Defining ROI for Metadata Environments

1
DCMI Global Corporate Circle
Defining Return on Investment (ROI) for Metadata
Environments
April 18, 2006
John Doe, Ed.D. Vice President All Ways On
Corporation
2
Agenda

• Background Information
• Issues, Problems, and Concerns
• Objectives of Research
• Return on Investment (ROI)
• Architecture Integration
• Business Case Integration
• Metrics and Measurements
• Future Possibilities
• Conclusion

3
Dublin Core

• 15 Standard Elements
• Current Standard
• ANSI/NISO Z39.85 - US standard, October 2001
• ISO 15836 international standard, April 2003
• Dominant standard for cross-discipline resource
  discovery on Internet
• Simple yet effective element set for describing
  a wide range of networked resources.
• Small language for making a particular class of
  statements about resources.

4
DCMI Global Corporate Circle

• Purpose of Organization
• Promote the use of the Dublin Core standard by
  enterprise organizations/corporations for both
  internal and external information.
• Current Work Initiatives
• CEN Workshop Agreement
• Identify measures for success when implementing
  metadata and Dublin Core, including identifying
  pain points and return on investments (ROI).
• Create bibliography of case studies and
  literature related to value proposition of
  DC/metadata in organizations
• Volunteers in Service
• Joseph Busch, jbusch_at_taxonomystrategies.com
• R. Todd Stephens, todd_at_rtodd.com
• Paula A Markes, markes_paula_1_at_lilly.com
• Michael Crandall, mikecran_at_u.washington.edu
• Paula Land, pladen_at_microsoft.com
• Igor Perisic, iperisic_at_entopia.com
• Kelly Green, kgreen_at_VRS.STATE.VA.US

5
Objectives of the Research
Research Question
What are the measurements of success when
implementing metadata and Dublin Core within the
corporate environment?
Objectives

• Identify the Best Practices among the Corporate
  Practitioners
• Education on the Value of Metadata
• Identify Methods of Communicating Value to
  Corporation
• Identify Case Studies for Enterprise Level
  Metadata Integration
• Identifying a Method for Calculating ROI

6
Issues, Problems, and Concerns

• Enormous Volumes of Information within the
  Corporation
• Internet 4 Billion Assets Indexed by Google
• Average Intranet 1.2 Million Assets
• Diversity of Technology Assets
• Zachman Framework
• Limited Integration with Current Standards
• Complex and IT Oriented Standards
• Search Engine Integration

7
Key Factors in ROI

• Breadth
• How many people will metadata affect?
• Repeatability
• How many times a day will they use it?
• Cost/Benefit
• Is this a costly effort with little or no
  benefits?
• Collaboration
• Will employees need to collaborate?
• Knowledge
• Can I reuse the information I create?

8
Standard ROI Process

• Identify
• Top areas of real benefit
• Impact to company/group
• Stakeholders
• Customers
• Consumers
• Producers

• Quantify
• Total Cost of Ownership
• Measure benefit areas
• Confirm values
• - Survey
• - Direct observation
• - Estimate
• Get benefit buy-in

• Assess
• - Calculate Metrics
• Reconfirm values
• Perform sensitivity analysis
• Assess expected case/worst case
• Evaluate Monthly

• Category Assessment
• Marketing materials
• Trade publications
• Best Practices
• SME

FinancialResults
Phase 3
Phase 2
Phase 1
9
Standard ROI Methodology
Benefit Model
Cost Model

• Business Benefits
• User Productivity
• Reduced Support Costs
• Reduced IT Costs
• Integration
• Information Reuse
• Increased Usage and Content
• Reduced Information Redundancy
• Future Benefits

• Infrastructure Costs
• Training and Education
• Application Software
• Consulting and Personnel
• Ongoing Operations
• Integration and Process Changes
• Organizational Changes
• Communications

Calculating Costs is Generally the Easier of the
Two Activities
10
ROI Models
Traditionally, ROI and Metrics have been based on
One-Off measurements like how many people have
been replaced or a percentage of another projects
success. There is no shortage of options.
No Valuation
Valuation
Benchmarking
External
Market toBook Value
Tobin q
VAIC
KM CapitalEarnings
EVA
CalculatedIntangible
IAMV
IC-Index
AFTF
Internal
WeightedPatents
Value-ChainScoreboard
TVC
SkandiaNavigator
IntangibleAsset Monitor
TechnologyBroker
ValueExplorer
Balanced Scorecard
HumanCapital Intel.
Intellectual Asset Val.
Karl-Erik Sveiby, 2004
11
Sample Approach to ROI
Balanced Score Card
Area
User Perspective
Financial Perspective
Internal Processes
Future Perspective
Service Effect
Costs
SLA
Education
Information Content
Resources - Human
Turn Around
Staff Retention
Category
Personal Control
Resources - Physical
Up Time
Utilization of XML
Repository Collection
Value Based (ROI)
Quality
Coverage Expansion
Survey Results
Budget
Response Time
Training
Usability Assessment
Staff Size
Engagement Time
Turnover
Page Views
Staff Experience
Assets / Resource
Exposure
Collected Feedback
Hardware Inventory
Time Available
Breaking New Ground
Complaints
Vendor Service Calls
Upgrade Time
New Meta Standards
Measurements
Failed Findings / Time Required
Economies of Scale
MTTR
Expanded Scope
of Subscribers
Data Errors
Patents
of Artifacts
Peak / Slow Demand
White Papers
of Suppliers
Backup / DR / Failover
Data Latency
12
Example ROI Model
Benefit 1
Increase in Productivity
Number of Employees in the Enterprise Average
Employee Salary Employee Costs Per Year
310 50,000 15,500,000
Increase in Productivity by Implementing
Metadata Employee Costs Savings Per Year
5 775,000
Benefit 2
Service Efficiency Increase
Number of Customer Service Calls / Month Average
Cost Per Call Total Costs Per Year
300,000 6 21,500,000
Increase in Productivity by Implementing
Metadata Service Costs Per Year
25 5,400,000
The sum of all benefits will be the total
quantifiable benefits used in the ROI
calculations.
13
Sample ROI Calculations
Description
Year 2
Year 3
Year 4
Year 5
Year 1
Costs Capital Investment Expense Costs
-500,000-50,000
0-60,000
0-60,000
0-75,000
0-75,000
Benefits Productivity Increases Service
Efficiency Gains Avoiding penalties from
Regulations
75,00050,00025,000
90,00062,50037,500
108,00078,12556,250
129,00097,65684,375
155,520122,070126,563
Net Cash Flow
-400,000
130,000
182,375
236,631
329,153
Net Present Value
77,957
Time Value of the Benefits Minus the Costs.
Assumptions Cost of Capital 11.5
ROI
58.23
(Benefits Costs)/Costs
Payback Period
3.58
Years until Benefits - Costs
Other Metrics Internal Rate of Return and
Alternative ROI Models
14
Should You Invest in Metadata
UnpredictableBenefits
No, More Research Required
Possibly
Costs
IntangibleBenefits
Dollars
Costs
Definitely
IndirectlyQuantifiableBenefits
Costs
QuantifiableBenefits
15
Recommendations

• Dont sell Metadata or Dublin Core, sell the
  vision of what you want to be able to accomplish.
• Clearly understand what the problem is and what
  the opportunities are.
• Do the math (costs and benefits)
• Quantify the Measurable Benefits
• Describe Intangible Benefits Qualitatively
• Identify your market (Customers and Suppliers)
• Support your calculations with research

16
Questions