Taxonomy Strategies LLC Making the Business Case for
Taxonomy Strategies LLC Making the Business Case for Taxonomy Joseph A. Busch September 27, 2005 Copyright 2005 Taxonomy Strategies LLC. All rights reserved.
Agenda v Taxonomy value propositions v What the research says v Example ROI Taxonomy Strategies LLC The business of organized information 2
Taxonomy issues, problems, and concerns v Enormous volumes of information within organizations v Diversity of assets § Content and technology v Complex and IT-oriented standards §. NET, SOAP, WSDL, etc. v Limited (if any) integration with applications: § Search engines § Information management applications § Back office transaction-based systems § Analytical systems § … Taxonomy Strategies LLC The business of organized information 3
Fundamentals of taxonomy ROI v Tagging content using a taxonomy is a cost, not a benefit. v There is no benefit without exposing the tagged content to users in some way that cuts costs or improves revenues. v Putting taxonomy into operation requires UI changes and/or backend system changes, as well as data changes. v You need to determine those changes, and their costs, as part of the ROI. Taxonomy Strategies LLC The business of organized information 4
Finding information should not be about “Feeling Lucky” Taxonomy Strategies LLC The business of organized information 5
Finding information requires multiple approaches Taxonomy Strategies LLC The business of organized information 6
about 3, 890, 000 results Taxonomy Strategies LLC The business of organized information 7
2, 199 results Taxonomy Strategies LLC The business of organized information 8
Agenda v Taxonomy value propositions v What the research says v Example ROI Taxonomy Strategies LLC The business of organized information 9
Usability research— Taxonomy compared to search results lists v “We found that users preferred a browsing oriented interface for a browsing task, and a direct search interface when they knew precisely what they wanted. ” Marti Hearst (and others) v “The category interface is superior to the list interface in both subjective and objective measures. ” Hao Chen & Susan Dumais Taxonomy Strategies LLC The business of organized information 10
Taxonomy compared to search result lists Category is 48% faster Median Search Time in Seconds Category is 36% faster Source: Chen & Dumais Taxonomy Strategies LLC The business of organized information In top 20 results Not in top 20 results 11
Time saved— Taxonomy compared to search result lists v 1 hour per day searching x 36% faster = 22 minutes each day v 22 minutes x 250 working days per year = 5500 minutes or 92 hours per year Taxonomy Strategies LLC The business of organized information 12
Time saved— Taxonomy compared to search result lists Benefit: Service efficiency increase Number of customer service calls/month 50, 0 00 Average cost per call $ 6 Total call costs per year $ 3, 600, 000 Increase in productivity by browsing information Service costs savings per year Taxonomy Strategies LLC The business of organized information 36% $1, 296, 000 13
Trusted advisers— Taxonomy avoids costs v “The amount of time wasted in futile searching for vital information is enormous, leading to staggering costs …” Sue Feldman, v Poor classification costs a 10, 000 user organization $10 M each year—about $1, 000 per employee. Jakob Nielsen, useit. com Taxonomy Strategies LLC The business of organized information 14
Knowledge workers spend up to 2. 5 hours each day looking for information … … But find what they are looking for only 40% of the time. Source: Kit Sims Taylor Taxonomy Strategies LLC The business of organized information 15
Knowledge workers spend more time re-creating existing content than creating new content 25% 8% Source: Kit Sims Taylor (cited by Sue Feldman in her original article) Taxonomy Strategies LLC The business of organized information 16
Cost saved by not recreating content Benefit: Increase in productivity Number of employees 100 Average employee salary $ 50, 000 Employee costs per year $5, 000 Increase in productivity from not recreating content Employee cost savings per year Taxonomy Strategies LLC The business of organized information 25% $1, 250, 000 17
Agenda v Taxonomy value propositions v What the research says v Example ROI Taxonomy Strategies LLC The business of organized information 18
Key Factors in ROI v Breadth § “How many people will metadata affect? ” v Repeatability § “How many times a day will they use it? v Cost/Benefit § “Is this a costly effort with little or no benefits? ” Source: Todd Stephens, Dublin Core Global Corporate Circle Taxonomy Strategies LLC The business of organized information 19
Some common taxonomy ROI scenarios v Customer support § Cutting costs § Increased sales v Knowledge worker productivity § Less time searching, more time working § Avoiding re-creating information that already exists v Catalog site § Increased sales § Increased productivity v Compliance § Avoiding penalties v R&D productivity § Faster time to market Taxonomy Strategies LLC The business of organized information 20
How to estimate costs— Tagging Taxonomy Facet Hier? Typical CV Size Time/ Value (min) Avg # values / Item $ / Min Cost/ Element Audience N 10 0. 25 2 $ 0. 42 $ 0. 21 Content Type N 20 0. 25 1 $ 0. 42 $ 0. 11 Organizational Unit Y 50 0. 5 2 $ 0. 42 Products & Services Y 500 1. 5 4 $ 0. 42 $ 2. 52 Geographic Region Y 100 0. 5 2 $ 0. 42 Broad Topics Y 400 2 4 $ 0. 42 $ 3. 36 1080 5 15 $ 7. 04 TOTALS Inspired by: Ray Luoma, BAU Solutions Taxonomy Strategies LLC The business of organized information 21
How to estimate costs— Assumptions ASSUMPTIONS Enterprise SW License Maintenance/Support SW Implementation Legacy Content Items Content Growth Rate $ 100, 000 15% 200% 100, 000 15% Tagging/Item $ 7. 04 Enterprise Taxonomy $ 100, 000 Taxonomy Strategies LLC The business of organized information 22
How to estimate costs— Total cost of ownership (TCO) Description Year 1 Year 2 Year 3 Year 4 Year 5 SW Licenses $ 100, 000 Maintenance $ 15, 000 Implementation $ 200, 000 App Tech Support $ 30, 000 Tagging Legacy Content $ 703, 500 Ongoing $ 105, 525 Taxonomy Creation $ 100, 000 Maintenance $ 15, 000 TOTAL $ 1, 103, 500 $ 165, 525 Taxonomy Strategies LLC The business of organized information 23
Sample ROI Calculations Description Year 1 Year 2 Software Licenses/ Maintenance $ 100, 000 $ 15, 000 Implementation/Support $ 200, 000 $ 30, 000 Taxonomy Creation/ Maintenance $ 100, 000 $ 15, 000 Legacy/Ongoing Tagging $ 703, 500 $ 105, 525 Benefits Productivity increases $ - $ 125, 000 $ 1, 250, 000 Service efficiency gains $ - $ 129, 600 $ 1, 296, 000 Yearly Net Benefits $(1, 103, 500) $ 89, 075 $ 2, 380, 475 Year 5 1. 4 Year 4 Costs Payback period Year 3 Years until Benefits = Costs Inspired by: Todd Stephens, Dublin Core Global Corporate Circle Taxonomy Strategies LLC The business of organized information 24
Summary v Taxonomy Value Propositions § Find information faster § Avoid recreating information that already exists § Increase sales § Avoid compliance penalties § Improve R&D effectiveness v Don’t sell “taxonomy”, sell the vision of what you want to be able to do. v Do the calculus (costs and benefits) § Quantify the tangible & intangible benefits § Quantify the total cost of ownership including maintenance & tagging v Support your calculations with research Taxonomy Strategies LLC The business of organized information 25
Taxonomy Strategies LLC Questions Joseph A. Busch + 415 -377 -7912 jbusch@taxonomystrategies. com http: //ww. taxonomystrategies. com September 27, 2005 Copyright 2005 Taxonomy Strategies LLC. All rights reserved.
Bibliography M. Hearst, A. Elliott, J. English, R. Sinha, K. Swearingen & K. Yee. “Finding the Flow in Website Search. ” 45 Communications of the ACM (Sept 2002) http: //bailando. sims. berkeley. edu/papers/cacm 02. pdf Sue Feldman. "The high cost of not finding information. " 13: 3 KM World (March 2004) http: //www. kmworld. com/publications/magazine/index. cfm? action= readarticle&Article_ID=1725&Publication_ID=108 K. S. Taylor. "The brief reign of the knowledge worker, " 1998. http: //online. bcc. ctc. edu/econ/kst/Brief. Reign/BRwebversion. htm. Taxonomy Strategies LLC The business of organized information 27
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