Quantifying Return on Investment for

ECM: A Methodology
A Doculabs White Paper
 © 2009 Doculabs, 200 West Monroe Street, Suite 2050, Chicago, IL 60606
(312) 433-7793 info@doculabs.com.
Reproduction in whole or in part without written permission is prohibited.
Doculabs is a registered trademark. All other vendor and product names are
assumed to be trade and service marks of their respective companies.
Table of Contents
1. Introduction 1

2. What’s the Best Way to Quantify the Potential Impact 3

of ECM within an Organization?

3. Doculabs’ Methodology 7

4. Sample Business Cases 8

5. Closing Recommendations 10

6. About Doculabs 11
Introduction

G
iven the volumes of unstructured information in Let there be no doubt: There is a business case to be made for ECM
organizations today, it should be easy to make the business technology.
case for technology initiatives that can help get that
information under control. Enterprise content management (ECM) Consider that 80 percent of the information within an organization is
technologies and processes are designed to do exactly that: to unstructured: word processing files, email, spreadsheets, web
capture, manage, archive, and deliver information, both within and content, images, graphics, and all the other digital assets that get
outside organizational boundaries. created for use in business processes. In most organizations, fully 90
percent of this unstructured information goes unmanaged, and
It should be easy – but it’s not. Doculabs knows from experience that industry estimates are that this unmanaged information is growing at
organizations struggle when it comes to effectively quantifying the a rate of 36 percent per year.
return on investment in ECM. We see many organizations facing
significant content management challenges, but which nonetheless
can’t seem to allocate funding for ECM initiatives – whether for
targeted projects affecting specific business processes or for
infrastructure initiatives designed for enterprise-wide deployment.

The reasons vary. Sometimes it’s because IT has too many other
high-priority projects on its plate. In other organizations, ECM may
have a bad track record – from projects that either went over budget,
or over time, or that achieved adoption rates far lower than the initial
projections.

But many ECM initiatives don’t get funded or don’t get fast-tracked
for the simple reason that IT can’t make the business case for ECM.
Too often we see business cases that fail to quantify the hard-dollar
returns, or that suffer from gaps in cost data, or that are based on
ROI models that are less than complete. Then an already weak
business case gets buried in spreadsheets, and ECM gets sidetracked
Figure 1: Problems Making the Business Case for ECM
yet again for lack of executive buy-in.

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But the picture gets even more complicated. Organizations are
becoming more distributed than they were in the past. As a result of
globalization, cross-continent, cross-culture, multi-language, hyper-
collaboration environments will soon be the norm, if they are not
already. Furthermore, the business environment is subject to
increasing regulation, and is also becoming increasingly litigious. In
the U.S., post-Enron regulatory changes have mandated that
organizations regard information management as an essential part of
running their businesses.
Whether you consider it from a compliance and litigation viewpoint,
through a cost-cutting lens, or from a productivity enhancement
perspective, ECM technology is an integral component of the IT
infrastructure within an organization.
In the current economic climate, however, it’s imperative to
demonstrate hard returns for any IT initiative, including ECM. In
many organizations, that also means determining the ranking of
ECM relative to other requests for IT spend, in order to prioritize
the order of spend in the area of content and process management.
Finally, it’s absolutely critical to package the message so that the
impact of the ECM initiatives you propose will be clear to executive
management. Bottom line: If you can’t demonstrate the value of
ECM within 10 minutes in an executive presentation, the
chances are the funding will (once again) go to other projects
that do show the hard returns.
So how do you make a credible business case for ECM – particularly
when ECM has to compete with a multitude of other requests for IT
dollars?
In this white paper, Doculabs provides the best practices and
approaches you need to justify ECM-related expenditures. We also
present Doculabs’ Business Case Modeling Framework, a methodical
approach that we have used to assist organizations in developing
ECM-specific business cases that demonstrate hard and soft returns
for executive management. Doculabs has the tools that can help you
make the case for ECM in your own organization.
To learn more about Doculabs’ Business Case
Modeling Framework…
Doculabs has developed a Business Case Modeling
Framework – a methodical approach designed to
assist organizations in developing ECM-specific
business cases that demonstrate hard- and soft-dollar
returns for executive management.
To learn more about this service or our other content-
and process-related consulting services, visit the web
site at www.doculabs.com, or call
(312) 433-7793.
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What’s the Best Way to Quantify the Potential Impact of ECM within an Organization?

T
he figure below shows some typical areas of spend for ECM. approach is taken. When putting together a business case, you
Note that we break them down by “targeted initiatives” – should consider your approach based on the organizational culture,
ECM projects designed to address specific business the appetite for spend, the maturity level of ECM, and the
problems or areas of ECM functionality – versus “infrastructure enterprise’s overall familiarity with the potential value that ECM can
initiatives,” which we consider to be initiatives affecting the entire bring. While an infrastructure investment makes a lot of sense in
enterprise. certain instances, other organizations might find a targeted initiative
a more favorable approach, given their funding constraints. In still
other organizations, proving out targeted value might be the first
Customer Communications Digitization / Process
Management Automation step toward justification of an infrastructure-related spend for ECM.

A business case should have a specific focus, based on your

Targeted Initiatives

eDiscovery and Compliance SharePoint Co-existence organization’s business priorities and its stated corporate business
goals. So familiarize yourself with the content of the organization’s
annual report. Know what your organization’s business priorities are,
Contract Management Email Management and tailor your business case accordingly.

It will also help to define the type (and level of detail) of data you
Other Industry-
Other Horizontal Initiatives
specific Initiatives
will need to gather to support your business case. Also make sure
you know what initiatives – both major and minor, both ECM and
non-ECM – are in the IT pipeline. That information will show you
where ECM may be competing for funding, but it can also show you
Infrastructure

other initiatives that might potentially benefit from ECM capabilities,

where you could tap into the budgets of other active projects.
Spend

Enterprise-wide Deployment

When putting together the business case for any of these types of
initiatives, consider the categories of benefits, classes of business
Figure 2: Typical Areas of ECM Spend cases, expense category emphasis, and worker types that will be
impacted by your proposed initiative. The subsections on the
The significance of the demarcation between targeted initiatives, following pages discuss each of these areas in detail.
whether industry-specific or cross-industry, compared to
infrastructure-related initiatives, is that the sources of funding tend
to be different. Furthermore, an organization’s stage of maturity
within the ECM lifecycle at a given point in time may dictate which

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Benefit Categories

Ask yourself: Which benefit category (or categories) align most closely with your organization’s corporate business goals? These are the benefits
that are most likely to get the attention of executive management. Evaluate your proposed initiatives by how well they fit your organization’s
business priorities, and prioritize and present them accordingly.

Revenue lift: Benefits that help the organization increase revenues.
(Example: customer communications technologies that integrate with
LOB systems, allowing for cross-selling and up-selling to existing
customers)
Risk mitigation/compliance: Benefits that improve the
organization’s ability to reduce corporate risk or facilitate its ability to
comply with regulations (Example: records management technologies
that make it easier to manage discovery-related information in the
event of litigation)
Cost reduction: Benefits that decrease the hard-dollar costs of
business processes (Example: imaging and e-forms technologies to
reduce the amount of paper in business processes)
Business continuity: Benefits that improve the organization’s
ability to ensure that mission-critical functions and services can
continue uninterrupted during and after a disaster. (Example: imaging
technologies and mirroring of repositories to ensure up-to-date
copies of business-critical documentation and data are maintained in
geographically dispersed locations)
Transformative: For organizations in the public sector, benefits that
allow a government department or agency to provide information to
its constituents in a timely and accurate manner. (Example: imaging
and e-forms technologies to digitize documentation and enable
timely response to Freedom of Information Act requests)

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Classes of Business Cases
Next, consider the various classes of business cases. As the examples suggest, there are different circumstances in which each class is appropriate:
Top-down vs. Bottom-up: A top-down business case is typically an
organization-wide business case that highlights macro-level ECM
benefits at an enterprise level. These tend to be credible only for
hourly wage/variable capacity types of workers, where capacity
planning can be directly affected with even minor efficiency gains.
(Example: Making information more easily accessible to customer
service reps in call centers throughout the organization, thereby
reducing time required to service calls)
Bottom-up business cases, generally a more credible and more
successful approach, tend to be more precise for knowledge workers
and also work rather well on the process worker-related activities and
tasks, where certain patterns tend to recur in many areas. Not only
can a particular line of business benefit from a process-level
drilldown, but those same ECM usage patterns can be applied to
other processes with similar characteristics. (Example: New Account
Origination optimization through imaging, e-forms, and workflow,
which presents usage patterns similar to Retail Mortgage Processing)
Reallocative: This class of business case focuses on reducing costs
from one area and allocating the savings to another area. (Example:
Suppressing print for customer communications and reallocating
those savings for modernizing the personalization platform for
electronic customer communications)
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Retrospective: The retrospective business case focuses on analysis
of a particular event or scenario and demonstrates how the outcome
would have been different if ECM technology were in place.
(Example: an instance of litigation discovery, showing the actual costs
of the discovery event and the cost reductions with ECM
technologies in place)
Embedded: This class of business case focuses on demonstrating
the ability of ECM to enable an existing and already funded initiative,
where ECM acts as an enabler for the in-flight effort. (Example:
Using the document management and records management
capability sets of ECM to enable archiving for an ERP initiative that
is already funded and underway)
Reformative: The reformative business case tends to highlight the
structural, business model-related or highly strategic changes that
require aspects of ECM in the critical path. (Example: A business
model, such as outsourcing, that the organization seeks to pursue,
where ECM technologies such as digitization and process
automation are prerequisites for undertaking a distributed sourcing
environment)
Expense Category Emphasis

Your business case should also take into consideration the category of business expense into which
your organization is likely to classify your proposed ECM initiative: as a capital expense or as an
operating expense. The reason this is important is that in certain organizations, funding is materially
easier in one category over the other, depending on the organizational priorities and macro trends
that dictate the business climate at the time. Some prefer capital expenses over operational expenses,
and others the reverse.

A further factor to consider is how the costs for ECM implementations (both initial and ongoing)
are allocated across the business. It’s important to consider a fair and equitable allocation of costs to
incentivize adoption across the organization. This is in contrast to what typically occurs in most
organizations, where the first business unit to volunteer for ECM functionality incurs a vast majority
of the initial costs. This inequitable allocation of costs is a disincentive for adoption, and the result is
a deployment that gets off to a slow start. A better approach in large infrastructure projects is
simultaneous deployment of multiple projects over a longer time period, where IT carries the costs on its books. This approach can then be
coupled with chargeback strategies where basic functionality for ECM can be provided for a low cost, and more advanced functionality is
provided with a value-based pricing model from IT to the business.

Worker Types

Finally, as you craft your business case, consider the general type (or types) of worker your proposed ECM initiative is likely to impact.

Process worker: It’s easier to calculate costs (and therefore hard-dollar benefits) because benefits
will be measurable in terms of unit costs; it’s also easier to enforce utilization, because ECM will
likely interface with process workers’ LOB systems. Yet many process workers don’t make full use
of the available ECM functionality, which means the investment goes underutilized and the potential
benefits aren’t realized.

Knowledge worker: Benefits that impact knowledge workers are more likely to be soft-dollar in
nature; it’s difficult to quantify hard-dollar benefits. It can also more difficult to attain end-user
utilization, because ECM tends to be an adjunct to knowledge workers’ existing applications. Adoption is also a critical hurdle; most knowledge
workers need to be convinced of the business benefits ECM provides (and they can devise ingenious work-arounds if you fail to convince them
of those benefits).

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Doculabs’ Methodology

D
oculabs has developed a Business Case Modeling Framework – a methodical approach designed to assist organizations in developing
ECM-specific business cases that demonstrate hard- and soft-dollar returns for executive management. Following are the steps:

Define Criteria: Evaluate existing business processes for

Criteria Description
potential benefit from ECM (i.e. revenue lift, risk mitigation/
compliance, cost reduction, business continuity), using a set of
Assessment of the level of priority that the
defined criteria. See table on this page for sample criteria. requesting business unit has placed on the project
Business Priority
Prioritize Processes: Assess the potential impact of ECM on request or initiative
each business process and prioritize processes, using your
defined evaluation criteria. Evaluation of how the project request aligns with
Strategic Alignment the organization’s major strategies or stated goals
Depict the Current State: Create a view of the current process,
applying current-state metrics and facts. Include data specific to
your organization (costs, volumes); supplement with industry The relative level of benefit that can reasonably
benchmark data in areas where your own data is incomplete. Magnitude of be expected to be portrayed by the process
Potential Return
Where possible, also include an analytic/ heuristic model that analysis work
shows how other organizations in your industry approach the
process. The areas of the business that will be impacted if
Impact of Potential the scenarios are automated
Project the Future State: Develop a view of the desired future Return
state with estimates of the improvements enabled by deployment
of ECM technologies. Use industry benchmark data to project General complexity of the process
the costs of the future state. Process Complexity
Quantify the Benefits: For each process, aggregate and analyze
the hard and soft benefits (i.e. revenue lift, risk mitigation/ Identification of how visible the scenario is from
compliance, cost reduction, business continuity). Visibility an enterprise perspective
Communicate and Socialize: Perhaps the most important step
of all, when it comes to obtaining executive buy-in. Develop an
effective communications model and socialize it with the
executive team. Doculabs recommends developing an interactive
visualization of the business case to communicate the business
case graphically, in a succinct, easy-to-understand format.

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Sample Business Cases

F
ollowing are two business cases developed using Doculabs’ Business Case Modeling Framework, showing examples of interactive
visualizations as a tool for communicating and socializing the business case to executive audiences.

Compliance Initiative: E-Discovery ROI Model

Problem: Repetitive and high costs of producing documents for
litigation discovery

Category of Investment: Targeted initiative

Addressable Audience: Legal

Approach for ROI: Retrospective, using organization-specific and

industry data

Key Benefits: Improve management of potentially discoverable

information and reduce the volume of case-specific discoverable
information that requires costly legal review

Potential Pitfalls Avoided: In many cases, organizations don’t

justify a proactive effort for use of ECM in e-discovery largely
because they have not yet faced a major and costly litigation. This
business case demonstrates how a few changes in variables in a past
experience can dramatically change the cost and risk implications for
an organization, thereby justifying the use of ECM as part of a
proactive approach.

If you would like have Doculabs present the interactive visualization

of this data please contact info@doculabs.com

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Infrastructure Example: Shared Services ROI
Model / System Rationalization
Problem: Inability to achieve high rates of adoption for ECM;
inability to roll out ECM functionality efficiently
Category of Investment: Infrastructure
Addressable Audience: IT and LOB executives
Approach for ROI: Top-down and reformative within IT and from
a time-to-deployment perspective
Key Benefits: Improved ability to target ECM functionality to the
needs of different users groups; improved efficiency in rolling out
ECM functionality. This factory-based shared services approach
instills a repeatable process within organizations that can result in 4-
to 6-week implementation times.
Potential Pitfalls Avoided: Many organizations invest in ECM, but
are unable to rapidly provision applications and achieve broad-based
adoption of ECM. Without a well-defined implementation approach
and strategy for ECM, approximately 50% of organizations will incur
If you would like have Doculabs present the interactive visualization
cost overruns, long times to deployment, and low adoption rates. A of this data please contact info@doculabs.com
shared services approach dramatically reduces these inefficiencies
and can lead to 30 to 40 percent improvements in deployment
efficiency, compared to a one-off implementation approach.

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Closing Recommendations
D
oculabs has helped many organizations develop business
cases for ECM – with both targeted initiatives and
infrastructure initiatives. As you begin to make the business
case for your own ECM initiatives, keep the following
recommendations in mind:
Identify Low-Hanging Fruit: Determine the areas of opportunity
for ECM that have a high probability of potential return. Look at the
benefit categories and determine which ones apply.
Select Modeling Approach: Agree upon the modeling technique
and combinations – i.e. the top-down vs. bottom-up, reallocative,
retrospective, embedded, and reformative models discussed in this
white paper.
Leverage Best Practices: Use proven logical models and industry
benchmark data to support your business case, and use visualization
models to communicate your business case to executive
management.
Use a Hybrid Model: Use your organization’s specific data in as
many places as possible and compare to industry averages.
Use a Proven Business Case Modeling Framework: Doculabs
provides consulting services in business case development, using its
Business Case Modeling Framework. As you prepare to develop a
business case, consider the design goals listed to the right to ensure
success of the effort.
1. The basis of a credible business case is
relevant, organization-specific data on the
costs, volumes, and other metrics around your
current business processes.
2. Many organizations don’t compile these
metrics; the data simply don’t exist. And even if
it does exist, you might not have a relative
comparison of the severity of the issue.
Doculabs recommends using a model that
uses not only internal organizational data, but
also industry benchmark data.
3. The data then needs to be applied to the
analytic and heuristic models, with the right
logic, assumptions, and parameters to help
you create defensible scenarios to
demonstrate how your proposed initiative will
provide quantifiable returns on investment, not
just an enumeration of the soft benefits.
4. The most critical piece of the business case is
calculating an ROI and then communicating it
to executives in sophisticated yet easy-to-
understand visual and interactive models. A
business case should always be able to
present “what-if” analysis, showing causes and
effects resulting from changes in assumptions.
Finally, a good business case should be simple
enough to review in a few minutes with an
executive audience, but still display the
robustness of the analysis.
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About Doculabs
Doculabs, Inc., is a consulting firm that focuses on strategic issues associated
with content management and related technologies. Founded in 1993,
Doculabs recognizes that managing unstructured content is fast becoming a
major business priority.

Doculabs has an established track record in helping its clients develop

strategies for bringing content under control. Doculabs understands the
technologies and the applications at both ends of the content management
spectrum, from the simple to the complex. For more than 10 years, Doculabs
consultants have helped clients identify their specific content management
requirements and the technology applications of greatest business benefit.
200 West Monroe Street
Suite 2050 Most important, our recommendations are completely objective. Because
Chicago, IL 60606 Doculabs does not sell software or integration services, you can be sure that
(312) 433-7793 our content management recommendations will truly meet your specific
www.doculabs.com needs.
E-mail Doculabs at:
Hundreds of leading organizations within the Fortune 1000, as well as federal,
info@doculabs.com
state, and municipal government agencies, have turned to Doculabs for
assistance with their content management strategies, including ways to help
them make effective use of ECM technologies as part of their compliance
programs.

For more information about Doculabs, or for further information on the

Business Case Modeling Framework presented in this document, visit the web
site at www.doculabs.com or call (312) 433-7793.

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