In a survey of software users conducted by Forrester Research Inc. late last year, 53% of the 934 respondents involved...
By submitting your personal information, you agree that TechTarget and its partners may contact you regarding relevant content, products and special offers.
in decisions about collaboration software said their organizations were either looking to install an enterprise content management (ECM) system or planning to upgrade or expand an existing one. As with other IT projects, building a business case to justify the costs and show the potential return on investment (ROI) is the first step in an ECM deployment – and that process sometimes is easier said than done.
Cathy Sparks is among the lucky ones: She said it didn’t take much effort to justify an investment in a new ECM system at the Vallejo Sanitation and Flood Control District in Vallejo, Calif., where she works as the district clerk.
Sparks joined the wastewater treatment and flood control agency in 2004, five years after it had settled a lawsuit filed by an environmental watchdog group over sewage discharges into San Francisco Bay during rainy weather. Before the settlement, finding documents requested by the plaintiff in the agency’s paper-based files sometimes took weeks, and the process of locating and forwarding them “was a huge expense,” Sparks said.
As a result of the lawsuit, the district developed a formal records retention policy and schedule governing the archiving and disposition of documents and other official records. Eventually, the agency also decided to purchase an ECM system that it began deploying last year and is continuing to roll out, with the ECM implementation currently about 40% complete.
Demonstrating a tangible ECM ROI and business value wasn’t difficult in light of the lawsuit, according to Sparks. “When an organization is affected by a lawsuit like we were, and that potential for litigation exists and is always looming over your head, it’s a great motivator to get your house in order, so to speak,” she said.
The electronic discovery requirements that lawsuits impose on organizations often serve as Exhibit A in the process of developing an ECM business case.
“When you look at some of the lawsuits out there, things have gone terribly wrong because of how documents were managed,” said Chris Riley, senior ECM and document capture architect at consulting firm ShareSquared Inc. in Pasadena, Calif. “Bad document management can be costly for an organization.”
Legal actions speak loudly when weighing ECM ROI
According to Riley, e-discovery is 10 times more expensive without a proper ECM system in place than it is with one. “If you don’t have that, what you’ll likely end up doing is having employees search through all files manually, and that is time-consuming and prone to a tremendous amount of human error,” he said. “It’s a lot of work, and productivity shuts down during that process.”
Beyond the harsh realities of a lawsuit, determining a potential ECM ROI involves calculations of both hard and soft returns. Being able to show the hard-dollar benefits of an ECM system is the best way to justify its cost, said Alan Pelz-Sharpe, a principal analyst at Olney, Md.-based consulting firm Real Story Group. In many cases, he added, an ECM project can help an organization increase its workload without adding to the workforce – or enable it to reduce costs by cutting positions that are no longer required.
“Unfortunately, one of the hard costs is people, and a lot of ECM programs do rest on manpower costs,” Pelz-Sharpe said. “It’s an element of ECM that people don’t like to focus on. But realistically, it’s about automating processes, which means someone is being eliminated.”
Other potential hard-dollar ROI savings that can be generated by a content management system include a reduction in the use of paper, lower data storage costs and a streamlining of business processes resulting from faster access to information, said Alan Weintraub, a principal analyst at Forrester.
For example, without the aid of an ECM system, it might take a customer service representative a week or more to resolve an issue on a particular order. “If I can resolve that issue in five minutes, I can collect money faster or pay back a refund faster and take it off the books,” Weintraub said. “Either way, the faster the transaction translates to hard ROI.”
The softer side of ECM ROI calculations
Soft returns typically focus on the ability of ECM systems to support better and faster decision making. For example, making information more accessible and easier to find can help empower workers to do their jobs better and increase their productivity.
“Do they have access to all the information they need to do their jobs? Lots of soft ROIs tend to be measured by productivity levels and the satisfaction levels of individuals,” Riley said. Showing that an ECM system would help employees “spend less time administering or searching for data and more time working with the data” can help demonstrate an ECM ROI, he added.
Soft benefits of that sort can be harder to define and nail down than hard ROI metrics are, especially in organizations or business units involving knowledge workers as opposed to customer service representatives and other employees in transaction-oriented operations jobs.
Pelz-Sharpe doesn’t think that trying to put such benefits into dollar terms is even worth the effort. “It’s pretty much a mythical ROI,” he said, adding that he typically advises clients to simply list potential soft benefits such as reduced redundancy and easier access to data as part of their business case for ECM.
Catherine LaCroix is a freelance writer based in Portland, Ore. She covers technology used in business, education and health care.
Dig Deeper on Enterprise content management, collaboration and search strategy