In early 2000, AOL Time Warner Book Group Chief Executive Larry Kirshbaum had a gut feeling the company would need a digital asset management system if it was going to cash in on an e-book market expected to hit $2.3 billion in sales by 2005.
But the days of Internet hype and free technology spending are long gone. And with the cost of such an enterprisewide system pegged at $3 million to $5 million, most companies must quantify their expected returns before investing in any type of a digital archive system.
Nucleus Research identified a number of ways companies considering reusable media projects can calculate potential returns.
Return on administrative costs. | |||||||||||
Direct savings are the first returns most companies can quantify. Companies should look at the following areas to identify direct benefits: | |||||||||||
Reduced overnight, courier and mail charges. | |||||||||||
There’s a return from eliminating the costs of couriers, Federal Express and plain old mail. | |||||||||||
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Reduced administrative costs. | |||||||||||
Count the number of deliveries multiplied by the time required to manage each one. | |||||||||||
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Managers should then discount the apparent time saved by a correction factor. The factor allows for the percentage of the saved time that gets spent in non-job-related activitiessuch as goofing off. |
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Reduced storage costs. | ||||||||||||||||||
With digitizing assets, there are also savings that come from reduced disk and storage space. Calculate reduced file storage space in savings per square foot; reduced disk purchases by the carton or by terabyte. | ||||||||||||||||||
Return on upselling. | ||||||||||||||||||
Companies may drive new revenue over the long term. Some potential returns: | ||||||||||||||||||
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Increased profit on new revenue streams. | ||||||||||||||||||
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Increased profits from retailer relationships. | ||||||||||||||||||
If a publisher, for instance, can show its outlets how to cut advertising costs with digital content, it can demand a cut of savings. | ||||||||||||||||||
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—Rebecca Wetteman is the Vice President of Research for Nucleus Research, an independent global research and advisory firm that provides financial and technology expertise.
You can write to her at [email protected]