Defining ROI for Metadata Environments in Corporate Circles

1. DCMI Global Corporate Circle Defining Return on Investment (ROI) for Metadata Environments April 18, 2006 John Doe, Ed.D. Vice President – All Ways On Corporation

2. Agenda • Background Information • Issues, Problems, and Concerns • Objectives of Research • Return on Investment (ROI) • Architecture Integration • Business Case Integration • Metrics and Measurements • Future Possibilities • Conclusion

3. Dublin Core • 15 Standard Elements • Current Standard • ANSI/NISO Z39.85 - US standard, October 2001 • ISO 15836 – international standard, April 2003 • Dominant standard for cross-discipline resource discovery on Internet • “Simple yet effective element set for describing a wide range of networked resources.” • “Small language for making a particular class of statements about resources.”

4. DCMI Global Corporate Circle • Purpose of Organization • Promote the use of the Dublin Core standard by enterprise organizations/corporations for both internal and external information. • Current Work Initiatives • CEN Workshop Agreement • Identify measures for success when implementing metadata and Dublin Core, including identifying pain points and return on investments (ROI). • Create bibliography of case studies and literature related to value proposition of DC/metadata in organizations • Volunteers in Service • Joseph Busch, jbusch@taxonomystrategies.com • R. Todd Stephens, todd@rtodd.com • Paula A Markes, markes_paula_1@lilly.com • Michael Crandall, mikecran@u.washington.edu • Paula Land, pladen@microsoft.com • Igor Perisic, iperisic@entopia.com • Kelly Green, kgreen@VRS.STATE.VA.US

5. Objectives of the Research Research Question • Identify the Best Practices among the Corporate Practitioners • Education on the Value of Metadata • Identify Methods of Communicating Value to Corporation • Identify Case Studies for Enterprise Level Metadata Integration • Identifying a Method for Calculating ROI What are the measurements of success when implementing metadata and Dublin Core within the corporate environment? Objectives

6. Issues, Problems, and Concerns • Enormous Volumes of Information within the Corporation • Internet: 4 Billion Assets Indexed by Google • Average Intranet: 1.2 Million Assets • Diversity of Technology Assets • Zachman Framework • Limited Integration with Current Standards • Complex and IT Oriented Standards • Search Engine Integration

7. Key Factors in ROI • Breadth • “How many people will metadata affect?” • Repeatability • “How many times a day will they use it? • Cost/Benefit • “Is this a costly effort with little or no benefits?” • Collaboration • “Will employees need to collaborate?” • Knowledge • “Can I reuse the information I create?”

8. Standard ROI Process • Identify • Top areas of real benefit • Impact to company/group • Stakeholders • Customers • Consumers • Producers • Quantify • Total Cost of Ownership • Measure benefit areas • Confirm values • - Survey • - Direct observation • - Estimate • Get benefit buy-in • Assess • - Calculate Metrics • Reconfirm values • Perform sensitivity analysis • Assess expected case/worst case • Evaluate Monthly • Category Assessment • Marketing materials • Trade publications • Best Practices • SME FinancialResults Phase 1 Phase 2 Phase 3

9. Standard ROI Methodology Benefit Model Cost Model • Business Benefits • User Productivity • Reduced Support Costs • Reduced IT Costs • Integration • Information Reuse • Increased Usage and Content • Reduced Information Redundancy • Future Benefits • Infrastructure Costs • Training and Education • Application Software • Consulting and Personnel • Ongoing Operations • Integration and Process Changes • Organizational Changes • Communications Calculating Costs is Generally the Easier of the Two Activities

10. ROI Models Traditionally, ROI and Metrics have been based on “One-Off” measurements like how many people have been replaced or a percentage of another projects success. There is no shortage of options. Benchmarking No $ Valuation $ Valuation External Market toBook Value Tobin q VAIC KM CapitalEarnings EVA CalculatedIntangible IAMV IC-Index AFTF Internal WeightedPatents Value-ChainScoreboard TVC SkandiaNavigator IntangibleAsset Monitor TechnologyBroker ValueExplorer Balanced Scorecard HumanCapital Intel. Intellectual Asset Val. Karl-Erik Sveiby, 2004

11. Sample Approach to ROI Balanced Score Card Area User Perspective Financial Perspective Internal Processes Future Perspective Service Effect Costs SLA Education Information Content Resources - Human Turn Around Staff Retention Category Personal Control Resources - Physical Up Time Utilization of XML Repository Collection Value Based (ROI) Quality Coverage Expansion Survey Results Budget Response Time Training Usability Assessment Staff Size Engagement Time Turnover Page Views Staff Experience Assets / Resource Exposure Collected Feedback Hardware Inventory Time Available Breaking New Ground Complaints Vendor Service Calls Upgrade Time New Meta Standards Measurements Failed Findings / Time Required Economies of Scale MTTR Expanded Scope # of Subscribers Data Errors Patents # of Artifacts Peak / Slow Demand White Papers # of Suppliers Backup / DR / Failover Data Latency

12. Example ROI Model Benefit 1 Increase in Productivity Number of Employees in the Enterprise Average Employee Salary Employee Costs Per Year 310 $50,000 $15,500,000 Increase in Productivity by Implementing Metadata Employee Costs Savings Per Year 5% $775,000 Benefit 2 Service Efficiency Increase Number of Customer Service Calls / Month Average Cost Per Call Total Costs Per Year 300,000 $6 $21,500,000 Increase in Productivity by Implementing Metadata Service Costs Per Year 25% $5,400,000 The sum of all benefits will be the total quantifiable benefits used in the ROI calculations.

13. Sample ROI Calculations Description Year 1 Year 2 Year 3 Year 4 Year 5 CostsCapital Investment Expense Costs -$500,000-$50,000 $0-$60,000 $0-$60,000 $0-$75,000 $0-$75,000 BenefitsProductivity Increases Service Efficiency Gains Avoiding penalties from Regulations $75,000$50,000$25,000 $90,000$62,500$37,500 $108,000$78,125$56,250 $129,000$97,656$84,375 $155,520$122,070$126,563 Net Cash Flow $-400,000 $130,000 $182,375 $236,631 $329,153 Net Present Value $77,957 Time Value of the Benefits Minus the Costs. Assumptions: Cost of Capital: 11.5% ROI 58.23% (Benefits – Costs)/Costs Payback Period 3.58 Years until Benefits - Costs Other Metrics: Internal Rate of Return and Alternative ROI Models

14. Should You Invest in Metadata UnpredictableBenefits No, More Research Required Possibly Costs IntangibleBenefits Dollars Costs Definitely IndirectlyQuantifiableBenefits Costs QuantifiableBenefits

15. Recommendations • Don’t sell “Metadata” or “Dublin Core”, sell the vision of what you want to be able to accomplish. • Clearly understand what the problem is and what the opportunities are. • Do the math (costs and benefits) • Quantify the Measurable Benefits • Describe Intangible Benefits Qualitatively • Identify your market (Customers and Suppliers) • Support your calculations with research

16. Questions