I have been working in the ECM industry for over twenty years and during this time I have seen many different methods used by companies trying to to justify their investment in deploying an ECM solution. These approaches have taken various forms and I think can be classified as having a high, medium or low impact when it comes to improving a companies bottom-line or profitability. Three examples for justifying ECM spending include:
- Worker Productivity – The theory goes that ECM can make knowledge workers more productive by providing better search and collaboration tools. Companies try to put a value on this by claiming to save each person 10 minutess per day. If the company has 10,000 employees that’s equal to over 1,600 hours saved each day. Multiply that by an average hourly rate per employee and you have made a saving. This is a very risky, low impact approach. In reality it is hard to show how this time saving actually equates to improvements in the bottom-line. What is to stop the employees just having another coffee break or spending that 10mins on Facebook?
- Space Saving – For some the removal of paper records from offices can be a significant saving. Replacing filing cabinets with desk space in very expensive property can remove the need to add additional office space or allow continued growth in existing properties. This approach will have medium impact and will depend on the office location, capacity and rental costs. These are real savings and can be seen on the balance sheet
- Business Process – This is the most valuable ROI. If you can show that ECM will make a core business process more efficient, i.e. bringing a new product to market faster, you can tie ECM deployment to improved revenue growth. The early days of Documentum was a good example of this. Back in the early 1990’s we focused on the New Drug Application (NDA) process within the pharmaceutical industry. If you can get a new drug approved sooner you can start selling it sooner resulting in more time to recoup profits before the patent runs out. In this case ECM has a significant value and can be directly linked to improvements in the bottom line and enhancing a companies profitability.
So there are multiple ways of justifying the investment in ECM, the actual approach used will vary by company with most business cases using a combination of all of the above. But it is widely accepted that most companies can benefit from the use of ECM. So once you realise that you need ECM how do you establish the best system for your needs?
To help identify the value of Alfresco over other, more traditional, ECM solutions I have been working with Forrester Research. Alfresco commissioned Forrester Research to carry out a study to establish the Total Economic Impact of deploying Alfresco. The study did not try to justify the benefit of generic ECM (as per the approaches above) but rather the value of deploying an open source Alfresco solution.
Forrester interviewed a number of existing Alfresco customers to understand why they selected Alfresco and then quantify the benefits that these companies saw by adopting Alfresco. The results of the survey showed that companies deploying an Alfresco solution could see significant benefits over deploying one of the more traditional ECM solutions. And of course these benefits were in addition to the other benefits outlined above. The study showed that companies deploying Alfresco:
- Avoided software license costs
- Reduced maintenance costs
- Lowered developer expenses
- Achieved an ROI of 53%
- Realised payback 10 months after go live
- and Saved over $1.3million over a 3 year period
Deploying ECM provides great benefits for companies, but companies that deploy Alfresco get even greater benefit. To find out more download a copy of the report here
To help launch the study, join me on a special webinar this Wednesday, February 1, 2012 with Forrester analysts Stephen Powers and Sebastian Selhorst. The Webinar will include industry trends and the state of content management today as well as key findings on Alfresco and customer insights.
When: Wednesday, February 1, 2012
Where: Online Webinar with Forrester, 8am PST, 11am EST, 4pm GMT, 5pm CET
You can register here - hope you can join us!