Month: June 2010

Considering the Cost & Value of Digital Content for an Enterprise

The way that the value of digital content changes over time, and how an enterprise content management (ECM) system might help to realize and/or retain greater value was the subject of my last post (http://martin-fulcrum.blogspot.com/2010/06/calculating-value-of-content-in-ecm.html). Lee Dallas retweeted that post, but also referenced a very interesting earlier blog post (2008) by fellow member of ‘Big Men on Content‘ Marko Sillanpääon the cost of content (link). Sillanpää considered content lifecycle costs as follows:Cost of Content = (Annual Authoring Costs + Annual Review Costs) / New Objects per AuthorContent authoring and review are not the only activities that incur cost – there are costs associated with each step in its lifecycle, notably including the costs of distribution, storage and ultimate destruction. Effective content distribution is becoming increasingly important to the realization of value.Cost and value are of course different concepts. The cost of an item does not necessarily reflect its value, as anyone who has watched the TV show “Antiques Roadshow” knows!In business, where there is an emphasis on the bottom line, the value of content ought on average to exceed its cost, or it should not have been created. But for a given piece of content, its cost is generally related to size and complexity, not what it enables. On the other hand, value is tied to enablement and varies over time – often declining gradually or precipitously, but sometimes increasing!It can be hard to explain to people how managing content benefits a business. However, I have found that identifying its ‘enterprise value’ is powerful. A good top-down approach is to reference the value chain of a business, using Michael Porter’s original simple model.People understand that enterprises take input from suppliers and partners and, through a series of steps, add value that can be realized in a final sale to customers. Clearly the effective execution of those steps adds to efficiency. When challenged, most people can identify content that contributes or is even essential to the completion of each of those value steps and their constituent processes. For example, an Engineering Department must create, review and approve engineering drawings, and then pass them on to the Manufacturing Department (see E, C & O value chain).In my experience, taking a value perspective is generally more attractive, especially in growth industries, than a cost and cost avoidance perspective – which has classically been the basis for return-on-investment (R.O.I.) approaches to software justification.  Syndicated at http://conversations.opentext.com/

Calculating the Value of Content in ECM

It’s only worth expending effort to manage something if it has value – usually positive, but sometimes negative. So the concept of content value is implicit in enterprise content management (ECM).On the other hand, the value of a given content object (i.e. digital file) such as an email or document generally declines over time – or at least this is the common wisdom. I have seen graphs drawn mapping ‘value’ over ‘time’, with a smooth decline of value tending to zero. However, such a representation is clearly an average of value across many types of enterprise content.If you look at individual pieces of content, then you’ll find different profiles:

  • In compliance, a piece of content may retain 100% of its value for a defined period of years and then abruptly drop to having no value, or even having negative value (liability) that should trigger its destruction
  • In knowledge management, a piece of content may have declining value over time, but then because of some new event may suddenly have increased value

But this perspective is of the Inherent or Independent Value of a piece of content – the value is assessed entirely based on the information contained in the object. But it seems to me that there are at least two other factors that impact value:

  • Context – when correctly combined with other prices of content a given piece of content may have greater value. For example a specifications document is more valuable together with the associated requirements document. Value can often be realized by the way in which context is presented between content items – how they are grouped, ordered or ranked.
  • Impairment – Ironically, the value of a piece of content may be impaired by efforts to manage content. If you mix valuable pieces of content with large amounts of irrelevant materials, that should have been destroyed, you reduce the chances that the valuable content can be found and its value realized. Keeping everything is usually a bad idea. And often users impair value when they misclassify content.

So the available value of a piece of content to an organization may be expressed as follows:Available Value = Inherent Value x Context / Impairment What this says is that content management efforts can be beneficial, but if not done well can actually be destructive.