We have covered DAM ROI a lot recently and the dubious methods proposed by some to prove it using flawed mathematical models. Jeff Lawrence at consultants, Celerity has written an item on this subject:
“Don’t make the mistake of using reduced work hours as a cost-saving justification. For example, if the DAM project reduces the number of hours it takes an employee to do his or her job, this probably will NOT reduce the bottom line. The only way to justify cost savings for reduced work hours is by eliminating staff or reducing overtime pay. Nobody wants to be the person that suggests reducing the staff. Instead, look to save by finding ways to reuse and repurpose assets. This may eliminate or reduce the need to purchase 3rd party assets, and usually improves collaboration between teams.” [Read More]
Celerity’s description of themselves as a ‘business acceleration consultancy’ is normally a red flag that would persuade my co-contributor, Naresh Sarwan, to start sharpening his pencil in readiness to take them to task. Fortunately for them, it’s me who has been delegated the job of commenting on their article and also (more importantly) I can mostly agree with what they’re saying.
As Jeff describes, accounting and finance personnel use models that are far more exacting than the fantasy ones vendors and analysts come up with, such as the IRR (Internal Rate of Return) example he provides and other more demanding methods too (in my own experience). If you arrive for financial justification meetings with people who really understand this subject comprehensively, expect to get a proper grilling. If the numbers look flawed or too good to be true, don’t risk using them and blowing the rest of your arguments for DAM ROI – which are probably more reasonable and believable anyway.
In the CMSWire article I wrote about this subject in April, I talked about outcomes oriented ROI and risk management techniques as an alternative to quantitative ROI. A few people have asked for more details on this and we plan to write a longer feature article or whitepaper on this subject in the near future.
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