Developing a Return on Investment Model for Content Management Systems

Diplomarbeit von Finn Ross

Abstract:

Today many companies are struggling to maintain their web content. Externalisation and globalisation forces companies to ‘open’ themselves and to tightly connect business processes over the web with their partners, thus employees and business partners need to have access to up to date information any time. Additionally, more and more companies port their sales- and support activities to the web and the demand and quantity of content is rising constantly. According to a study conducted by Forrester, the volume of web sites ranges from several thousand to many million pages. Typically portals and media publishers, like Yahoo! and CNN are at the top scale with more then 4.4 million pages. Though much smaller, the websites of click-and-mortar companies are still weighing in with an average of 77,000 pages. Additionally, Forrester expects that the content volume will at least double each year.

As companies move their business activities to the web the quantity of content is not only rising but content is also becoming more critical. Out of date material, poor control and design can have significant impacts on sales and the company’s image. Most companies recognize that content flow is almost as crucial as cash flow and that customers are increasingly demanding. Familiar with highly dynamic sites such as eBay and Amazon, customers assume that a company’s web site will have similarly comprehensive and up-to-the-minute information.

Up to now the web has been dominated by highly manual approaches to maintenance. However, with rising content quantities, costs for maintenance and production rise exponentially. To cope with the flood of assets and to streamline the maintenance and publishing processes without sacrificing flexibility is the purpose of a Content Management System (CMS). Many companies have switched to content management products and the market for content management systems continues to grow. Faulkner Information Services estimate that the market will grow to a turnover of 64 billion USD in 2003.

The high demand for content management is bringing together a diverse pool of competing software vendors and shows the increasing importance of content management. However, although the importance and potentials of content management systems are well understood, the pressure to justify their application is constantly rising, as all areas are being forced to reduce costs and increase efficiency. The economic downturn is additionally increasing the pressure and today all initiatives must be evaluated according to their potential business value.

In addition to the increasing pressure to justify investments, the market for content management systems is growing constantly. A growing number of vendors offer content management products, with different functionalities and obviously with prices ranging from low-cost to high class. While key vendors such as Vignette offer content management systems priced at 500,000 USD, other offer their products free of charge. The increasing complexity of the market makes an understanding of potentials and added values of a content management system indispensable. Why buy a content management system for 500,000 USD, while others are offered free of charge and what is the business value of a content management system ?

It is the purpose of this study to find suitable answers to these questions, by developing a Return on Investment (ROI) model for content management systems, which allows to examine and to justify its detailed costs and benefits and to determine its potential business value. However, the study of this topic encounters many difficulties in several aspects. Hence, the following discussion is not meant as a final statement, but rather as a suggestion and basis for further discussion.

The first chapters of this study provide a theoretical basis of the topic, which is followed by a discussion to find a suitable method for examining the return on investment. The last two chapters put the previously discussed return on investment model to a test and find a conclusion.

Chapter 1 provides an introduction to the content management system and discusses its different components. Specific details and aspects, which are particularly important in terms of the ROI analysis, will be discussed elaborately in chapters 4 to 6.

Chapter 2 is an introduction to the investment theory, discusses the basics of investment and outlines the most common methods of investment appraisal.

Chapter 3 discusses the return on investment method, points out its limitations and difficulties in its practical application and shows a path for the appropriate examination of the return on investment of a content management system, which is followed in the ongoing chapters.

The first section of chapter 4 discusses the meaning of the term ‘information system’ and the layout of the content management system’s architecture in detail. The ongoing sections build up on the first section and discuss the system’s costs and benefits in terms of the ROI analysis.

Chapter 5 contains an outline of the integration of a content management system within the organization and shows the affected business processes to determine, in terms of the return on investment analysis, the potential benefits a content management system can provide through the support and automation of the corresponding processes.

Chapter 6 focuses on the customer’s value of content and how this value can be influenced through the capabilities of the content management system.

Chapter 7 reviews and summarizes the gathered insights of the previous chapters, and incorporates the corresponding elements into a complete return on investment framework.

The purpose of Chapter 8 is to demonstrate the application of the return on investment framework in practice. It considers a fictitious company, which faces the investment decision for a content management system and hence has to examine the exact numbers concerning the corresponding costs and benefits.

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