How Do You Manage the Unmanageable?
ECM technology is comprised of several core components including Web content management, document management and collaboration. Other components, such as enterprise search, imaging solutions and digital asset management, often considered part of ECM, have traditionally been purchased as separate systems. Increasingly, however, vendors are bundling ECM technologies as a suite, expanding the capabilities and reducing the overall cost of a single solution. Of the components listed here, this paper focuses on two—document management and collaboration (hereafter referred to as document management or DM).
Barriers to Purchasing an ECM System
Traditional ECM installations involve the selection and procurement of generalized content management software, specialized department modules, configuration, customization, hardware, installation, integration, training and, in some cases, additional database optimization. User setup is generally time-intensive and static, with upgrades and maintenance to the system supported by the customer, on the customer’s premises.
Even though ECM on the whole is a proven category, in which big software vendors generate up to $1.3 billion in sales annually, many buyers remain disappointed with their investment. Unfortunately for customers, analysts estimate that up to 90% of enterprise DM-licensed “seats” are not deployed. Why the gap? A closer look at the dynamics and economics of deploying DM across a large organization reveals several possible reasons
1. Cost. A traditional DM software license that is installed in a company, customized for use in a specific application, deployed across a group or several groups, will begin at approximately $20,000 per department or single application. However, industry analysts indicate that software cost, over three to five years, is typically only 15% to 20% of the total project cost. In the end, what looked like an affordable $20,000 investment may likely cost more than $100,000—with enterprise-wide systems coming in at upwards of $1 million.
2. Time to implement. Often, IT professionals approach projects by designing a complete solution on paper, then developing, and deploying it. This approach of shooting for a 100% solution has two consequences. It drives up the cost of implementation, and is frequently off-the-mark as initially designed, requiring updates in the field. The cost of perfect design is too high. In addition, internal and external issues—hardware, software and other components—can result in a mismatch and costly delays. Consequently, the business value you had hoped for takes too long to achieve.
3. Obsolescence. Traditional software companies update products once every 12 to 18 months, the reason being that deployed software must be distributed to customers who must perform upgrades to the installed software (usually on their own time). The cost of implementing these upgrades puts the burden on the customer; the customer resists; and the software company responds with fewer product updates which in turn have a direct impact on product innovation cycles. Because vendors make improvements at different times, most corporate buyers cannot realize a fully updated, end-to-end suite on premises. One component or another is always out of date.
4. Difficulty of use. Software is often not intuitive, nor easy to use, thereby forcing people to learn unfamiliar processes. If the application is not mission-critical, many collaboration and workflow improvements go unimplemented if the solutions are not easy to use and aligned with current business processes.
5. Functionality gaps. Departmental initiatives and needs, which could benefit from ECM, take a back seat to other enterprisewide concerns such as bandwidth, mobility, ERP systems and other core process and infrastructure initiatives.
6. IT prioritization. Limited IT resources force choices as to what projects IT can work on at any given time. Only 25% of IT budgets
are spent on innovation or new systems each year; the balance is in maintenance. High-ticket items, such as installed software, compete for a smaller piece of the pie. Moreover, cumbersome approval processes impede projects. Finance departments, recognizing the total cost of deployed software, now require a more complete justification and approval cycle for each application. Even when licenses are purchased, competing priorities inhibit the full rollout of products and services.
A Fresh Approach: DM On-Demand
An alternative to installed software is emerging. Software delivered on-demand, also known as “software-as-a-service” (SaaS), is growing at approximately 25% a year, versus installed software, which remains relatively stagnant at 6% a year growth. While many promising new technologies vie for the attention of IT leaders and CIOs, only a few of these innovations actually end up improving top-line performance or bottom-line productivity. A recent survey of US IT executives by McKinsey & Co. found that only two new technologies were viewed as highly promising tools for obtaining real business benefits—one being SaaS.
What is on-demand software? At the most basic level, on-demand software refers to an application that is comprised of a single, integrated code base, which is delivered as a service to multiple customers simultaneously, and securely, via the Web. Additional capacity, users, add-on components or features can be ordered and fulfilled instantly,
as the customer demands, and without the technical or licensing barriers common to installed software.
Configurations or customizations are applied to the shared code base, at the account level, which means that frequent updates to the software can be made, while keeping customer preferences and configurations intact. (Note: on-demand is not the same as the old ASP model.) Document management is especially suited to on-demand because of the generally challenging nature of deploying a DM system, which requires dedicated hardware, multiple applications from different vendors and, frequently, quite a bit of integration. By pre-integrating components, the on-demand service provider can spread the cost of architecting and integrating the full solution among all customers.
So, what’s the difference to a buyer? Imagine deciding you need a DM system, articulating your goals, evaluating providers, and the day you say “go,” having all the hardware, software and services solutions immediately available to your team, department, pilot users or the entire company for that matter. As you grow, you simply log on and add more users, more storage, or more transmission capability according to your needs. That is the power of on-demand. In addition, there are characteristics of collaboration and access that make DM especially well suited for an online application.
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