Determining the ROI of a content management solution – Part 1

Calculating ROI for a content management system

When considering new content management systems (CMS) one of the primary decision factors is the return-on-investment (ROI). However, calculating the ROI is not typically straightforward and can require a combination of judgement and strict data. In this blog entry, we will focus our attention on the return (R) or the benefits side of the equation. In Part 2 we will explore the investment (I) or the cost side of the equation.

Measuring the benefits of a CMS requires a number of assumptions and therefore can be quite subjective. We think it make senses to try and capture the assumptions that have the largest impacts and where possible quantify the return:

Time savings – Will the CMS help your staff find content more quickly than your current solution? To calculate this benefit, you would:

  • Count the staff using the CMS and determine their weighted average salary
  • Estimate the time savings the employee saves each time they use the CMS
    – The CMS may enable them to find content faster
    – If the CMS allows them to find content that wouldn’t have been founded otherwise, you can count the savings from recreating content
  • Multiply the average salary by the amount of time the CMS will save

For example, let’s say you have 1000 employees with an average salary $100/hour using the CMS an estimated 10 times a month saving 6 minutes each time they use it. So each month they save 1 hour for a total of 12 hours a year. In addition, they save about an hour each month because the CMS exposes more content and reducing content recreation. This is an additional 12 hours a year for a total of 24. Therefore, the savings per employee ($100/hour * 24) is $2,400 and the savings across all employees is $240,000.

Now you may want to discount this because all your employees may not use all the saved time valuably. However, having your employees work less may also have benefits in terms of job satisfaction and productivity. Typically, these factors are hard to measure and you have to make a rough judgement.

Productivity, knowledge capture, and sales – A good CMS will also provide a long list of the softer benefits that may be hard to explicitly measure:

  • Are you capturing more knowledge? Is it easier to deal with employee turn-over?
  • Is your output and operations going to improve because your employees have better access to content?
  • Are you able to close more deals because your pitches have improved?

You could calculate the sales benefit by estimating the percent increase in winning a deal and the average size of a deal. However, these numbers tend to be hard to defend. Instead, you could ask your vendor to speak with other customers to understand subjectively what benefits they are seeing on a consistent basis. This should give you a rough sense of the value of the subjective, softer benefits.

 

You can then combine the value of all the benefits to estimate to the total return on the investment.

3 thoughts on “Determining the ROI of a content management solution – Part 1”

  1. I suggest you go back to first principles… why do you want a CMS, or a different CMS in the case of an upgrade? What are the goals you are pursuing? Those original thoughts should enable you to build a solid benefits register. Better still, work out how your goals will be met; and the ideal method would be to use a results chain model. With one of those, it’s relatively easy to defend benefits claims.

    1. Great comment Mike. Our hope was that people could apply the ideas above from a first principle perspective. As you mentioned, if you can outline your goals you could then put numbers to the ‘softer’ benefits.

  2. Hi Kartic… The point about a Results Chain model is that is encompasses ALL your thoughts about benefits. If you think ‘softer’ benefits have any merit, then the question is ‘why do you think that?’ There will be reasons. They might involve the behavioral changes that enable ‘harder’ benefits to be realized; or things that are hard to measure. A Result Chain model allows ALL the factors that influence the eventual success of a scheme to come together in one ‘network’ model, so that the mystery (or apparent lack of worth) of ‘softer’ benefits (outcomes) can be shown to contribute – as preconditions / prerequisites – to other outcomes. It all chains together as a complete model that is, in itself, the argument for a scheme. It’s a very powerful tool.

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