February 25, 2016

ROI of an ECM System and Output Management

There are many studies about the Return on Investment (ROI) of Enterprise Content Management (ECM) systems and the overwhelming consensus is that ECMs are a wise investment. What is often overlooked in the discussion, however, whether or not the ECM in place or is being deployed, is what types of incremental investments are justified.

An investment that should be considered is one that opens up the value captured in structured and semi-structured documents that are stored in various formats in the ECMs and network-accessible file stores across the enterprise.

But first, a short discussion of terminology as ROI is one of the most misused terms in business. ROI has a narrow definition and a loose definition (the loose definition is the one that is in general use). The narrow definition of Return On Investment is a ratio, expressed as a percentage of the Return (Recognized Economic Gains minus Costs) divided by the Investment (Costs). The loose definition is that any value proposition that can be monetized has been called ROI at one point or another. A common practice is to use the payback period, i.e. the time it takes for the savings to equal the incremental costs, and refer to that as the ROI.

However it is defined, ROI measures economic value from realized savings. ECMs deliver economic value by enabling business processes, but do they, as natively configured, have all the features needed to meet all enterprise needs? The simple answer is no. One of the outstanding needs is output management which delivers value by controlling the process of collecting and distributing documents from multiple repositories.

In ROI calculations, there are direct savings and indirect savings, hard dollar savings and soft dollar savings, savings that accrue in the cost centers where the spending occurs and savings that accrue across the enterprise. All these factors combine to make exact numbers often difficult to obtain, but the evidence is clear that the savings are real.

For example, when automation allows a knowledge worker to setup a collection of documents for distribution and then proceed to their next task while the execution of the distribution proceeds, those cumulative hours saved are direct hard dollar savings. When the execution of that distribution doesn’t require incremental software licenses to open the documents, that represents indirect hard dollar savings.

When the knowledge worker is able to add annotations to the documents and a table of contents the calculations of the 'savings’ gets harder but the math has to be done as an automated vs a non-automated process. Print the hard copies, annotate the hard copies, sort the hard copies, index the hard copies, prepare the table of contents, and assemble the final packet for distribution vs. a controlled, automated process with output management. Clearly there are hard dollar savings.

Where soft dollar saving come into play is when the packet arrives at the customer and the enhanced packet leads to increased customer retention. Actually, there are more practical examples, such as in case management, where internal customers are the recipients of the packets from output management and increased productivity of these recipients is a clear economic benefit of the deployment of the system.

As mentioned above, ROI can be misapplied, but time and again has clearly showed the economic benefits of both ECMs and the Output Management incremental add-on. Contact us to learn more about how Output Management can deliver savings in your environment.