Over the last few months we have been looking at the flawed nature of classic ROI calculations as applied to DAM and how these nearly always contain misconceptions embedded within the calculations which can invalidate the conclusions of any study. A few people have contacted me about these articles and also I have found similar pieces that support the same argument. As I suspected, this is far from unique to DAM software but can be found across the board in numerous other fields also.
Andy Rudin has written these articles: ROI Calculus: More SWAG than Swagger and the follow-up: Look Ma! No ROI!. The second is of particular interest as I believe we have now fully debunked the myths behind ROI calculations and the next challenge is finding some other more plausible method for demonstrating the value that DAM solutions can offer. Obviously we have many vendors who read DAM News and this article is useful as it is presented from the perspective of a solution provider who wants to avoid getting coerced into phoney ROI battles with either their prospect or the competition. Andy presents three recommendations:
- Align with their strategic objectives: i.e. showing that your product can help them get where they currently plan to go.
- Demonstrate how to reduce the organisation’s risk.
- Provide options and flexibility to allow them to incrementally assess effectiveness and change direction if required.
“Reducing this stuff to simplistic ROI quantification removes understanding the strategic value gained from owning these advantages—and that’s the point. If your competitors are going to beat you on strategic enablement, they must prove themselves superior strategic enablers. That means not giving them a pass by allowing them to simply pump fluffier numbers through canned spreadsheet algorithms…Strategic enablement. Low risk. Options value. These are sales hammers best not ignored. Sometimes, the things that are the most difficult to measure are also the most consequential in predicting an outcome—in this case, successful results.” [Read More]
As much as the vendors get given a verbal kicking for these kind of bogus studies, it has to be said that in a fair number of cases, the prospective client share an equal or even greater amount of the blame by asking for them in the first place. They need to be educated to allow to them to understand that reductionist methods don’t usually work when it comes to making accurate predictions about the impact on productivity of some complex device such as a DAM system.