Considering the Cost & Value of Digital Content for an Enterprise

The way that the value of digital content changes over time, and how an enterprise content management (ECM) system might help to realize and/or retain greater value was the subject of my last post (http://martin-fulcrum.blogspot.com/2010/06/calculating-value-of-content-in-ecm.html).

Lee Dallas retweeted that post, but also referenced a very interesting earlier blog post (2008) by fellow member of 'Big Men on Content' Marko Sillanpää
on the cost of content (link). Sillanpää considered content lifecycle costs as follows:

Cost of Content = (Annual Authoring Costs + Annual Review Costs) / New Objects per Author
Content authoring and review are not the only activities that incur cost – there are costs associated with each step in its lifecycle, notably including the costs of distribution, storage and ultimate destruction. Effective content distribution is becoming increasingly important to the realization of value.

Cost and value are of course different concepts. The cost of an item does not necessarily reflect its value, as anyone who has watched the TV show "Antiques Roadshow" knows!

In business, where there is an emphasis on the bottom line, the value of content ought on average to exceed its cost, or it should not have been created. But for a given piece of content, its cost is generally related to size and complexity, not what it enables. On the other hand, value is tied to enablement and varies over time – often declining gradually or precipitously, but sometimes increasing!

It can be hard to explain to people how managing content benefits a business. However, I have found that identifying its 'enterprise value' is powerful. A good top-down approach is to reference the value chain of a business, using Michael Porter's original simple model.

People understand that enterprises take input from suppliers and partners and, through a series of steps, add value that can be realized in a final sale to customers. Clearly the effective execution of those steps adds to efficiency. When challenged, most people can identify content that contributes or is even essential to the completion of each of those value steps and their constituent processes. For example, an Engineering Department must create, review and approve engineering drawings, and then pass them on to the Manufacturing Department (see E, C & O value chain).

In my experience, taking a value perspective is generally more attractive, especially in growth industries, than a cost and cost avoidance perspective – which has classically been the basis for return-on-investment (R.O.I.) approaches to software justification.

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