“What’s the ROI?”
That question. Seemingly the lifeblood of managers and the bane of employees. It’s the business way of saying “show me it’s worth it.” For software products aimed at providing organization and increasing performance efficiency, it rightly is the most important question to ask, and “it makes my life easier” is often not a satisfactory answer.
For digital asset management software, however, the “it makes my life easier” answer is often the answer that instantly comes to mind for users, but there are many clear (and some not so clear) and significant cost savings from using a digital asset management platform.
Here’s what to consider to understand the return on investment for digital asset management.
Easier to Measure Costs
I won’t act as if these things are actually easy to measure because they are not. Easy to measure activities include things like how much money was spent on promoting a particular Facebook post. The activities below depend on the specific company and the individuals working at that company, and they are tough to accurately nail down, but there is industry research into the ranges of these costs.
Time wasted searching for hard to find files is one of the most cited areas for the benefit of digital asset management. We don’t disagree but also think this is just the beginning. According to McKinsey, 19% of a worker’s time is spent searching for files. 19%! That means about one full day of work a week is eaten up looking for files. When extrapolated across an entire department or an entire company, we’re talking about tens of thousands of hours each year spent searching for files.
To put some exact numbers to it, you’ll first need to calculate the “fully loaded” cost of each employee. The fully loaded cost includes:
1. The employee’s salary or annual wages.
2. The employer’s share of payroll taxes for each employee (typically 6.2% of annual wages).
3. The cost of additional benefits – health insurance, disability insurance, retirement contributions, and other fringe benefits.
4. The cost of employee training per year.
Add all of those up and then divide by the number of hours worked per year (2000 hours would be a 40-hour work week across 50 weeks). That number represents the “fully loaded” cost of the employee per hour to the company. You can do this at the individual level, the team level, or across an entire department. Typically the “fully loaded” cost is about two times the employee’s salary. Multiplying this number by the number of hours spent searching per week will give you the weekly search cost per employee. You can then extrapolate this out to costs per team and annual costs.
Weekly search cost per employee = (“Fully loaded” hourly rate) X (Hours spent searching per week)
A marketing team of six people who have an average salary of $60,000. Their “fully loaded” annual cost is about $120,000 each. They all have normal 40-hour work weeks with two weeks vacation per year.
($120,000)/(2000) = $60 “fully loaded” hourly rate per employee.
They all spend the worldwide average of 19% of their time searching for files.
(40 hours per week) X (19% of time searching) = 7.6 hours per week per employee.
This works out to 45.6 hours across the entire team per week.
($60 “fully loaded” hourly rate) X (45.6 hours per week) = $2,736 per week in search costs
This works out to $136,800 per year spent searching for assets.
Keep in mind that this is a team of 6. For a team of 60, or 600, you can see how large these numbers can get.
Digital asset management does not promise to make these costs go to zero because there will always be some required time searching, but with properly implemented and managed digital asset management, these costs can be cut in half.
In the above example, that means an annual savings of $68,400 on search time alone.
Another advantage of digital asset management is its self-service nature. Digital asset management can remove the need for specific gatekeepers and fulfillment managers. A user can get what they need when they need rather than having to submit a request for an asset and then wait, frustrated, while someone else fulfills the order. In the era of cloud storage, antiquated fulfillment processes should be a thing of the past.
To calculate fulfillment costs you’ll need to figure out how many downloads are made per year and the average time spent fulfilling a request. Most reports show an average of a few minutes spent per request.
Annual fulfillment costs = (# of assets downloaded per year) X ((Average time spent per request in minutes)/60) X (Employee’s “fully loaded” hourly rate)
Our team from above with a $60 “fully loaded” hourly rate makes 10,000 downloads a year and each download takes 2 minutes to process through their fulfillment process.
(10,000) X (2/60) X ($60) = $20,000 per year in fulfillment costs.
Unlike search costs, these costs can essentially go to $0 with proper digital asset management. The only time spent is the negligible time spent processing download requests through the system, which for most downloads takes less than a few seconds.
If an employee can’t find a needed digital asset they will usually start by wasting time searching in the wrong places or asking colleagues who may not know where the asset is. If that fails, the employee may recreate the needed asset, and that’s an expensive and sad thing. Unfortunately, it happens all the time.
This is a huge wasted opportunity of your employees’ time and talents. Instead of creating new assets for your brand, they are just retracing their old steps or the steps of another employee because an asset was mislabeled, misorganized, or lost in some other way.
Calculating duplication time is “easy” as it is just the employee’s “fully loaded” hourly rate multiplied by the hours needed to recreate the asset. Measuring the frequency of this across the organization is the challenge.
Like fulfillment costs, these duplication costs should go to near $0 with proper digital asset management as no assets should be lost or too hard to find.
Harder to Measure Costs
These costs are much harder to measure because there are more moving parts and many more unknowns. Unfortunately, these costs can have a much greater impact on an organization than some of the easier to measure costs.
Companies and organizations spend millions upon millions of dollars creating digital content for all aspects of their operations. In-house teams, agencies, third-party partnerships all spend hours and hours pouring their creative energy and time into creating content for your brand. But if the marketing team can’t find the assets when they want to use them, all of this investment could be for nothing.
Sometimes assets live as attachments in one person’s email, or on a thumbdrive, or DVD, or on a person’s desktop and that person recently left the company. It’s very easy for things to go missing without proper digital asset management. And missing assets means more time spent searching, more time spent duplicating assets, campaigns run without the best assets, and many lost opportunities. Without digital asset management, managing the lifecycle of an asset is nearly impossible and assets tend to be more regularly underutilized. The specific costs are hard to measure because you may not know what is missing but these costs can be enormous.
Using the Wrong Assets
Imagine going in to an important meeting with a critical retail partner to discuss your brand’s 2018 product line. You have a polished presentation ready to go and you’ve completed your introduction and are about to put up the first slide of your 2018 products. You click the button on your wireless presenter remote and the slide goes up. Before you realize what’s happened, you look out and see the face of one of your colleagues. The color has drained from her face and her eyes are as big as saucers. You then turn back to the screen and you see it. You’re not showing this important partner the 2018 product photos. You’re showing them the 2017 photos. Ouch.
There’s no great way to proceed.
Admit the error in the moment and you still look bad, continue the pitch as created and then follow up after the meeting with updated images also doesn’t look good. At worst there is lost business and at best there is a lot of wasted time cleaning up for sending the wrong assets. The costs of using the wrong assets in a situation like this varies and can range from wasting a few hours of an employee’s time to clean up errors, impossible to measure harm to your reputation, and the high costs of lost business. In each instance, it might be $100 lost or it might be tens of thousands or more.
This presentation example may seem far-fetched but we’ve seen it happen and can tell you that it really shakes up the company. A more common example, and one that is likely even costlier, is feeding incorrect assets to an ecommerce site. You may have thousands of people buying a product based on product photos that are incorrect. It’s not too hard to picture the damage something like that could do.
Most companies spend lots of time and sometimes many millions to develop their brand and brand assets. Getting everyone on the same page to tell a consistent brand story is critical to ensuring the success of the brand. Sometimes the best intentions don’t lead to the best results and that brand consistency suffers.
This may be the hardest to measure impact of poor digital asset management. If you have an easy way to measure the strength of your brand, then I recommend you drop what you are doing and start a company selling brand measurement services. You’ll make millions in no time.
Even without an easy way to calculate, we believe the potential brand harm is easy to understand. The best case scenario is missed opportunities for a cohesive brand story, and the worst case scenario is a confused brand that loses your company goodwill and customers.
So, what’s the ROI?
Like with all things, it depends. The makeup of your team, the quality of your internal processes, and the quality of communication within the organization all impact the costs described above. As we’ve shown, even for small teams, the costs that could be saved with digital asset management are (very conservatively) in the tens of thousands of dollars per year and can easily grow into hundreds and hundreds of thousands of dollars per year for large teams or companies using outdated processes.
Digital asset management systems can range from as little as about $1000 per year for a limited product for a small team to as much as $10,000+ per month for a sophisticated enterprise solution used across a company.
Here’s one last equation.
ROI = (Gain from investment - cost of investment)/(cost of investment)
*Expressed as a %.
And here again is that small team of six marketers using Image Relay’s Professional plan and considering only their search and fulfillment costs.
Gain from investment = $68,400 saved in search costs + $20,000 saved in fulfillment costs = $88,400
Cost of investment = $9,000 ($750 per month)
ROI = ($88,400 – $9,000)/$9,000 = 882.22%
We’re proud of numbers like that, and they are the reason why our clients have rated Image Relay as the digital asset management software with the highest ROI.