Evaluating Digital Investments: Top-line or Bottom-line ROI impact for DAM

Editor’s note: Lyndon Hedderly has developed a digital value assessment through years of working on return on investment models with various customers. Lyndon has written a number of blog posts on this topic here, including reimagining the business case for digital initiatives.

Digital asset management is key to managing your content and your content drives your customer experiences, which in turn drives your overall business performance. This isn’t just about the management and organization of digital assets; it is about digital fitness.

I’ve just spent the morning reviewing Digital Asset Management (DAM) ROI calculators and articles. Most of the models describe cost savings based on reduced time & effort spent on a series of tasks, such as;

• searching for digital assets,
• re-working formats, file versions and conversions,
• re-creating assets / content distribution / workflows,
• dealing with DRM compliance or violations.

The hours spent on these tasks are typically multiplied by an hourly rate, to arrive at a supposed saving per asset. This is then multiplied by the number of total assets and deducts the DAM solution costs, to give an overall return on investment.

The average net savings I would realize, for my fictitious company with 25,000 assets, was roughly $250k (900% ROI), over 5 yrs. Not bad, although, in my opinion, these savings are as hypothetical as the imaginary company I used to model them.

Why are these calculations wildly arbitrary and overly simplistic at best, and potentially misleading at worst? The effort estimates have little factual basis. Multiplying this number by an hourly loaded cost to infer an absolute dollar saving is also fundamentally flawed. Furthermore, the costs of the DAM solution focus only on the application whilst ignoring areas such as training, onboarding and overall change management. In short, the calculations of cost savings are useless, except for perhaps a box-ticking exercise to satisfy procurement.

To add to this, I can’t help feel these DAM ROI calculators completely miss the point. Whilst some calculators point out that there are additional soft benefits of DAMs (i.e. brand consistency, improved customer service, asset repurposing), only three of the models mention revenue enhancement in the ROI - and then only briefly. They fail to assess the real impact above the line. To really assess bang-per-DAM-buck - to capture the most realistic ROI - we should not focus on spurious dollar savings but instead look at the advantages a DAM gives to the business.

To explain further, I’ll use an analogy. Why do people upgrade to a Tesla? OK, there may be some benefit in cost savings from free charging and this is definitely a worthy consideration. But people mostly buy Tesla’s because they’re cool, they’re fast, they have autopilot, zero emissions, they’re roomy and practical, with great infotainment and kit. In short, the investment is justified on positive attributes, over and above potential savings.

Quantifying a digital investment on positive business uplift isn’t always easy. But here’s a few statements outlining why digital investments in tools like a DAM are key to enhancing digital fitness:

1. 20% of CEOs are now taking a “digital-first” approach to business change (with profits and growth remaining the number-one business priority for 58% of CEOs (Gartner).
2. By 2020 every business will become a digital predator or digital prey. (Forrester).
3. The Future Of Business Is Digital; every business needs to become a digital business (Forrester).
4. Digital asset management is the key to managing your content and your content drives your customer experiences. And according to Gartner, customer experience is your primary competitive differentiator (CMS-Wire).

Is it “water under the bridge” or “over the DAM” for ROI impact?

If a DAM speeds up digital capability -- and improves customer experience -- shouldn’t this be factored into the ROI? Shouldn’t a DAM’s impact on competitive position be considered over a dollar savings? A good DAM should enable your digital strategy and execution. This in turn will facilitate your customers experience and this will help drive your business. We should be looking at the strategic importance of a DAM, not simply cost takeout.

To conclude, for most digital investments, it is more interesting (albeit more difficult) to focus on top-line / revenue growth rather than bottom-line / cost savings. At Acquia we’ve avoided publishing a generic, overly simplified (and probably meaningless) DAM ROI calculator.

Instead, contact us and we can look at your business, with you, to assess whether a DAM is appropriate and what the positive business benefits might look like. We start by assessing the applicability of a DAM to address your challenges. We can then look at the TCO of a DAM solution. The aim would be to identify and quantify the positive business outcomes, in addition to potential savings. You still get an estimated ROI but it’s modelled for you, in a customised way. We also consider factors such as; ease of use, intuitive design, ease of collaboration and reuse. We want you to select a flexible, future proof DAM that supports the customer journey and supports your business objectives. Feel free to contact us if you would like to discuss further.