No one cares about ECM (Part 2)

In the last post, we looked at how important and difficult it is to communicate the benefits of improved content management practices to CXOs. In this post, we’ll explore some ways to articulate the organizational benefits of ECM that are compelling to the C-level decision makers who must ultimately approve and support an ECM initiative.

When I ask clients to list the benefits of ECM, they are quick to point out the softer ones: “people will spend less time looking for documents,” “having one version of a document will mean less rework or lost work,” “we’ll spend less time mired down in managing our emails,” and so on. However true these may be, and however painfully CXOs may be aware of (and suffer from) them, they aren’t enough by themselves to justify ECM spend, at least not 2009-2010.

There are other categories of ECM benefits, however, that offer much more tangible benefits to an organization. In my practice, once the project team realizes they must go beyond soft, net-to-productivity type benefits to gain funding for their initiative, I stress four areas of general ECM benefits that are good starting points to find ROI at most medium to large firms.

Storage

This is the most straightforward savings bucket of the four: you have too much information on your servers and it is growing at an alarming rate…so much so that even factoring in a yearly reduction in storage costs going forward, there are ample savings to be found by improving how content is managed.

These savings come from two kinds of activities: better management of storage devices and better information lifecycle management (ILM). The former has to do with network operations, i.e., storage management techniques such as compression, deduplication, virtualization, and so on. The latter has to do with how employees are managing content day-to-day, i.e., unstructured data on shared drives and hard drives, emails, content in team sites or document management systems, etc.

In general, the savings to be gained from better storage management are the quick win here and should normally be addressed first, as poor storage management has other, more serious side effects than simply the cost of storage (i.e., backup and disaster recovery capabilities). In contrast, the savings due to better ILM take significantly more effort to realize, because it’s necessary to get users across the enterprise to change how they manage their content—and asking them to change how they work in order to improve their information hygiene so that IT can reduce storage costs is not a compelling value proposition for most employees. It can be done, but business users need a justification for improving ILM that means something to them, that offers them a meaningful value proposition for the operational changes they’re being asked to make.

E-discovery

For a lot of reasons, e-discovery costs are a great candidate for ECM benefits:

• E-discovery costs tend to be staggering. So staggering, in fact, that at most clients, once we’ve pulled together their actual e-discovery costs over the last few years, the project team—even the folks directly involved in litigation response day-to-day—are flabbergasted. Up to $10M a year at medium-sized firms is not at all atypical, and at large firms, the sky’s the limit. I know of one organization that spent roughly $200M deduplicating emails for a single discovery effort. While this level of spend is not the norm, multi-million dollar e-discovery efforts at large firms are fast becoming commonplace.
• Reputational risk is high for class-action, highly-publicized lawsuits. For organizations in heavily regulated industries (such as financial services, banking, healthcare, pharma, oil and gas, mining, transportation) or with high public visibility (big box retailers, media and entertainment firms, high tech manufacturers), reputational risk is top of mind, because the successful operation of their businesses depends in large part on public trust. How they comport themselves during high-profile litigation affects both the outcome in the courtroom and the court of public opinion.
• The money spent on e-discovery is throwaway. As expensive and time consuming as e-discovery efforts are, they do nothing whatsoever to improve how content is managed day-to-day by employees—in terms of ILM, things are as bad as they were before. Once the lawsuit is over, the clock is simply reset for the next litigation event and its associated e-discovery costs. If nothing else changes, the organization will continue to spend these dollars with every litigation.

Given these factors, C-level folks tend to be attuned to the importance of successful litigation response as well as the costs associated with it. And although the cost and effort required for e-discovery are affected by a number of factors (such as the scope and nature of the lawsuit or the industry involved), the upstream content management practices at an organization are critical. This sets the stage for successfully selling improved content management at the organization.

The argument goes something like this:

When a litigation event hits, the costs are bounded by the universe of information at the organization, because this is the cloud of stuff that will need to be searched to find the information relevant to the case. The larger the cloud, the more effort it will take to zero in on the relevant information. And the more poorly organized the cloud is, (1) the more time and effort required from human analysts (some of them highly paid paralegals and lawyers) and (2) the higher the likelihood that mistakes will be made in what is and is not turned over to opposing counsel.

Improving content management at an organization reduces e-discovery costs and risks by shrinking the universe of information at an organization and organizing it better. It can’t stop lawsuits from hitting an organization, but it can help an organization respond to litigation events more effectively, efficiently and for less money.

Given that typical costs for improving ECM are far lower than the costs of one year’s worth of e-discovery at medium and large firms, you would think that the project team could stop their pitch here and kick off the project: after all, what firm wouldn’t spend $4M to save $10M? To save $200M?

The situation isn’t this simple, however, because of the uncertainty of litigation risk and the associated e-discovery costs. This is the “tell me the color of the truck that didn’t hit me” dilemma: we can’t predict what litigation events will occur in the future, so we can’t be 100% sure of the cost-benefit analysis for ECM spend relative to e-discovery savings.

In addition, the changes required to affect ILM improvements are far-reaching and have operational and cultural dimensions that make change management difficult. The situation is analogous to what we saw with storage improvements: asking 8,000 employees to change how they work every day to make life easier for 30 corporate lawyers is a tough sell at most organizations. So while e-discovery savings are a significant benefit of ECM improvements, they are often not enough in and of themselves to tip the scales for CXOs in favor of underwriting ECM spend.

What is needed to tip the scales at most clients are business-centric benefits over and above e-discovery and storage savings. In the next post, we turn to two ECM benefits that have strong appeal for business users: customer communication management and contracting.