contribute to the definition of a business case. What is a business case? A business case justifies the rationale for architectural recommendations in a cohesive and compelling manner. A well-defined business case should include qualitative reasons, and if possible a quantitative justification, or return on investment (ROI) for undertaking a project – not just the technical perspective.


The following sections present a sample model for calculating ROI and general (qualitative) benefits of using a platform to manage enterprise content.

Qualitative Reasons

Implementing a platform approach to building content driven applications has a number of benefits such as:


  • Reduced training needs for technical resources, since a single approach is in use throughout the enterprise. Architects, developers and designers can learn the strengths, weaknesses, features, constraints and interfaces once and build numerous applications. This allows the resources to focus on delivering high-value features instead of learning vendor tools.

  • Improved content reuse and consistency

  • Lower costs due to a reduced number of tools required to support the requisite use cases

  • Reduced time to market, since a consistent tool is being used to deliver multiple applications.

Keep in mind these are only generalized benefits. An effort should be made to identify the benefits specific to the organization adopting the ECM platform.

Calculating ROI


Project Return On Investment Project Return On Investment

Adopting an enterprise content management (ECM) platform may mean significant organizational investment. And, like any investment, it is important to understand when the acquisition will pay for itself – ROI. A number of techniques can be used for calculating the return on investment (ROI), however, a simplistic approach involves identifying the benefit of implementing the new solution, quantifying each benefit and deducting the cost. The categories below include sample benefit and cost areas. They will vary for each organization/project.


Benefit Model:

  • Business Benefits

  • User Productivity

  • Reduced Support Costs

  • Reduced IT Costs

  • Integration

  • Information Reuse

  • Increased Usage of Content

  • Reduced Information Redundancy

  • Future Benefits


Cost Model:

  • Infrastructure Costs

  • Training and Education

  • Application Software

  • Consulting and Personnel

  • Ongoing Operations

  • Integrations and Process Changes

  • Organizational Changes

  • Communications


In addition to identifying costs and benefits, you may want to segment one-time items from reoccuring items (e.g. annually) to depict initial ROI with reoccurring ROI or project ROI within a time-frame.

Sample ROI Calculation


The following tables depict an organization’s ROI estimates for delivering three applications using a single purpose application to deliver a business solution versus leveraging a content platform. In this example, the applications can all be classified as content-centric applications.


  • Project A is a generic Document Management project to serve the organization's requirements for managing internal documents. The content platform approach is compared here to a project deciding for a specific approach, buying software from a DM provider.




  • Project B is a content application that is more process oriented; an implementation of an extranet application to manage customer product returns. It must integrate with the ERP system. The content platform approach is compared here with a specific approach where the application would be developed from scratch, using a low level development framework




  • Project C is a Digital Asset Management application for the Marketing and Communications team. The platform approach here is evaluated versus the choice for buying an out-of-the-box DAM solution




This example assumes the “content platform” is open source, delivered under a subscription model. Because of this, most of the software cost for the content platform approach are operational, as opposed to large upfront CAPEX costs like the traditional packaged Document Management and DAM solutions. Do not assume open source means free. It does not. Open source has a cost, it’s just not an acquisition cost; the cost of open source is mostly in reoccurring maintenance and support.


This fictional model can be used as a starting point for your own ROI analysis of adopting an ECM platform. Keep in mind that to assess the true value of adopting an ECM platform, you must look beyond a single project and examine the impact over time.


Let's look at initial costs for these projects.












































































Project A: Internal Document Management



Project B: Customer Return Processing



Project C: MarCom Dept Digital Asset Management



CAPEX



Consulting
(advisory, customization and integration)



65,000



65,000



80,000



60,000



5,000



5,000



Internal
(process definition, training, project management)



34,000



34,000



12,000



24,000



5,000



5,000



Software acquisition



45,000



0



3,000



0



60,000



0



Infrastructure setup



15,000



15,000



15,000



2,000



14,000



0



TOTAL



159,000



114,000



110,000



86,000



84,000



10,000



Let's look now at probable operational cost on the next 3 years for these projects and calculate the Total Cost Of Ownership on 3 years:




























































































































































OPEX



Year 1



41,600



43,600



27,500



21,000



15,000



5000



Ongoing project cost
(enhancements, project management)



24,000



16,000



18,000



15,000



0



0



Software maintenance & support



10,000



20,000



500



5,000



10,000



5,000



Infrastructure



7,600



7,600



9,000



1,000



5,000



0



Year 2



35,600



49,600



22,500



15,000



15,000



5,000



Ongoing project cost



18,000



12,000



13,000



9,000



0



0



Software maintenance & support



10,000



20,000



500



5,000



10,000



5,000



Infrastructure



7,600



7,600



9,000



1,000



5,000



0



Year 3



45,600



45,600



33,500



23,000



15,000



5,000



Ongoing project cost



28,000



18,000



21,000



17,000



0



0



Software maintenance & support



10,000



20,000



500



5,000



10,000



5,000



Infrastructure



7,600



7,600



12,000



1,000



5,000



0



TCO (on 3 years only)



281,800



242,800



175,500



130,000



129,000



10,000



Let's look now at the Total Cost of Ownership for the organisation, for the 3 projects on the 3 years:





















Specific approach



Platform approach



TOTAL COST of OWNERSHIP
(all projects)



604,300 USD



412,800 USD



Cost Reduction





  • 191,500 USD





Although this model is purely fictional, it illustrates the value of adopting a content platform instead of leveraging single-purpose applications or custom developing solutions. Notice that consulting, infrastructure and software costs for the point solutions remain high over each application implementation, while these costs decrease or are eliminated for subsequent implementations using the ECM platform.

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Category: Industry Insight
Tagged: Content Management