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Digital Wordflow - Mastering ROI for Composition Software

By Carro Ford November 24,

By WhatTheyThink Staff
Published: November 24, 2003

By Carro Ford November 24, 2003 -- Maybe you are a commercial printer making a run for transaction business. Maybe your service bureau or in-house operation is upgrading existing software or migrating to a new platform. Maybe you are just a glutton for punishment. If you are in the market for composition software, chances are you will have to sell that acquisition to someone who ranks above you on an organization chart. Congratulations, you've got your work cut out for you. When justifying a composition software purchase, you are projecting ROI models for a rather complicated product and process. The people to whom you are pitching your case probably don't really understand what it is you do, much less what your software does. The Business Case Better Be Good Not to put too much pressure on you, but you'd better pay close attention to your business case for a composition software investment. In an informal survey of about two dozen government chief information officers, 57 percent said building a business case showing a return on investment strategy is the single most important driver of new funding for IT initiatives. A Dell Computer study found that ROI ranks as the most important criterion in evaluating IT investments, according to a survey of 287 IT decision makers, including 105 C- and VP-level executives, managers, analysts and others. But, no pressure! “ROI considerations for composition software often involve migration efforts to new platforms as well as new applications,” notes Elizabeth Gooding, president and CEO of Art Plus Technology, Inc. ( www.artplustechnology.com ). Gooding has made a career of helping companies justify software ROI to internal audiences. She offers some advice for making ROI a true measure of success and a successful measure. “At a minimum, you must measure tangible costs of new software against costs eliminated for tools replaced. Other cost factors include development time and cost, software maintenance cost, and personnel time to maintain applications. Measuring the benefit side of the equation requires more finesse.” Out With The Old Reducing cost of ownership is one way to snag some ROI. But be aware of the cost of retiring existing tools. Can you consolidate your tool kit with one solution for composition, document assembly, correspondence, messaging and post processing? How many applications can your organization replace with new software? Replacing software also gives you an opportunity to reduce cost of ownership with a lower cost platform, such as NT, but make sure you can scale up if needed. “With average annual maintenance costs of 20 percent, each missed contract anniversary before you can retire existing tools impacts ROI,” says Gooding. “Also, consider ongoing training costs for separate tools versus a single environment, plus staff and system resources to maintain the current state. Look for opportunities to streamline architecture with the new tool and achieve gains from a more standardized process." Perform a gap analysis before eliminating anything. How many applications must be migrated to the new platform? Differentiate between static/stable and those already slated for redesign or enhancement. What is the effort required to migrate? Now you get into application coding and testing. What is the risk of migrating and what is the impact of change to users and customers? "Change management is the single most overlooked factor in maximizing ROI," says Gooding. In With The New If you're still gung ho about new software, here are some thoughts on developing applications with your new toy. “If you can't achieve a 20 to 30 percent reduction in development or maintenance costs after ramping up on the new tool, or a dramatic improvement in production throughput, it's probably not worth switching products.” Early adopters encounter different integration, training and support issues than those who hold out for a later release. Over the long run, you should see a higher return on ongoing maintenance of a consolidated software platform, perhaps as much as a 25 to 70 percent reduction in application maintenance efforts by your personnel. “Maintenance gains are dependent on the number of tools replaced with a single interface and externalizing certain data processing functions,” says Gooding. To Market, To Market One issue driving software ROI for some companies is improved time to market for new products. “Time to market with campaigns and correspondence, and flexibility in managing inserts can be dramatically improved with new composition and personalization technology,” Gooding declares, “but how do you put a value on it? It's usually cost of capital, along with savings on development and increase in market share captured separately. Other factors could be eliminating preprinted inserts or reducing the risk of compliance penalties or Service Level Agreement penalties through improved production cycle. There's nothing like face-to-face opportunities for getting into the details of the composition tools you are considering or would like to know more about. “The annual Financial Communications Forum (December 15-16 at the Sheraton Boston Hotel www.insightforums.com ) is an opportunity to evaluate a lot of the leading composition software vendors in one place,” says Gooding. “Let the vendors do some of the work for you. Ask them the questions presented here and see who makes the best business case for your investment.”



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