Presentation on theme: "DCMI Global Corporate Circle1 Defining Return on Investment (ROI) for Metadata Environments April 18, 2006 John Doe, Ed.D. Vice President – All Ways On."— Presentation transcript:
DCMI Global Corporate Circle1 Defining Return on Investment (ROI) for Metadata Environments April 18, 2006 John Doe, Ed.D. Vice President – All Ways On Corporation
DCMI Global Corporate Circle2 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
DCMI Global Corporate Circle3 Dublin Core 15 Standard Elements Current Standard –ANSI/NISO Z US standard, October 2001 –ISO – 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.
DCMI Global Corporate Circle4 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, –R. Todd Stephens, –Paula A Markes, –Michael Crandall, –Paula Land, –Igor Perisic, –Kelly Green,
DCMI Global Corporate Circle5 Objectives of the Research 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 Objectives Research Question What are the measurements of success when implementing metadata and Dublin Core within the corporate environment?
DCMI Global Corporate Circle6 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
DCMI Global Corporate Circle7 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?
DCMI Global Corporate Circle8 Standard ROI Process Financial Results Category Assessment - Marketing materials - Trade publications - Best Practices - SME 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 Phase 3Phase 2Phase 1
DCMI Global Corporate Circle9 Standard ROI Methodology Benefit Model Cost Model Calculating Costs is Generally the Easier of the Two Activities 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
DCMI Global Corporate Circle10 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$ ValuationBenchmarking External Internal VAIC IC-Index Value-Chain Scoreboard Skandia Navigator Balanced Scorecard Human Capital Intel. Intangible Asset Monitor Market to Book Value EVA IAMV Tobin q KM Capital Earnings Calculated Intangible AFTF Weighted Patents TVC Technology Broker Value Explorer Intellectual Asset Val. Karl-Erik Sveiby, 2004
DCMI Global Corporate Circle11 Sample Approach to ROI Balanced Score Card User PerspectiveFinancial PerspectiveInternal ProcessesFuture Perspective Area Service Effect Information Content Personal Control Repository Collection Costs Resources - Human Resources - Physical Value Based (ROI) SLA Turn Around Up Time Quality Education Staff Retention Utilization of XML Coverage Expansion Category Survey Results Usability Assessment Page Views Collected Feedback Complaints Failed Findings / Time Required # of Subscribers # of Artifacts # of Suppliers Budget Staff Size Staff Experience Hardware Inventory Vendor Service Calls Economies of Scale Measurements Response Time Engagement Time Assets / Resource Time Available Upgrade Time MTTR Data Errors Peak / Slow Demand Backup / DR / Failover Data Latency Training Turnover Exposure Breaking New Ground New Meta Standards Expanded Scope Patents White Papers
DCMI Global Corporate Circle12 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 The sum of all benefits will be the total quantifiable benefits used in the ROI calculations. 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
DCMI Global Corporate Circle13 Sample ROI Calculations DescriptionYear 2Year 3Year 4Year 5Year 1 Costs Capital Investment Expense Costs -$500,000 -$50,000 $0 -$60,000 $0 -$75,000 Benefits Productivity Increases Service Efficiency Gains Avoiding penalties from Regulations $75,000 $50,000 $25,000 $90,000 $62,500 $37,500 $108,000 $78,125 $56,250 $129,000 $97,656 $84,375 $155,520 $122,070 $126,563 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
DCMI Global Corporate Circle14 Should You Invest in Metadata Quantifiable Benefits Indirectly Quantifiable Benefits Intangible Benefits Unpredictable Benefits Dollars Costs Definitely Possibly No, More Research Required
DCMI Global Corporate Circle15 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