The ROI of Content Management Systems (CMS)
Gone are the days of free spending for your Internet projects. The old theory of “put it on the web and watch the sales come pouring in” is not only gone, but the exact opposite seems to be the case in many organizations. Many companies are wary about putting any money into Web-based projects (along with many other IT projects) and want to see a rather favorable Return On Investment (ROI) for any monies spent. So how does one justify spending more money for a software application?
Mathematically, ROI is represented as:
ROI = (present value of benefits) / (present value of costs)
Simply stated, it measures the annual return on that business investment.
So how do we begin measuring the success of a content management system? Measuring ROI is not a new concept, but trying to measure the hard and soft benefits of a new technology can certainly be a daunting task. There are many ways to measure ROI and the best way to begin is to outline the hard and soft objectives of the CMS project and then define the measurements in each category.
Hard objectives are generally easy to define and measure. Such measurements include reduced labor costs, increased sales, accelerated time-to-market, reduced human errors, lower distribution costs, improved quality, expanded product/service deployment, greater return from other IT investments (such as an ERP, portal, etc), and reduced Web production costs.
Soft measures, even though harder to define and measure, can often be more compelling than hard measures to take notice of. Soft measures include the ability for experts to control the creation and dissemination of content, the ability to maintain consistency (and also branding consistency) throughout the site, the ability to improve customer service, the ability to manage content security on the site (who sees what), the ability to focus resources more effectively (ie, have your skilled programmers programming instead of doing simple updates), putting business people in control of online communication, and reducing legal liabilities. Additional benefits include the creation of a clear navigation structure, making it easier for visitors to find content and ultimately making the site more valuable for them. Personalizing the site for customers can also ensure that the users are able to find relevant information much easier.
An interesting argument for knowledge gathering and CMS usage is for time savings. It has been shown that managers will spend 20 to 25% of their time gathering information. After the implementation of a knowledge management (KM) or CMS, one will be able to find the same amount of information in less time. An interesting phenomenon occurs however as the time spent on that function reaches 20%. The worker will again start devoting more time to seeking other or more information, raising the level to 25% of their time again. As a result, the initial appearance is that there is no real time savings since the knowledge gatherer is devoting the same amount of time to information gathering. However, upon deeper inspection it is apparent that given the same amount of information, it will take less time to find that given amount. The bottom line here is that you shouldn't simply justify a CMS or KM system by time saved, but to use field stories and to demonstrate better decisions and higher productivity where possible.
To sum it all up, it's clear that not all ROI measures are clearly financial. It's harder to put a dollar value on brand consistency and improved content freshness but that doesn't mean that those aren't as important. You need to determine what your goals are in terms of business objectives, financial and otherwise, and see how a CMS can help you achieve those goals.
After it is all said and done, you've decided a CMS is what your organization needs, and you're ready to go, take these last few items into consideration. There may be other costs associated with its implementation, such as long and expensive timelines, consulting, and project management and development fees which can all add significantly to your total cost of ownership (TCO). The more built-in and out-of-the-box functionality you can get from your CMS, less consultation and customization fees will be added to your total cost.
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