Calculating ROI
As today's economic downturn cuts deeper into IT budgets, CIOs often have to justify investments in more expensive initiatives, like a content management system (CMS). Buying and building the technology for a CMS is the (relatively) easy part. The hard part is justifying the business need and getting upper management to shell out the significant investment needed to get a CMS off the ground.
After you've determined that a CMS will fulfil a true business need, often the next thing that upper management will want to see is an ROI. Here are some factors you should consider when determining the cost of a CMS effort.
-It's critical to do a broad-based business justification for the project as a whole," says Tony Byrne, founder and managing editor of CMSWatch, an independent information and analysis site that focuses on Web content management. For organisations where content is the business, investing in better management is an essential infrastructure costâ€"the cost of doing businessâ€"just as the cost of a phone system or a firewall is for the enterprise.
Byrne advises companies to consider three factors when estimating the costs of a CMS:
Software licensing (including databases, search engines, and other ancillary packages). -Watch out for cost creep as you add additional servers and content contributors," says Byrne. -The most important thing to remember is that software licensing may well turn out to be the least of your expenses."
Integration, customisation, and extension. Industrial-strength CMS doesn't come out-of-the-box: hiring a professional services firm to help you put everything together may set you back one to three times the cost of the software licensing alone, depending on the scope of the engagement.
Data cleaning, normalisation, organisation, and migration. -CMS buyers typically need to do most of this themselves; everyone usually underestimates the level of effort involved," advises Byrne. Byrne offers a simple formula for calculating ROI. The first step is quantifying costs and then adding up all the hard dollars and cents your company will see in:
- Increased sales.
- Expanded product/service deployment.
- Greater return from other IT investments (eg, ERP, portal).
- Accelerated time to market.
- Process efficiencies.
- Reduced Web production costs.
- Reduced paper/mailing costs.
- Reduced human errors.
Then, quantify and add up all the "soft" benefits, which include:
- Putting business people in control of online communication.
- Maintaining brand consistency.
- Enhancing customer satisfaction.
- Improving content security and reducing legal liabilities.
- Maximising internal skills through greater specialisation.
-Compare your costs laid out above against the benefits you expect to gain from a CMS," explained Byrne. -Although the benefits may be difficult to quantify at times, at some point, your company will simply decide that, ROI or not, it can't live any longer with the (likely growing) pain of not effectively managing your content."
Geoff Choo contributed to this article
