Should ROI hold much weight?

When working as a consultant I often get asked about ROI, and how best to calculate this. Now when working for previous companies, this had to be done (especially when in a pre-sales phase) and I can see clearly why. Like anything in business, if you can show something is worth doing from a money point of view, then it is likely to get done.  

But how much weight does ROI calculations actually hold? I have read a couple of blog posts about this in the past couple of days, some of which see ROI as a complete joke and pull no punches in saying so. Have a quick read of this article submitted by Alan Peiz-Sharpe (@CMSWatch on twitter) http://www.cmswatch.com/Trends/1798-ROI-Joke

Working as an analyst myself, and also as a technical guy, I can see Alan’s point, ROI calculations are very vague and often based on presumptions. But does this mean they are no good at all? I beg to differ.

Business Case                                                                       

Ok, I am not saying use a ROI in the traditional term. I see ROI as an illustrative tool when looking at smaller parts of a business case. So when investing in IT, make sure you draw up a good and detailed business case for the solution you are purchasing (lets use ECM here as this is more of a specialist field of my own). Building a business case is not easy, especially for ECM and don’t think that a couple of hours on line reading up on ECM is going to help you write a good business case. This is an area that I often help businesses with, and it is one where businesses should really look to outside help if they can.

Ok, so you have a good case for your business, one which looks at the business benefits of the system and technology available, one that looks at what is the best fit for your organisations (don’t get hung up on price at this stage).

Where to use ROI type calculations

I never use ROI calculations as an argument for anything, especially for something as large as a complete solution for an organisation. (Many of the problems with these are illustrated in Alan’s post – though typically these are user case presumptions, over optimistic calculations etc). So where do I use these types of ROI illustrations…Well I use them based on “cases”. 

So let’s look at what I mean by a case. Ok, let’s say you have all your content stored in paper, and unfortunately your storage area goes up in a nasty fire. What is the estimated cost to your business of this? Don’t try to actually put a value on this, but imagine if you had a good ECM system you know you don’t have this as a problem for you. So in this case, your real ROI would be whatever you would saved in this scenario, which is more than measurable money….Don’t like that one?

Ok, what about the cost in fines to your organisation if you are found to be “non-compliant” to government legislation – with a particular solution you would be compliant. Is the fine greater than the investment? Yes – so the system is therefore a good ROI in this case scenario.

You can keep on doing this, looking at smaller business scenarios within your business case for a particular IT solution (doesn’t have to be ECM) and carry out ROI type of illustrations. You can of course be tempted to actually place monetary values in your ROI scenario illustrations, but please, if you do this, be very cautious and make sure you get your “variables” as accurate as possible. Let’s look at a quick example…

An example is monitoring how long it takes an individual to locate a paper file. Now obviously this is going to be different each time that person searches for a file – sometimes it will be on their desk, or the desk adjacent to them, it may be filled correctly, or it may be miss-filed or worse still, missing. So, take an average of that person’s time spent looking for files over a couple of days. Then spend the same period of time monitoring a person using an ECM system to locate files. What’s the time saving? I would use Time as my ROI in this case and let others put a price on this. Why? Well though you can put a price on this time saving, does it actually equate to that money saving? You still pay that person the same wage do you not? So the only way to calculate a real saving is looking at efficiency gains in this case, and that can be tricky. Though in theory it is easy, what actually happens when that staff member has more time to do their work? Do they actually work harder and faster? Or do they only marginally increase the amount of work they complete – actually, do they get given anymore work because they are working more efficiently or do they still only receive the same amount of work to do… You can quickly see how ROI as a money calculation can come back to bite you later…

Conclusion…

Basing any investment, especially on IT based on an ROI calculation is asking for trouble. Instead look at a valid business case that may contain scenarios which will illustrate areas where investment return can be measured, not necessarily in hard cash. Within my blog you will find a number of posts on ECM savings, some of which do look at scenarios and cases where monetary values could be added, however, my aim is to make illustrations and put forward a business case, rather than a simply ROI calculation…

Silverlight EPOS?

Now this maybe a little left field, but I have been talking to some EPOS people who have been asking if we can expect EPOS systems delivered in Silverlight. Funny enough, I have also seen people searching my own blog on this subject…

So what is the chances? To my knowledge there isn’t anyone attempting this, and there are a number of reasons why not. I have to say the chances of getting a Silverlight EPOS system are at best, very slim.

Why not?

Many EPOS systems (especially the entry level solutions) are built to work and run a physical till (cash draw and receipt printer). EPOS systems are often a single install, with your back office staff basically having the same software installed that will drive your front office point of sale terminal (till). To drive a POS terminal, the software has to interact with drivers that are actually installed on the physical machine.

Silverlight in essence is a web based technology, and as such cannot interact with drivers etc on the host PC. This is purely due to security. If you are not technical and reading this, just think, if a website could easily take control of programs and drivers on your PC, what sort of damage could a malicious hacker / developer do?

Wait, don’t get turned off just yet…

Though Silverlight couldn’t be used to drive a POS terminal, .NET applications built using WPF could, and these look and feel just like Silverlight applications. I know this means a client installation (which Silverlight avoids) however, on the POS you have to have a number of drivers and applications installed in any case.

Don’t think though that you have to use traditional thick client applications for your back office staff. Though most EPOS systems use the same software for front and back office (especially smaller solutions) it doesn’t mean this has to be the case. A division of my own company, workFile EPOS, delivers a thick client POS application, written in .NET, but back office users use the system delivered through a browser (thin client), removing any requirements for installations in the back office or indeed (if required) machines at home for home use.

EPOS systems that split front and back office functions can easily provide more flexibility, in terms of both user experiences administration flexibility. At workFile EPOS we have been looking to replace a number of web pages with pages using Silverlight to deliver a richer experience. The thin client sales agent is a prime example, delivering a “sales” interface without the need to drive a till or any hardware.

Silverlight EPOS is go…

In conclusion, yeap you can have a Silverlight EPOS solution. The chances of you seeing one shortly though are slim, and there is no chance of you using Silverlight to deliver a POS terminal. Also think that many EPOS systems were written many many moons ago and still don’t really take advantage of thin client technology or in some cases newer versions of Windows (I have seen many that still run on DOS!)

But, all this being said, some EPOS providers out there, like workFile EPOS, have the potential to use Silverlight to deliver EPOS back office functions, which bring together all the benefits of EPOS with those of rich end user experiences. If the demand is out there, no doubt Silverlight will be used for back office EPOS systems and WPF for the POS terminal experience. We shall see…

ECM functionality, let’s expand…

Those of you who follow my blog posts will already know that my company has its own ECM platform, something we have worked very hard to write over the past 4 years. We are currently working on a new “out of the box” interface and upgrading the core ECM product itself with additional features….

This work has got me thinking quite hard about additional features and functions that our ECM platform could deliver, offering something different and more to what we already provide.

Expanding ECM functionality…

So, what features and functions fit into an ECM world, or what could fit into an ECM world? Well there are lots of options, many of which I won’t discuss here, but I wanted to see what other people thought, so I posted out into the Twitter universe and got a lot of interesting replies. Very interesting. If you use twitter, is well worth following:

http://twitter.com/seanrnicholson , http://twitter.com/djbressler ,  http://twitter.com/skemsley and with a more BPM hat on http://twitter.com/DevilsRefugee

 

Wiki

I have already had a number of discussions with Sandy Kemsley (http://twitter.com/skemsley) about Wikis and ECM (see my post https://andrewonedegree.wordpress.com/2009/05/22/wiki-or-document-management-ecm/) For me, Wikis are an obvious feature to include into an ECM platform, after all they deal with content and ease of access. I like the idea of them being incorporated into an ECM platform because ECM brings to the wiki so much more in regards to security, retention periods, management etc etc.

Micro-blogging

Well with Twitter, we all know how popular micro-blogging has become, and how useful it can be. Within an enterprise there is definitely place for micro-blogging functionality, helping keep people up to date with things happening around them. Again, by incorporating this functionality into an ECM platform, you gain all the benefits ECM solutions can deliver. There is also nothing stopping the end user interface from pulling in content from such sites as Twitter too, allowing users to review more public tweets along with private work based posts…

Discussion threading, forums and collaboration

Collaboration tools are already quite popular with ECM vendors. However, is the content that is generated in such collaboration sessions stored? Are discussions and discussion threads stored and managed? Not at the moment…There is great benefit in storing this content, especially as it can provide reasoning and arguments for why something was done. For example, why does a particular publication have these images selected? Wouldn’t it be of great benefit to see / listen to discussions that took place while in meetings, real or virtual, about that publication?

By storing such additional content against files, the ECM platform delivers additional knowledge and insight, something that could prove invaluable for the lifecycle of any content.

External web sources

This is something I like. I am very aware that many users leverage the web to gather information. More often than not, such users carry out research on x number of websites (often not diverting away from these). Users often visit each website checking for updates, or they view feeds to check for these updates. However, this isn’t searchable as in the sense a user may search for something from Bing or Google.

By storing external content from websites for users, users can search that content whenever they need, with the ECM platform updating this content at specified periods.

 

Conclusion…

ECM platforms have the potential to encompass so many other functions that are performed currently by other types of software, and “do it better”. In today’s enterprises and climate, it’s more important than ever to maximise staff and business process efficiency. ECM solutions are ideal for doing this, bringing together different software features and functions into a single, manageable enterprise wide solution…

For those of you who may be interested, our ECM platform is workFile ECM. Our workFile Vision offering is not yet available, however all of the features looked at in this blog are on our product roadmap and will be delivered via our workFile Vision solution very shortly…(Thought I had better mention that)

 

Have your say…

I am always interested in reading what others have to say on this, please, please post your own comments on features and functions that you would like to see in an ECM vendors platform.

True ECM savings…#1

This is going to be something I will continually look at through my blog posts, so you could say this is post #1 in looking at the true savings ECM solutions can provide organisations.

In this first post, I want to look at what organisations consider to be their costs when:

1. Filing a document
2. Locating documents
3. Waiting for documents due to others using them
4. Locating misfiled documents
5. Reproduction of lost documents if possible
6. Paper Archive / storage
7. Retention period management

It’s weird, as I have read many blogs recently that do actually place monetary values to these things. I find this great in illustrating a point, however each organisation is different and to get a real feel for what your organisation is spending here, you need to get a consultant in to review these issues.

So, quoting from an AIIM blog http://aiim.typepad.com/aiim_blog/2009/05/management-ecm-excuse-3-weve-got-to-pick-our-battles-.html we see that some typical values have been placed. So, $20 to file a document, $120 to find a misfiled document and $220 to reproduce a document. These are just some figures I have chosen to reference. Now some organisation will look at this and think “hey, that’s not too bad. An ECM solution investment is going to cost us mega bucks so our ROI is going to be over a large period of time….” Well you would be wrong….

First off, just how many times does your organisation have staff file a document in a day? How many times are documents searched for in a day by staff and just how long does that take? How much time is wasted waiting for a document from another staff member? How many times do you have staff looking for misfiled documents? How often do you actually reproduce documents? How much does it cost to store your physical paper? How much do you spend on managing retention periods and looking at compliance issues? Now put a price on these things per day and multiply by the number of working days in the year……hmmm you see these costs aren’t small.

But they aren’t the only costs. There are so many more. For example, just how much are you spending on physical paper? Filing cabinets themselves, stationary etc? There are also the costs that are even harder to measure, and which could be argued are far more important. These are costs or impacts on your actual business. The time it takes you to respond to the market, the time it takes you to deliver for your customers, the time it takes you to execute business processes, the time it takes you to deal with customer complaints or enquiries. All of these have costs associated with them, both in terms of monetary costs right now, and longer implication costs to your company in retaining customers and winning new ones.

All in all, when you start looking at ECM and looking at the costs, make sure you start to investigate in detail just what are your current operating costs. I think you may well be shocked….Of course there are companies out there, consultancies ready and willing to help you with these things, my own company offers such services. I would strongly advise getting all the information to hand before you start looking at ECM solutions, that way you know you can get a good feasibility study together and have an accurate ROI projection…..

Little plug here, if you need some help in looking at your day to day costs and benefits of ECM, why not mail the guys at One Degree… info@onedegree.co.uk