Cloud DAM Vendor, WebDAM have recently sent us a copy of a paper they have written about how to measure DAM ROI. I must admit, I normally fear getting issued with these documents and asked for an opinion on them, perhaps only slightly less than that other tool of Satan, the DAM ROI Infographic. In this rare case, however, it’s not that bad – mainly because they have dialled down the sales & marketing razzmatazz and concentrated on encouraging readers to carefully examine the facts in a manner that is relevant to their individual situation:
“Digital asset management is the proven solution for today’s enterprises to effectively find, manage and share branded assets. If you’ve been tasked with estimating and presenting DAM ROI for your company’s unique needs, this guide will help you identify the numbers that should be collected and describes a calculation method. That said, keep in mind that the nature of DAM itself can make it difficult to come up with concrete figures that apply across all use cases. Using a plug and play DAM ROI calculator won’t always yield 100% complete calculations because organizations use and benefit from DAM in many different ways. Despite these challenges, an ROI calculation is still a very valuable benchmark to start with and measure against over time. To reach the most accurate calculation of ROI, it’s essential to have a thorough understanding of how your marketing and creative teams work with digital assets, how valuable these assets are and the many intangible factors that will influence ROI.” [Read More]
The paper includes three grades of ROI classification: ‘conservative’, ‘moderate’, ‘aggressive’ and offers some ideas of the variables to consider in a DAM ROI case. Fundamentally, I still think that these quantitative ROI models where the savings are allegedly proven in advance are flawed, however, I have to acknowledge that in some organisations, they are required to demonstrate the business case behind a purchase decision. Since DAM vendors have to sell DAM systems, they are top of the list of people who are likely to get asked to come up with them.
Using three different prediction models as WebDAM have done is an improvement on the ‘think of a number add three noughts and double it’ techniques I have seen used elsewhere. If you have to go through this kind of task, some other options to consider for even more realistic ROI cases are examining proper financial accounting techniques for ROI calculation such as Internal Rate of Return (IRR) and Discounted Cashflow. These are a shade or two more difficult to work out (to the extent that your copy writer and in-house graphic designer might find themselves no longer being the employees who contributes most to the exercise) but if you really want to demonstrate your commitment to the bean counter’s cause then they are a good way to do it.
One of the major complications with proving DAM ROI is related to the nature by which people generally go about trying to achieve it. The ROI case is almost always predicated on productivity enhancements – shaving time off required for mundane activities like searching for assets or generating derivatives (e.g. re-saving files in alternative digital formats) with search being the largest single cost-saving. This poses a number of challenges for ROI cases that are not immediately obvious. Firstly, there isn’t really any such thing as an ‘average’ amount of time spent searching for something. Assets that were being worked on recently can usually be found far quicker than those from a number of years ago – in fact a DAM can actually things worse since you can’t just open files up direct from your desktop or that memory stick you carry around in your pocket. By contrast, assets for a project you did three years ago are clearly a different proposition and in that case, you may become exclusively reliant on a combination of the DAM system’s and facilities and a satisfactory metadata cataloguing to ever find them again.
The other problem with accurate ROI calculation is the conflict of interest it presents for the employees who will make heaviest use of the DAM. When I have been required to take on this type of task before, prospective end users will tell you they definitely need a DAM system and they are desperate for the capabilities it offers. If you then ask them how long they spend on some task that a system is designed to automate, they tend to be more reticent to offer numbers that prove their case because they don’t want to be forced to reveal to their boss that potentially hours of time got wasted looking for some file which either they or their close colleagues lost.
What really proved to me that ROI cases are flawed was an exercise I did with a client several years ago. After a lot of interviews with the staff of a busy marketing department that was clearly in need of a DAM solution, the only numerically positive case in favour of DAM that we could come up with was the saving it would make on printing consumables since they would no longer need to print artwork out to show it to colleagues. The employees effectively ‘proved’ they did not need a DAM by under-playing the time taken to carry out a number of tasks due to fears that they might get called to account over previous bad practices (which mostly happened because they were busy rushing to meet deadlines). In the end, the ROI figures got set aside and they proceeded with the initiative anyway – which begs the question as to why the exercise was commenced to start with?
If you are a vendor trying to sell DAM solutions to a client, their CFO or FD etc is unlikely to believe your ROI numbers because they know your interest is proving what a great idea DAM is in order to help secure a sale. They get exposed to countless other ROI case examples from suppliers across the entire tech spectrum (and outside it too). A better option (in my opinion) is to have an organisation start with the lowest cost entry point possible for a working solution, regularly test the results and then scale it up based on figures that have been collected from actual system use. CFOs rarely argue against spending less money and this seems like a more honest and effective way to assuage their concerns and secure a longer-term relationship.
It’s good to see WebDAM present a more realistic proposal for DAM ROI and I hope it encourages others to take a lead from their example. The business case for DAM is already a very strong one that does not need further embellishment.