by Tom Beasley

ROI … perhaps the most common acronym tossed around in any business today.

When should ROI on an enterprise content management (ECM) project be calculated? Some experts say that ROI should be pre-calculated before project implementation, simply to justify the implementation itself. In fact, many executives are now requiring an ROI analysis before approving any given project or investment. Some experts say to wait for a time well beyond project rollout when your ROI can be calculated to the dime.

Still others claim it's impossible to measure ROI due to the uncertainty and impracticality of trying to peg absolute and accurate cost figures to the implementation of an ECM project. One industry expert states that "the problem with an investment ROI analysis is that the hard ROI depends on heroic assumptions." For example, if you save 10,000 people one hour per day, can you really eliminate the jobs of 1,200 people? Probably not. If that's the case, then how effective is using ROI as a metric to measuring the overall success of ECM implementations?

Frankly, it may not be … at least not as the sole measure of success. Over the years, what has happened is that ECM has become important to organizations primarily because of non-ROI justification, things like compliance, records management, disaster preparedness and e-discovery. Case in point, you cannot plug a clean and certain figure into an ROI analysis spreadsheet that represents the unfathomable amounts of time, money and stress involved in recovering from data loss in the aftermath of a disaster.

Enter VOI. "Value on Investment" is rooted in the premise that you cannot always put an ROI figure on a successful ECM solution, but you should always be able to recognize the inherent value that the solution brings to your organization. For example, while you may be able to calculate how much money you've saved through eliminating physical storage space or reducing headcount (ROI), you cannot easily put a dollar amount on benefits like improved customer service and increased efficiencies (VOI). This secondary measure, or justification, can also take into account the costs and risks of litigation, the need for regulatory compliance, disaster recovery costs, the use of ECM as a business enabler, and the need for ECM to enable accurate and complete records management in today's enterprise.

In this issue of The AccuView, we have included an article that further expands upon the issues surrounding ROI calculations and introduces the concept of VOI. The second article summarizes a recent survey that reflects how financial services firms are achieving greater customer retention and satisfaction, as well as better competitive advantage, as a result of their use of business process management solutions. And finally, you'll learn how drilling for data draws similarities from the early days of drilling for oil. Perhaps it will be the hidden treasures discovered within your data that will deliver the greatest return and value to your organization.

Best regards,

Tom Beasley

tom.beasley@accuimagellc.com

In today's acronym-laden electronic content management world, an old three-letter standby is getting put through its paces. For years, return on investment (ROI) has been the calling card of ECM initiatives and projects worldwide. Depending on the size and scope of a project, staff and consultants have been known to crank through myriad ROI calculations, each designed to show just how much a targeted department might save by addressing its content management needs. Management or board approval often rested on a specific number or date at which an ECM investment would either pay for itself or at least stop costing the company more money.

Today, many of those calculations are changing. Increasingly, enterprises of all sizes and structures are looking at ECM with a new eye toward benefits that go beyond dollars-and-cents ROI. Business drivers have changed, pushing content management to the forefront of many enterprise-wide strategic initiatives. Technology has also streaked ahead, meaning ROI calculated this year may not hold up three years hence. Perhaps most importantly, the very nature of business has changed, with electronic content inhabiting an ever-more centralized role in the enterprise. The result of these and other factors is that, while ECM initiatives today continue to be strengthened with strong ROI, many are being approved as much for their qualitative as their quantitative promise.

One of the bigger drivers behind increased attention to electronic content management is the growth of content itself, not only in pure volume but also in importance within the organization. A recent IDC survey found that 76 percent of respondents said they have a need to develop content once and reuse it many times after that. More than half - 58 percent - said they need well-tagged content in order to improve how they manage and deliver information, and 48 percent cited a need to combine and analyze content from many different sources.

Moreover, the explosion of technology pushes old content to the periphery even as it generates more content to take its place. Distributed servers, web farms and multinational corporations are among the factors that have created a far-flung (though content-centric) world whose parameters continue to expand. Toss in the multifarious ways in which content is now used, along with legions of new content users (customers, business partners), and the pressing need for effective content management can hardly be ignored.

Thus ECM project approval need no longer rely on ROI alone. That said, just as Mark Twain famously quipped regarding mistaken reports of his corporal demise, reports of ROI's death have probably been "greatly exaggerated." You still may need ROI, but the best ROI appears to come packaged with other key ECM rationales.

Other Rationales

One of the other key rationales is legal and regulatory compliance. "On the legal and discovery side, you have to implement systems like managing e-mail, getting rid of shared drives, and anything else to reduce frivolous lawsuits and avoid fines," says Dan Elam, vice president of ECM consultancy eVisory. As a pure ROI calculation, Elam notes, putting a number to a potential legal judgment (which is never actually paid, since the system has prevented the lawsuit) falls short. At the same time, it is just that sort of nonstandard return - the avoidance of a potential multimillion dollar discovery bill or legal judgment - that can sway a board or executive to develop more effective ECM.

Another persuasive argument is that good content management is simply good business. "You may want to ask yourself, does it make us more competitive? Does it make us more innovative?" notes Carl Frappaolo, executive vice president of Perot Systems Innovation Lab (formerly Delphi Group). Frappaolo talks about doing a "thorough needs assessment" rather than a financially-focused ROI calculation. Included in that needs assessment, he says, are things such as whether not having effective content management is costing the company the salaries and/or benefits of temp employees brought in to search through and manage content, or increased storage costs due to excessive data duplication. "One of the questions you want to get at," Frappaolo says, "is not just what is the current cost for maintaining your records, but what is the cost of not maintaining your records?"

Another cost that doesn't always fit neatly into a standard ROI calculation is the cost of recovering from a loss of data, be it due to human error or natural or manmade disaster. "How do you come up with numbers that are representative of what the risk might be?" asks Russ Edelman, president of Corridor Consulting. In one case, Edelman says, his group calculated the estimated cost to rebuild systems and software, as well as to replace people who may have been affected by the disaster, but the numbers added up so quickly that executives had a hard time taking them seriously. Better than trying to attach a large number to a disaster, he counsels, ECM professionals should stress the amount of work it would take to recover the lost data, and the almost certain loss of continuity and efficiency that might result.

Traditional ROI calculations may also be off the mark, Edelman adds, if they ignore or under-report the true cost of ownership of systems and data. He cites the example of a recent ROI study that focused on the cost of new software and projected reductions in staff time, but completely ignored the cost of (and benefits to) re-engineering systems and processes as well as training costs for the new system. "In order to be effective, ROI has to begin with the entire total cost of ownership," Edelman says. "The good news is end users and decision-makers are getting savvier to this, that ROI may not represent all factors."

Moving from ROI to VOI

For the acronym lover in all of us - good news. Not only can ROI continue to be used as one of a quiver full of arrows for ECM justification, enter a new acronym - VOI, for "value on investment" - to take its place.

"People misunderstand how to apply ROI in relation to ECM," states Toby Bell, research director at Gartner. "If I ask the business side or the CFO, they'll say ECM equals cost, and BPM (business process management) equals ROI." Bell argues that executives who view ECM in this way ignore or shortchange the "horizontal" value of good ECM - consistent, accurate data and content that can be used to create "vertical" applications and solutions that can be sold to customers or business partners. Gartner even offers another acronym - CEVAs, which stands for "content-enabled vertical applications." Bell cites examples such as loan origination and claims processing, whose very existence, much less ROI value, can be traced to the good horizontal-scale value of efficiently and accurately managed content.

ECM professionals will win converts by preaching the benefits of ECM as both a holistic and complementary technology to aid the entire ECM-challenged enterprise. An even stronger argument may be made that ECM is really a core competency or simply the "cost of doing business" in today's content-centric, electronically-enabled world. As such, ECM's ROI - or VOI - becomes self-evident.

"Executives and CFOs really want to hear how is it helping, not just 'what's the return if we do this,'" says Frappaolo. "Good CFOs will really want to understand why it is helping, do we need to retrain, is our culture or are our processes changing for the better? It is not just a focus on the numbers but on the overall how and why."

"You can spend a lot of time coming up with all kinds of calculations," Edelman concludes. "If we have 150,000 people worldwide who spend five percent of their time looking for content, and if we know the average salary of the individuals we can come up with some kind of number. There's a good chance executives will look at that and just laugh. You are trying too hard to sell the ROI. Some of this is much more intangible. What you want is for people to start to say we are doing this because we believe in the concept, rather than here is mathematically how it is all going to work."

Source: AIIM E-DOC, January/February 2007

Although business process management has some distance to go before reaching maturity, it's already scoring important victories not only in cost-cutting, but in business innovation. The insurance industry, for instance, is rapidly adopting holistic BPM solutions, outpacing other financial services firms such as banks and brokerages, according to TowerGroup.

The ROI of BPM

Customer retention and satisfaction, as well as better competitive advantage among financial services firms, are directly linked to use of BPM practices. That's one of the key findings of a recent TowerGroup research report. And as businesses make changes based on BPM, they'll see visible ROI from improved and faster operations, better employee productivity, and the ability to reach strategic objectives. Other key findings include:

• Simply mapping and closing the process gaps between current practices and those desired can provide 30 percent of the operational efficiency that a financial company gains through the BPM initiative.
  
• Management's commitment and leadership are key drivers for successful BPM. Technology can't replace this.
  
• More companies are scaling BPM strategically in the enterprise, not just using it for workflow or back office applications.

Source: Optimize, April 2007

Oil might sound expensive today, but in the mid-1800s, it cost around $2 a gallon, equivalent to about $200 in today's money. But that was a different type of oil: whale oil, hundreds of gallons of which are stored in the head and blubber of the whale. The market for petroleum had not yet been developed, and whale oil was prized by the wealthy for burning nearly odorless and smoke-free, compared to the stinky and smoky - but cheap - tallow candles used by everyone else.

Whale oil was expensive because whales were extraordinarily difficult to locate. Expeditions spent multi-year voyages crisscrossing known migratory paths, waiting for a stroke of good luck when one of these mammals had to surface to breathe. (It took Ahab a dense 500 pages to find Moby Dick, which felt not unlike an actual hunt.) Nevertheless, as prices increased, the animal was systematically hunted to near extinction.

But as we know, petroleum became plentiful enough to displace whale oil. After the first oil well was dug by Edwin Drake at Oil Creek in western Pennsylvania in 1859, prices plummeted. Before long, petroleum prices sank to seven cents a gallon, and the whale oil market collapsed. That's not surprising, since it's clearly cheaper to gather oil from a sedentary supply.

Then, just like today, drilling for oil also relied on strokes of luck. The first wells were drilled near naturally occurring brine wells near Pittsburgh which already supplied a thriving salt industry. Oil seeped naturally into a nearby creek, and Drake drilled there in the manner of the briners. Explorers began looking for their next strikes near other naturally occurring oil seepages in streams. But before long, those had all been tapped and exhausted, and new supplies had to be found. And just like guessing where the whales were beneath the ocean, underground oil became hidden treasure, and the price increased. Wildcatters began drilling blind, hoping to strike oil.

By now, you should note some strong similarities between those early oil hunters and people today finding information treasures in your ECM systems. But this is more than just a surface similarity. As it turns out, contemporary oil explorers have techniques for finding hidden oil that also literally work for finding hidden information.

The key problem we share with whalers and wildcatters is this: how can people discover things for which the precise location is unpredictable? And the new problem: how do we serve an audience looking for something fundamentally unpredictable?

Drilling for Oil … A Better Way

"We spend tens of millions of dollars on data, and use it to make decisions worth hundreds of millions of dollars," says Sam Clayton, knowledge management specialist at BHP Billiton Petroleum, a division of the world's largest diversified resources company.

Companies like BHP Billiton explore for natural resources, drilling for oil and mining for gold by finding information treasures. Now that they can't follow oil seeps or known whale migration paths, they've found new ways to generate evidence of where to look. Teams of geoscientists study data like seismological readings, ground-penetrating radar and fault-line maps to help predict where to explore. Records of tiny fossils reveal the likelihood of the existence of mineral veins or oil fields, yet all the while generating a potentially overwhelming volume of reports. In the case of BHP Billiton Petroleum, these reports were capturing tens of millions of dollars worth of information, which analysts needed to repurpose as each new project unfolded.

BHP Billiton was drowning in information, hindering a team of renowned geoscientists from focusing on their specialty of piecing together the lay of the land from scant clues. Enterprise content management had a clear role in supporting them by managing all this raw information for analysts, helping them upload it, monitor its integrity, audit its provenance and make it possible for everyone to find that information in any context.

The specialists recognized that the ways of organizing information were constantly changing, yet no system could handle the flux. The seemingly impossible problem to solve was this: there was no way to predict in advance precisely how any given information might get reused, since each new project was unique. A newly discovered ocean trench in the Gulf of Mexico might share a geological similarity to a peak in the French Alps, making it possible to inform a new drilling project with existing data. Yet until the new trench was discovered, no one could have known to classify their topographies in a way that they might eventually be juxtaposed. This problem is the complement of an information consumer's dilemma: how can he retrieve information when his precise task is unlike any other that has come before?

Information-access platforms offer a solution. Though the search engine has become the most familiar approach, information access has advanced far beyond search. Search engines work like wildcatters sinking an oil well: they have a hunch on a location, then stab in the dark, hoping for a strike. For example, to find information about how the French Alps are similar to our newly discovered trench, we might search on "French Alps" to discover which of our tens of thousands of reports might mention them. Typically we either get back no results (perhaps we've over-specified our query, or a classifier used different terminology), or more commonly, we get back too many results to make sense of.

Information access works more like ground-penetrating radar: it summarizes all of that hidden information in a way that can guide our drilling before we begin. Through a combination of techniques like search, guided navigation, charts and reports, it shows us where we might have the most success exploring. As with oil exploration, the map is not the world, and as soon as we forget the map is not the world, we are lost. An iterative process is required, where we step closer, constantly remapping, updating our host of summarizations that will help us determine our next steps.

The oil seeps sought by drillers near Pittsburgh and the migratory paths hunted by the whalers are the stuff of wayfinding, the set of techniques people and animals alike use to find something, like food, whose location they don't yet know. The process has been well-studied and follows predictable steps: people follow a scent, looking for fresh cues that the trail is growing hotter or colder. They constantly re-evaluate and concentrate their efforts in the most fertile directions.

People foraging for information face the same problem and need a powerful set of wayfinding tools to support them. In this process, they must:

• Predict: Which available navigation or search might get me closer?
  
• Evaluate: Does the rich feedback tell me I've gotten closer to my goal?
  
• Adapt: Now that I understand the terrain and types of options available, can I better formulate my goal?
  
• Iterate: I follow the information scent, stepping toward my goal.
  
• Revise: Unexpected discoveries along the trail help me formulate new goals.

Search engines alone don't support this full range of behaviors. Information access tools in enterprise content management systems succeed by helping each individual follow the idiosyncratic path he or she must take to discover unpredictable information.

How could BHP Billiton's knowledge management experts help searchers complete tasks that were impossible to predict in advance? The answer was also in wayfinding. Instead of predicting the precise path people would take to reach information, they instead needed merely to expose evidence of an information scent. This came in the form of structure - explicit or implied - that could help searchers evaluate the suitability of any particular set of data. From there, the information access platform was able to summarize that evidence into constantly updated "maps" that could inform our searchers as they completed a goal.

Big Treasure in Small Decisions

We've been talking about big treasure: oil. There are also comparable big treasures in ECM systems to be found, like forgotten intellectual property, or big costs to be avoided, like regulatory compliance mandates. For example, one bank may save tens of millions of dollars by making just a single set of regulatory documents easier to discover.

The biggest treasure in ECM is in the aggregate of all the little treasures to be found. That's because information access makes possible, for the first time, better informed decision-making on ever-smaller decisions. A typical investment in ECM might have its roots many years in the past, and in that time it has successfully captured far more valuable information than has been retrieved. Information access is finally unlocking that value, and as you might guess, the potential is tremendous.

Are you ready to discover hidden information treasures? We can help you drill for data - call AccuImage at 615.242.7226 today!
Source: KMWorld, April 2007

AccuImage, LLC is a systems integrator that empowers their customers with solutions designed to gain the maximum value from their information at every point in the information lifecycle. Founded in 1996 and headquartered in Nashville, Tennessee, AccuImage specializes in the design, installation and support of document and content management systems, forms processing solutions, and electronic workflow systems. The company offers hardware and software from leading companies - AnyDoc Software, Böwe Bell+Howell, Canon, Captaris, Captovation, EMC Documentum, Fujitsu, Hewlett-Packard, IBM, Kodak, Kofax, Panasonic, Plasmon and Verity - as well as consulting, document conversion and professional services.