Tei of Oracle Universal Content Management PDF
Tei of Oracle Universal Content Management PDF
December 2007
Total Economic Impact
TM
Of
Oracle Universal Content Management
Project Director: J onathan Lipsitz
Contributor: Lauren Hughes
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TABLE OF CONTENTS
Executive Summary...............................................................................................................................3
Purpose..............................................................................................................................................3
Methodology.......................................................................................................................................3
Approach............................................................................................................................................4
Key Findings ......................................................................................................................................4
Disclosures.........................................................................................................................................5
Oracle Universal Content Management: Overview...............................................................................5
Analysis...................................................................................................................................................6
Interview Highlights: Emerson Process Management......................................................................6
TEI Framework..................................................................................................................................7
Costs ..................................................................................................................................................8
Benefits ............................................................................................................................................13
Risk...................................................................................................................................................19
Flexibility...........................................................................................................................................21
TEI Framework: Summary...............................................................................................................21
Study Conclusions................................................................................................................................24
Appendix A: Total Economic Impact Overview...................................................................................25
Appendix B: Glossary...........................................................................................................................26
2007, Forrester Research, Inc. All rights reserved. Forrester, Forrester Wave, RoleView, Technographics, and Total
Economic Impact are trademarks of Forrester Research, Inc. All other trademarks are the property of their respective
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strictly prohibited. For additional reproduction rights and usage information, go to www.forrester.com. Information is based on
best available resources. Opinions reflect judgment at the time and are subject to change.
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Executive Summary
In August 2007, Oracle commissioned Forrester Consulting to examine the total economic impact
and potential return on investment (ROI) that enterprises may realize by deploying Oracle Universal
Content Management. Oracle Universal Content Management is Oracles enterprise content
management solution (ECM). It provides companies with the ability to easily manage and reuse
content across the organization and to streamline related business processes. This study illustrates
the financial impact of moving from ad hoc content management solutions to a systematic approach
of managing structured and unstructured content using Oracle Universal Content Management.
In conducting in-depth interviews covering several divisions within Emerson Process Management,
a division of Emerson Electric, Forrester found that the organization achieved significant benefits:
some easily measured for this ROI study and others equally valuable that could not be quantified.
Specifically, the benefits fall into the following categories: 1) reduced headcount needed to gather,
manage, and disseminate content; 2) reduced need to print, publish, or mail documents; 3) reduced
external costs for third-party vendors; 4) increased output per worker in specific content
management processes; 5) improved user productivity across the organization due to easier and
faster access to content and improved business processes; and 6) improved consistency of
information resulting in better messaging and branding to customers.
Emerson Process Management was able to provide metrics to quantify components of the first four
benefits. For the interviewed customer, Forrester found an anticipated return on investment (ROI) of
between 177% and 215% with Oracle Universal Content Management.
Purpose
The purpose of this study is to provide readers with a framework to evaluate the potential financial
impact of Oracle Universal Content Management on their organizations. Forresters aim is to clearly
show all calculations and assumptions used in the analysis. Readers should use this study to better
understand and communicate a business case for investing in Oracle Universal Content
Management.
Methodology
Oracle selected Forrester for this project because of its industry expertise in enterprise content
management and Forresters Total Economic Impact (TEI) methodology. TEI not only measures
costs and cost reduction (areas that are typically accounted for within IT), but it also weighs the
enabling value of a technology in increasing the effectiveness of overall business processes.
For this study, Forrester employed four fundamental elements of TEI in modeling Oracle Universal
Content Management:
1. Costs and cost reduction.
2. Benefits to the entire organization.
3. Risk.
4. Flexibility.
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Given the increasing sophistication that enterprises have regarding cost analyses related to IT
investments, Forresters TEI methodology provides a complete picture of the total economic impact
of purchase decisions. Please see Appendix A for additional information on the TEI methodology.
Approach
Forrester used a four-step approach for this study:
1. Forrester gathered data from existing Forrester research relative to Oracle Universal
Content Management and the ECM market in general.
2. Forrester interviewed Oracle marketing and sales personnel to fully understand the
potential (or intended) value proposition of Oracle Universal Content Management.
3. Forrester conducted a series of in-depth interviews with one organization currently using
Oracle Universal Content Management.
4. Forrester constructed a financial model representative of the interviews. This model can be
found in the TEI Framework section below.
Key Findings
Forresters study yielded the following key findings:
ROI. Based on the interviews with an existing customer, Forrester constructed a TEI
framework and the associated ROI analysis illustrating the financial impact areas. As seen
in Table 1, the risk-adjusted ROI for this company is 177% with a breakeven point (payback
period) of twelve months after deployment.
Benefits. As discussed previously, some of the benefits associated with Oracle Universal
Content Management were difficult to quantify for this study. For the purposes of the ROI
analysis, only benefits associated with headcount reduction; reduced printing, publishing
and distribution; external cost savings; and some specifically documented productivity
gains were quantified. The risk-adjusted, present value of the benefits for the organization
amount to $5,177,744 over a four-year period.
Costs. Emerson Process Managements approach to Oracle Universal Content
Management was to start small and grow as the business needed. The costs shown in this
study reflect this approach. The majority of the costs are comprised of license fees,
maintenance fees, and professional services. The risk-adjusted, present value of the costs
for the organization amount to $1,872,055 over a four-year period.
Table 1 illustrates the original and risk-adjusted financial results for Emerson Process Management
based on data and characteristics obtained during the interview process. Forrester risk-adjusts
these values to take into account the potential uncertainty that exists in estimating the costs and
benefits of a technology investment. The risk-adjusted value is meant to provide a conservative
estimation, incorporating any potential risk factors that may later impact the original cost and benefit
estimates. For a more in-depth explanation of risk and risk adjustments used in this study, please
see the Risk section.
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Table 1: Company ROI, Original And Risk-Adjusted
Unadjusted Summary financial results
(Best case)
Risk-adjusted
ROI four-year 215% 177%
Payback 11 months 12 months
Total four-year costs (PV) $1,819,463 $1,872,055
Total four-year benefits (PV) $5,722,944 $5,177,744
Total four-year net savings (NPV) $3,903,480 $3,305,689
Source: Forrester Research, Inc.
Disclosures
The reader should be aware of the following:
The study is commissioned by Oracle and delivered by Forrester Consulting.
Oracle reviewed and provided feedback to Forrester, but Forrester maintained editorial
control over the study and its findings and did not accept changes to the study that
contradicted Forresters findings or obscured the meaning of the study.
The customer name for the interviews was provided by Oracle.
Forrester makes no assumptions as to the potential return on investment that other
organizations will receive. Forrester strongly advises that readers should use their own
estimates within the framework provided in the study to determine the appropriateness of
an investment in Oracle Universal Content Management.
This study is not meant to be used as a competitive product analysis.
Oracle Universal Content Management: Overview
According to Oracle Corporation, Oracle Universal Content Management, formerly Stellent
Universal Content Management, turns content into assets by making unstructured or dynamic
content easier to find, access, and reuse within an organization. Oracle Universal Content
Management supports the content lifecycle, applying the appropriate amount of control and adding
support for users during each lifecycle phase. Content is managed during creation, capture, and
storage. Additional features can be applied, such as version control, indexing for search, and
metadata and security. Services can be added to help distribute, publish, classify and retain, expire,
and delete content.
Oracle Universal Content Management is an enterprise content management solution, offering Web
Content Management, Document and Imaging Management, Digital Asset Management and
Conversion, and Retention Management modules on a single, unified platform. This architecture
allows customers to leverage content management investments across the organization and
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throughout various applications. Oracle Universal Content Managements single-architecture
approach also allows all managed content and services to be accessed from a common user and
administration interface.
Oracle Universal Content Managements approach to ECM offers organizations a single layer of
integration and a common set of Application Program Interfaces APIs. Users can reuse content and
integrate hundreds of documented Oracle Universal Content Management services such as
checking in content, performing a search, returning search results, or approving an item in workflow
using standard integration methods such as Web services, J ava, J ava EE, J avaServer Pages
tags, command line utilities, Microsoft Component Object Model scripting, and Web-based
distributed authoring and versioning.
Analysis
As stated in the Executive Summary, Forrester took this multistep approach to evaluate the effect
that implementing Oracle Universal Content Management can have on an organization:
Interviews with Oracle marketing and sales personnel.
In-depth interviews with one organization currently using Oracle Universal Content
Management.
Construction of a financial framework for the implementation of Oracle Universal Content
Management.
Emerson Process Managements implementation began in 1998. To simplify this study, eight years
of effort have been condensed into a four-year timeframe. This condensed model accurately
reflects Emerson Process Managements start small approach and the total costs and benefits.
Interview Highlights: Emerson Process Management
The customer interviewed for the TEI study was Emerson Process Management, an Emerson
Electric business unit. This study highlights results from the Valve Division as well as several other
divisions within Emerson Process Management that utilize the Valve Divisions solution. The
remaining divisions may have separate instances of Oracle Universal Content Management or
other solutions that were not included in this study.
Emerson Electric is a diversified global technology company that provides products and services for
a wide range of industries, commercial markets, and end-users, including consumers. Emerson
Process Management provides devices, systems, and services that create a comprehensive
solution for a plant's efficient automation and asset management.
Emerson Process Management initially implemented Oracle Universal Content Management in
1998. It began as a grassroots effort led by three end-users to utilize content management for a
specific need. They wanted to have easy, global search and retrieval capability for Engineering and
Quality Documentation. By doing this, they hoped to eliminate millions of pages of documents that
were being printed each year. One of the main criteria was that all functionality, publishing,
management, and retrieval be Web-based. The solution quickly became a mission-critical
application, with manufacturing plants around the world relying on Oracle Universal Content
Management to retrieve manufacturing specifications on a real-time basis.
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From this initial use, the Oracle Universal Content Management implementation grew rapidly. The
content management team developed solutions for various divisions upon request and based on
business benefit prioritization. There are now more than 200 applications tied into the Oracle
Universal Content Management solution that use workflow to improve business processes. Mark
Heindselman, Manager of Information Services for the Valve Division and content management
service provider for various process divisions, says that they have a flexible system based on
users needs and requirements that can easily grow and adapt as needed.
The interviews uncovered the following relevant points:
The greatest challenge in successfully rolling out content management is deciding how to
properly organize and manage content. It is especially important to consider the security
aspects of managing content.
Once the Oracle Universal Content Management solution was in place, it was very easy to
roll out new uses. Typically, it takes Emerson Process Management one to two months to
define additional requirements and integrate another content repository.
Benefits were realized almost immediately for the low-hanging fruit, replacing paper with
electronic content. Uses that involved changing business processes had a longer learning
curve, but benefits were still realized quickly.
Emerson Process Management uses most ECM components of the Oracle Universal
Content Management offering. It does not currently use Records Management but is
considering a pilot of Universal Records Management.
All content is maintained in native format and resides in the underlying repositories. Most
content is also automatically converted to a Web-viewable PDF upon addition to the
repository.
Prior to implementing Oracle Universal Content Management, content was published to
each Web site separately. This was a manually-intensive process. Now, content can be
easily repurposed for multiple internal and external Web sites. This reduces costs, ensures
brand and information consistency, and eliminates versioning difficulties.
According to Mark Heindselman, Bad pains drive change. Examples of these are too
much effort to manage content, unable to find the content, content is out of compliance,
there are redundant copies and version control issues, and business processes are not
streamlined.
Having a robust content management solution in place allowed Emerson Process
Management to change the business while running the business. It was able to improve
business processes without keeping employees from completing their daily responsibilities.
TEI Framework
Introduction
From the information provided in the in-depth interviews, Forrester has constructed a TEI
framework for those organizations considering implementation of Oracle Universal Content
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Management. The objective of the framework is to identify the cost, benefit, flexibility, and risk
factors that impact the investment decision. All monetary values are rounded to the nearest dollar.
Framework Assumptions
Table 2 lists the discount rate used in the present value (PV) and net present value (NPV)
calculations and the time horizon used for the financial modeling.
Table 2: General Assumptions
Ref. General assumptions Value
A1 Discount rate 10%
A2 Length of analysis Four years
Source: Forrester Research, Inc.
Organizations typically use discount rates between 8% and 16% based on their current
environment. Readers are urged to consult with finance to determine the most appropriate discount
rate to use within their own organizations.
In addition to the financial assumptions used to construct the cash flow analysis, Table 3 provides
salary assumptions used within this analysis.
Table 3: Salary Assumptions
Ref. Metric Calculation Value
B1 Fully burdened salary* per IT employee (Year 1) [Increases yearly by 5%] $69,971
B2 Work days per year 200
B3 Fully burdened daily cost per IT employee (Year 1) (B1/B2) $349.86
B4 Fully burdened salary* per content business owner (Year 1) [Increases yearly by 5%] $65,651
B5 Fully burdened salary* per generic employee** (Year 1) [Increases yearly by 5%] $53,000
*Includes salary, variable compensation, and all direct benefits (e.g., health insurance)
**For the benefits calculations, specific examples of headcount reduction were used. Different roles had
different costs. To simplify the model, an average salary was calculated.
Source: Forrester Research, Inc.
Costs
This section describes the overall costs to initially implement Oracle Universal Content
Management, costs to further rollout Oracle Universal Content Management, and the costs to
maintain the solution.
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Initial Internal Implementation Costs
Emerson Process Managements initial Oracle Universal Content Management implementation
efforts were modest; the company made engineering and quality documentation available online.
(The previous method of sharing this documentation was to physically mail updates to 65 locations
around the world.) This project was implemented by three end-users and was completed quickly.
License and hardware fees associated with this initial implementation are covered in the relevant
cost sections below. Between the three individuals working on this implementation, one full-time
equivalent (FTE) worked on this. The duration was 40 work days, or approximately two months. The
fully burdened salary per IT employee in Year 1 of the study was $350 per day. The resulting initial
implementation internal labor cost is equal to 1 FTE x $350 per day x 40 days, or $14,000.
Table 4: Initial Implementation Internal Labor Costs, Non-Risk-Adjusted
Ref. Metric Calculation Initial
C1 Number of FTEs 1
C2 Daily fully burdened salary (=B3) $350
C3 Days of effort 40
Ct Initial internal implementation costs (E1 * E2 * E3) $14,000
Source: Forrester Research, Inc.
Internal Labor Costs IT
The Oracle Universal Content Management solution is managed by the Content Management
Services team, which has responsibility for internal and external content across the entire business
unit. In Year 1, only one FTE was dedicated to managing the solution. This increased to two FTEs
by Year 3. These individuals maintain the software and roll out new services based on business
user requests. Because the team is small, it relies on third-party services, which is discussed in a
later section.
Table 5: Internal Labor Costs IT, Non-Risk-Adjusted
Ref. Metric Calculation Initial Year 1 Year 2 Year 3 Year 4
D1 Number of IT FTEs 1.0 1.5 2.0 2.0
D2 Annual fully burdened salary (=B1) $69,971 $73,470 $77,144 $81,000
Dt Internal labor costs IT (D1 * D2) $69,971 $110,205 $154,288 $162,000
Source: Forrester Research, Inc.
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Internal Labor Costs Business
Business users and/or content owners are involved in the requirements definition and rollout of
additional solutions based on the Oracle Universal Content Management platform. Once an
additional solution is implemented, the effort to manage the content is equal to or less than it was
previously, i.e., storage on shared drives. Therefore, these cost calculations only include the
incremental costs of defining and rolling out new solutions.
Table 6: Internal Labor Costs Business, Non-Risk-Adjusted
Ref. Metric Calculati
on
Initial Year 1 Year 2 Year 3 Year 4
E1 Number of business FTEs 0.0 0.5 1.0 1.5 2.0
E2 Annual fully burdened salary (=B4) $65,651 $68,934 $72,381 $76,000 $79,800
Et Internal labor costs business (E1 * E2) $ - $34,467 $72,381 $114,000 $159,600
Source: Forrester Research, Inc.
Software Licenses And Maintenance
The software license total value used in this study reflects what a new customer using a similar
amount of Oracle Universal Content Management licenses as Emerson Process Management
would expect to pay. This may not be the same that Emerson Process Management actually paid.
The licenses were phased in to reflect how Emerson Process Management implemented Oracle
Universal Content Management, starting slow and ramping up.
Table 7: Software Licenses And Maintenance, Non-Risk-Adjusted
Ref. Metric Calculation Initial Year 1 Year 2 Year 3 Year 4
F1 License fees $25,000 $65,000 $200,000 $120,000 $90,000
F2 Maintenance % 22% 22% 22% 22% 22%
F3 Maintenance fees (F2 * sum F1) $5,500 $14,300 $63,800 $90,200 $110,000
Ft Software licenses and
maintenance
(F1 +F3) $30,500 $79,300 $263,800 $210,200 $200,000
Source: Forrester Research, Inc.
Hardware Costs
Because Emerson Process Management started slowly in its rollout of Oracle Universal Content
Management, initial hardware requirements were low. Some servers were repurposed for use in the
Oracle Universal Content Management installation, reducing the total number of servers that
needed to be purchased. Over the course of the study, the price of servers went down. This is due
primarily to a general reduction in hardware costs over the years.
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Table 8: Hardware Costs, Non-Risk-Adjusted
Ref. Metric Calculation Initial Year 1 Year 2 Year 3 Year 4
G1 Cost per server $20,000 $20,000 $15,000 $10,000 $8,000
G2 Number of servers 1 1 4 3 3
Gt Hardware costs (G1 * G2) $20,000 $20,000 $60,000 $30,000 $24,000
Source: Forrester Research, Inc.
Professional Service Fees
Because the content management team at Emerson Process Management is small, it uses a
significant amount of professional services to roll out new projects as well as for system
maintenance at times when it is short staffed. In Year 2 of the study, Emerson Process
Management changed to a lower cost professional service provider.
Table 9: Professional Service Fees, Non-Risk-Adjusted
Ref. Metric Calculation Initial Year 1 Year 2 Year 3 Year 4
H1 Hourly consulting rate $200 $200 $130 $135 $150
H2 Number of hours 40 300 600 800 900
Ht Professional service fees (H1 * H2) $8,000 $60,000 $78,000 $108,000 $135,000
Source: Forrester Research, Inc.
Document Scanning Costs
Emerson Process Management did not need to do any back scanning of paper documents. Nearly
all of the documents for the early projects existed in electronic format on shared drives. Beginning in
Year 3, it began scanning some documents for new content management projects.
To accomplish this, it was necessary to purchase scanning hardware and software. Per page
document scanning costs vary widely depending on volume, outsourcing versus in-house, type of
documents to be scanned, etc. For this study, Forrester estimated that the total activity cost of
scanning was 50 cents per page.
Emerson Process Management also back scanned microforms that were used for replacement
parts ordering. The corresponding time-savings benefit was very small. However, this greatly
improved customer service by reducing replacement part ordering time for older product from
several days to several minutes. This benefit is not included in the ROI calculations.
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Table 10: Document Scanning Costs, Non-Risk-Adjusted
Ref. Metric Calculation Initial Year 1 Year 2 Year 3 Year 4
I1 Scanner equipment costs 10,000
I2 Scanning software licenses 10,000
I3 Maintenance percentage 15% 15%
I4 Software maintenance (I3 * I2[total]) $1,500 $1,500
I5 No. of pages scanned 38,000 44,000
I6 Cost per page scanned $0.50 $0.50
I7 Document scanning costs (I5 * I6) $19,000 $22,000
I8 No. of microforms scanned 400,000 600,000
I9 Cost per microform scanned $0.07 $0.07
I10 Microform scanning costs $28,000 $42,000
It Document and microform
scanning
(I1 +I2 +I4 +I7
+I10)
$68,500 $65,500
Source: Forrester Research, Inc.
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Total Costs
Table 11 summarizes Emerson Process Managements costs associated with its implementation of
Oracle Universal Content Management.
Table 11: Total Costs Of Oracle Universal Content Management, Non-Risk-Adjusted
Ref. Costs Initial Year 1 Year 2 Year 3 Year 4 Total Present
value
Ct Initial internal
implementation
costs
$14,000 $14,000 $14,000
Dt Internal labor
costs IT
$69,971 $110,205 $154,288 $162,000 $496,464 $381,256
Et Internal labor
costs
business
$34,467 $72,381 $114,000 $159,600 $380,448 $285,811
Ft Software
licenses and
maintenance
$30,500 $79,300 $263,800 $210,200 $200,000 $783,800 $615,137
Gt Hardware costs $20,000 $20,000 $60,000 $30,000 $24,000 $154,000 $126,700
Ht Professional
service fees
$8,000 $60,000 $78,000 $108,000 $135,000 $389,000 $300,357
It Document
scanning
$68,500 $65,500 $134,000 $96,202
Total $72,500 $263,738 $584,386 $684,988 $746,100 $2,351,712 $1,819,463
Source: Forrester Research, Inc.
Benefits
Not all the benefits that Emerson Process Management realized are easily quantified in this ROI
analysis. Therefore, the first half of this section details the benefit calculations that go into the ROI
analysis, and the second half describes qualitative benefits that are not included in the ROI
analysis. In many respects, the qualitative benefits are as valuable as the quantitative ones and
should be taken into consideration when analyzing the total return on investment offered by Oracle
Universal Content Management.
Report Printing Savings
Prior to implementing Oracle Universal Content Management, Emerson Process Management
printed an enormous number of reports. Some reports were run weekly and some monthly. Each
report was sent to 65 locations around the world. The underlying data was taken from mainframe
and PC-based applications. This resulted in printing millions of pages a year. (Employee effort
required to print the reports is included in the Reduction In Headcount benefit above.)
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Table 12: Report Printing Savings, Non-Risk-Adjusted
Ref. Metric Calculation Year 1 Year 2 Year 3 Year 4
J 1 Number of pages not printed 833,750 3,239,375 5,039,375 5,539,375
J 2 Print cost per page $0.04 $0.04 $0.04 $0.04
J t Report printing savings (J 1 * J 2) $33,350 $129,575 $201,575 $221,575
Source: Forrester Research, Inc.
Brochure Publishing Savings
Emerson Process Management received hundreds of thousands of requests every year to send
brochures and other expensive printed materials. These requests came from distributors, end
customers, and others in the industry. Since Emerson Process Management has made all of these
materials available online, the vast majority of these requests are handled as document downloads.
This benefit category captures reduced publishing in two ways. First, within the valve division, there
was a reduction in the number of brochures and materials that were printed in the past and would
have to be updated. Secondly, there was a reduction in additional publishing that would have been
sent upon request.
Table 13: Brochure Publishing Savings, Non-Risk-Adjusted
Ref. Metric Calculation Year 1 Year 2 Year 3 Year 4
K1 No. of brochures
(valve division)
136,000 160,000 160,000
K2 No. of brochures (other areas) 500,000 600,000
K3 Cost per brochure $2.20 $2.20 $2.20
Kt Brochure publishing savings ((K1 +K2 ) * K3) $299,200 $1,452,000 $1,672,000
Source: Forrester Research, Inc.
Avoided Microfiche Production
Emerson Process Management also produced a significant amount of microfiche, which was
distributed to the 65 locations around the world. By using Oracle Universal Content Management, it
was able to eliminate all microfiche production. All of this content is now available for review and
download online. The number of reports per year would have increased over the life of the study but
was left the same for simplicity.
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Table 14: Avoided Microfiche Production, Non-Risk-Adjusted
Ref. Metric Calculation Year 1 Year 2 Year 3 Year 4
L1 Number of microfiche reports not printed 7,500 7,500 7,500
L2 Cost per microfiche report $50 $50 $50
Lt Avoided microfiche production (L1 * L2) $375,000 $375,000 $375,000
Source: Forrester Research, Inc.
Reduced Internal Mailing Costs
All of the printed reports and microfiche were sent to the 65 locations around the world via internal
mail. The cost per piece was significantly less than that of using the regular postal service.
Nonetheless, eliminating these mailings resulted in significant savings.
Table 15: Avoided Internal Mailing Costs, Non-Risk-Adjusted
Ref. Metric Calculation Year 1 Year 2 Year 3 Year 4
M1 Number of pieces not mailed 304,444 339,091 360,833 380,714
M2 Average cost (internal) per piece $0.09 $0.11 $0.12 $0.14
Mt Reduced internal mailing costs ( M1 * M2) $27,400 $37,300 $43,300 $53,300
Source: Forrester Research, Inc.
Reduction In Headcount
During the period of this study, Emerson Process Management was able to reduce its total
headcount because of the Oracle Universal Content Management implementation. Some of the
reductions were an actual decrease in headcount, and others are measured as the avoidance of
new hires. Regardless of how the reduction was achieved, the company has saved a significant
amount of money on salary and benefits from the total reduced headcount.
Each headcount reduction cited in this study is linked to a specific content management project.
The types of roles removed include printing department personnel and individuals involved in
content gathering and disseminating processes and document review processes. Salaries varied
among individual employees, so an average fully-burdened salary was used to simplify the model.
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Table 16: Reduction In Headcount, Non-Risk-Adjusted
Ref. Metric Calculation Year 1 Year 2 Year 3 Year 4
N1 Number of reductions 3.0 5.0 8.5 10.5
N2 Yearly fully burdened salary =B5 $53,000 $55,650 $58,433 $61,355
Nt Reduction in headcount (N1 * N2) $159,000 $278,250 $496,681 $644,228
Source: Forrester Research, Inc.
External Cost Savings
Emerson Process Management incurred costs to external parties that were eliminated as Oracle
Universal Content Management usage expanded. This benefit category captures three specific
examples.
Fax lines and printing infrastructure. Emerson Process Management had dedicated
telephone lines and network connections in place for faxing and printing, but these were
eliminated when these activities ceased.
Trouble ticketing system. Emerson Process Management was spending $750,000 per year
on an outsourced solution to manage PC support and trouble ticketing. When they decided
to eliminate this contract, an in-house solution was built based on the Oracle Universal
Content Management platform. It took thirty-two hours to build the solution, saving
significant time and money that is included in this benefit.
Mainframe application maintenance. Emerson Process Management used a messaging
application solely for disseminating mainframe-based reports around the organization.
When mainframe reports were moved into Oracle Universal Content Management, it was
able to eliminate this mainframe application and stop paying annual maintenance.
Table 17: External Cost Savings, Non-Risk-Adjusted
Ref. Metric Calculation Year 1 Year 2 Year 3 Year 4
O1 Fax lines and printing infrastructure $3,000 $3,000 $3,000 $3,000
O2 Trouble ticketing system 75,000 $75,000 $75,000 $75,000
O3 Mainframe application maintenance $80,000 $80,000
Ot External cost savings (O1 +O2 +O3) $78,000 $78,000 $158,000 $158,000
Source: Forrester Research, Inc.
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Incremental Output Per Worker
Productivity gains are a soft savings and difficult to accurately quantify. The productivity benefits
described in this section are specific to completed Oracle Universal Content Management-based
projects that improved the business processes. Examples of these projects include the new job
posting process, engineering and quality document handling, product review and certification
processes, etc. This benefit calculation does not include a generic savings per employee because
of improved content search and availability.
These benefits were realized as the specific projects were completed. Various projects impacted
several types of workers with different salaries. To simplify the calculation, an average salary across
all of these employees was used. Even though these incremental output improvements are real and
linked to specific projects, the value of this benefit was reduced by 50% to reflect that employees do
not convert all of their newly available time into productive work.
Table 18: Incremental Output Per Worker, Non-Risk-Adjusted
Ref. Metric Calculation Year 1 Year 2 Year 3 Year 4
P1 Number of hours saved 3,240 4,447 4,447 10,380
P2 Hourly rate per worker (B5 / 1,767 hours) $30.00 $31.50 $33.08 $34.73
P3 Percent reduction 50% 50% 50% 50%
Pt Incremental output per worker (P1 * P2 * (1 P3)) $48,600 $70,040 $73,542 $180,248
Source: Forrester Research, Inc.
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Total Quantified Benefits
Table 19 summarizes the total quantified benefits Emerson Process Management realized by
implementing Oracle Universal Content Management.
Table 19: Total Quantified Benefits, Non-Risk-Adjusted
Ref. Benefits Year 1 Year 2 Year 3 Year 4 Total Present
value
J t Report printing
savings
$33,350 $129,575 $201,575 $221,575 $586,075 $440,190
Kt Brochure
publishing savings
$299,200 $1,452,000 $1,672,000 $3,423,200 $2,480,180
Lt Eliminated
microfiche prod
$375,000 $375,000 $375,000 $1,125,000 $847,790
Mt Reduced internal
mailing costs
$27,400 $37,300 $43,300 $53,300 $161,300 $124,672
Nt Reduction in
headcount
$159,000 $278,250 $496,681 $644,228 $1,578,158 $1,187,684
Ot External cost
savings
$78,000 $78,000 $158,000 $158,000 $472,000 $361,996
Pt Incremental output
per worker
$48,600 $70,040 $73,542 $180,248 $372,431 $280,432
Total $346,350 $1,267,365 $2,800,098 $3,304,351 $7,718,164 $5,722,944
Source: Forrester Research, Inc.
Litigation Preparation And Retention Compliance
Companies find a growing expense in preparation for lawsuits and the cost of the discovery
process. Enterprise content management can help reduce these costs by making the relevant
documents easier to find, resulting in a quick dismissal or reduced legal fees. Additionally, an ECM
solution can include records management, which will ensure that documents are kept for as long as
needed and no longer based on retention regulations and policies. This further reduces the
cost of litigation preparation as older documents are automatically purged and do not need to be
reviewed. It also helps to avoid potential fines and to reduce the cost of purging old documents.
Improved Business Processes And Worker Productivity
ECM is an effective tool for removing business process bottlenecks and generally improving
business processes. Making content easily available and searchable improves user self-service and
improves overall efficiency. This can result in reduced headcount, better customer service, and the
overall ability to do more with less.
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Consistent Information And Branding
Version control is a huge problem for todays organizations. With the same content available from
so many different locations, both internally and externally, it is hard to ensure that the latest version
is available company-wide. This is especially important when making content available via external
Web sites. Enterprise content management can be used to ensure that every Web site and
repository is being populated with the latest content. This removes the risk of re-work being needed
because of out-of-date information or customers accidentally accessing the wrong version of
important documents. Also, it can help deliver brand consistency across multiple channels.
Risk
Risk is the third component within the TEI model. It is used as a filter to capture the uncertainty
surrounding different cost and benefit estimates. If a risk-adjusted ROI still demonstrates a
compelling business case, it raises confidence that the investment is likely to succeed because the
risks that threaten the project have been taken into consideration and quantified. The risk-adjusted
numbers should be taken as realistic expectations, since they represent the expected values
considering risk. In general, risks affect costs by raising the original estimates, and they affect
benefits by reducing the original estimates.
Each benefit and cost is assigned either a low, medium, high, or none risk rating. The
following benefits and costs were rated as either medium or high risk:
Initial internal implementation costs, high risk. Emerson Process Management adopted
a go-slow approach to rolling out Oracle Universal Content Management. This meant their
initial implementation costs were potentially lower than those which other companies may
experience. Early costs (and benefits) factor more strongly in discounted cash flow
analyses because they are not discounted to the same extent.
Internal labor costs IT, medium risk. Emerson Process Management operates its
content management group with limited resources. This is partially offset by the amount of
professional services it uses. Nonetheless, other companies may have more internal
resources working on content management.
Internal labor costs Business, medium risk. Emerson Process Management
content/business owners may spend less time in rolling out new content management
projects than other companies. This can result in a higher total cost of ownership (TCO).
Hardware costs, medium risk. Emerson Process Managements go-slow approach
meant it did not need as many servers early on and that it could add repurposed servers as
they became available. A more aggressive rollout plan may require that more servers are
purchased.
Document scanning, high risk. Emerson Process Management did not need to do back
scanning to make hard copy content available in the Oracle Universal Content
Management system. Other companies may have a larger amount of content that needs to
be back-scanned, resulting in significant up-front costs.
Brochure publishing savings, high risk. Many companies do not publish expensive
brochures. If that is the case, these companies would not realize this category of benefits.
Avoided microfiche production, medium risk. Many companies do not use microfiche. If
that is the case, these companies would not realize this category of benefit.
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- 20 -
For the purpose of this analysis, Forrester risk-adjusts cost and benefit estimates to better reflect
the level of uncertainty that exists for each estimate. The TEI model uses a triangular distribution
method to calculate risk-adjusted values. To construct the distribution, it is necessary to first
estimate the low, most likely, and high values that could occur within the current environment. The
risk-adjusted value is the mean of the distribution of those points.
For example, the risk associated with initial internal implementation costs is defined as high. This
risk level was chosen because other companies may spend more time and money on a larger initial
implementation. Therefore, a reasonable likelihood exists that someone reading this paper will incur
more costs of this nature. The original estimated cost is $14,000. To calculate the risk-adjusted
cost, the most likely scenario was set at 100% of cost, the high scenario was assigned 125% of
cost, and the low scenario was assigned 100% of cost. The rounded mean of these three values
is 108%. The resulting cost used in the risk-adjusted tables is $15,120, or 108% of $14,000.
The following tables show the values used to adjust for uncertainty in cost and benefit estimates.
Readers are urged to apply their own risk ranges based upon their own degree of confidence in the
cost and benefit estimates.
Table 20: Risk Adjustments To Costs
Ref. Risk adjustments to costs
Risk
scoring Low
Most
likely High
Risk-
adjusted
Q1 Initial internal implementation costs High 100% 100% 125% 108%
Q2 Internal labor costs IT Medium 100% 100% 115% 105%
Q3 Internal labor costs business Medium 100% 100% 115% 105%
Q4 Software licenses and maintenance Low 98% 100% 105% 101%
Q5 Hardware costs Low 98% 100% 105% 101%
Q6 Professional service fees Low 98% 100% 105% 101%
Q7 Document scanning High 100% 100% 125% 108%
Source: Forrester Research, Inc.
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Table 21: Risk Adjustments To Benefits
Ref. Risk adjustments to benefits
Risk
scoring Low
Most
likely High
Risk-
adjusted
R1 Report printing savings Low 90% 100% 105% 98%
R2
Brochure publishing savings High
50% 100% 95% 82%
R3
Avoided microfiche production Medium
80% 100% 102% 94%
R4
Reduced internal mailing costs Low
90% 100% 105% 98%
R5
Reduction in headcount Low
90% 100% 105% 98%
R6
External cost savings Low
90% 100% 105% 98%
R7
Incremental output per worker Low
90% 100% 105% 98%
Source: Forrester Research, Inc.
Flexibility
Flexibility, as defined by TEI, represents an investment in additional capacity or capability that could
be converted into business benefit for some additional future investment. Flexibility would also be
quantified when evaluated as part of a specific project (Please see Appendix A for more detail).
Oracle includes Document and Imaging Management, Document-centric Collaboration, Digital
Asset Management and Conversion, Web Content Management, and Retention Management
modules in its Universal Content Management licenses. Universal Records Management is bundled
in some license packages, but not Emersons. Emerson has the flexibility of adding this module,
which is something they are considering. However, no benefits associated with this flexibility have
been quantified in this study.
Emerson Process Management found that its Oracle Universal Content Management solution
created a significant amount of flexibility by making it easy to implement a new repository or a
project improving a business process. According to Mark Heindselman, there is not a lot of work to
this. Once you do it once, you can leverage it over and over again. Therefore, there is a flexibility
benefit because a small incremental investment in rolling out another project can result in significant
benefits. For this study, these benefits were not quantified in the ROI analysis.
TEI Framework: Summary
Considering the financial framework constructed above, the results of the costs, benefits, and risk
sections can be used to determine a return on investment, net present value, and payback period.
Table 22 and Table 23, below, show the risk-adjusted cost and benefit values, applying the risk-
adjustment method indicated in the Risks section and the values from Table 20 and Table 21 to the
numbers in Table 11 and Table 19, respectively.
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Table 22: Risk-Adjusted Costs
Ref. Costs Initial Year 1 Year 2 Year 3 Year 4 Total Present
value
S1 Initial internal
implementation
costs
$15,120 $15,120 $15,120
S2 Internal labor
costs IT
$73,470 $115,715 $162,002 $170,100 $521,287 $400,318
S3 Internal labor
costs
business
$36,190 $76,000 $119,700 $167,580 $399,470 $300,102
S4 Software
licenses and
maintenance
$30,805 $80,093 $266,438 $212,302 $202,000 $791,638 $621,288
S5 Hardware costs $20,200 $20,200 $60,600 $30,300 $24,240 $155,540 $127,967
S6 Professional
service fees
$8,080 $60,600 $78,780 $109,080 $136,350 $392,890 $303,361
S7 Document
scanning
$73,980 $70,740 $144,720 $103,899
Total $74,205 $270,553 $597,533 $707,364 $771,010 $2,420,666 $1,872,055
Source: Forrester Research, Inc.
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Table 23: Risk-Adjusted Benefits
Ref. Benefits Year 1 Year 2 Year 3 Year 4 Total
Present
value
T1 Report printing
savings
$32,683 $126,984 $197,544 $217,144 $574,354 $431,386
T2 Brochure
publishing savings
$245,344 $1,190,640 $1,371,040 $2,807,024 $2,033,748
T3 Avoided
microfiche prod.
$352,500 $352,500 $352,500 $1,057,500 $796,923
T4 Reduced internal
mailing costs
$26,852 $36,554 $42,434 $52,234 $158,074 $122,179
T5 Reduction in
headcount
$155,820 $272,685 $486,747 $631,343 $1,546,595 $1,163,930
T6 External cost
savings
$76,440 $76,440 $154,840 $154,840 $462,560 $354,756
T7 Incremental output
per worker
$47,628 $68,639 $72,071 $176,643 $364,982 $274,823
Total $339,423 $1,179,146 $2,496,776 $2,955,743 $6,971,088 $5,177,744
Source: Forrester Research, Inc.
The values used throughout the TEI Framework are based on in-depth interviews with one
organization. Forrester makes no assumptions as to the potential return that other organizations will
receive within their own environment. Forrester strongly advises that readers use their own
estimates within the framework provided in this study to determine the expected financial impact of
implementing Oracle Universal Content Management.
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Study Conclusions
Forresters in-depth interviews with Emerson Process Management business unit yielded several
important observations:
Emerson Process Management realized benefits in three general ways: 1) reduced time to
market for information; 2) reduced existing costs and avoiding future costs; and 3) improved
the quality and consistency of information.
Oracle Universal Content Management provided a flexible framework in which Emerson
Process Management could rapidly rollout additional projects, resulting in a more flexible
organization and delivering business benefits.
Emerson Process Management utilized Oracle Universal Content Management to
streamline general business processes, not just content creation and management
processes.
The financial analysis provided in this study illustrates the potential way in which an organization
can evaluate the value proposition of the Oracle Universal Content Management solution. Based on
information collected in in-depth interviews with Emerson Process Management, Forrester
calculated a four-year risk-adjusted ROI of 177% with a payback period 12 months. All final
estimates are risk-adjusted to incorporate potential uncertainty in the calculation of costs and
benefits.
Table 24: ROI, Original And Risk-Adjusted
Unadjusted Summary financial results
(Best case)
Risk-adjusted
ROI four-year 215% 177%
Payback 11 months 12 months
Total four-year costs (PV) $1,819,463 $1,872,055
Total four-year benefits (PV) $5,722,944 $5,177,744
Total four-year net savings (NPV) $3,903,480 $3,305,689
Source: Forrester Research, Inc.
Figure 1: Summary Financial Results, Risk-Adjusted
$(500,000)
$0
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
$3,000,000
$3,500,000
Initial/Year 1 Year 2 Year 3 Year 4
Costs (PV)
Benefits (PV)
Cumulative Cash Flow (PV)
Source: Forrester Research, Inc.
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- 25 -
Appendix A: Total Economic Impact Overview
Total Economic Impact is a methodology developed by Forrester Research that enhances a
companys technology decision-making processes and assists vendors in communicating the value
proposition of their products and services to clients. The TEI methodology helps companies
demonstrate, justify, and realize the tangible value of IT initiatives to both senior management and
other key business stakeholders.
The TEI methodology consists of four components to evaluate investment value: benefits, costs,
risks, and flexibility. For the purpose of this analysis, the impact of flexibility was not quantified.
Benefits
Benefits represent the value delivered to the user organization IT and/or business units by the
proposed product or project. Often product or project justification exercises focus just on IT cost and
cost reduction, leaving little room to analyze the effect of the technology on the entire organization.
The TEI methodology and the resulting financial model place equal weight on the measure of
benefits and the measure of costs, allowing for a full examination of the effect of the technology on
the entire organization. Calculation of benefit estimates involves a clear dialogue with the user
organization to understand the specific value that is created. In addition, Forrester also requires that
there be a clear line of accountability established between the measurement and justification of
benefit estimates after the project has been completed. This ensures that benefit estimates tie back
directly to the bottom line.
Costs
Costs represent the investment necessary to capture the value, or benefits, of the proposed project.
IT or the business units may incur costs in the forms of fully burdened labor, subcontractors, or
materials. Costs consider all the investments and expenses necessary to deliver the proposed
value. In addition, the cost category within TEI captures any incremental costs over the existing
environment for ongoing costs associated with the solution. All costs must be tied to the benefits
that are created.
Risk
Risk measures the uncertainty of benefit and cost estimates contained within the investment.
Uncertainty is measured in two ways: the likelihood that the cost and benefit estimates will meet the
original projections and the likelihood that the estimates will be measured and tracked over time.
TEI applies a probability density function known as triangular distribution to the values entered. At
a minimum, three values are calculated to estimate the underlying range around each cost and
benefit.
Flexibility
Within the TEI methodology, direct benefits represent one part of the investment value. While direct
benefits can typically be the primary way to justify a project, Forrester believes that organizations
should be able to measure the strategic value of an investment. Flexibility represents the value that
can be obtained for some future additional investment building on top of the initial investment
already made. For instance, an investment in an enterprisewide upgrade of an office productivity
suite can potentially increase standardization (to increase efficiency) and reduce licensing costs.
However, an embedded collaboration feature may translate to greater worker productivity if
activated. The collaboration can only be used with additional investment in training at some future
point in time. However, having the ability to capture that benefit has a present value that can be
estimated. The flexibility component of TEI captures that value.
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Appendix B: Glossary
Discount rate: The interest rate used in cash flow analysis to take into account the time value of
money. Although the Federal Reserve Bank sets a discount rate, companies often set a discount
rate based on their business and investment environment. Forrester assumes a yearly discount rate
of 10% for this analysis. Organizations typically use discount rates between 8% and 16% based on
their current environment. Readers are urged to consult their organization to determine the most
appropriate discount rate to use in their own environment.
Net present value (NPV): The present or current value of (discounted) future net cash flows given
an interest rate (the discount rate). A positive project NPV normally indicates that the investment
should be made, unless other projects have higher NPVs.
Present value (PV): The present or current value of (discounted) cost and benefit estimates given
at an interest rate (the discount rate). The PV of costs and benefits feed into the total net present
value of cash flows.
Payback period: The payback period is the breakeven point for an investment the point in time
at which net benefits (benefits minus costs) equal initial investment or cost.
Return on investment (ROI): A measure of a projects expected return in percentage terms. ROI is
calculated by dividing net benefits (benefits minus costs) by costs.
A Note On Cash Flow Tables
The following is a note on the cash flow tables used in this study (see the Example Table below).
The initial investment column contains costs incurred at time 0 or at the beginning of Year 1.
Those costs are not discounted. All other cash flows in Years 1 through 3 are discounted using the
discount rate shown in [Table 2] at the end of the year. Present value (PV) calculations are
calculated for each total cost and benefit estimate. Net present value (NPV) calculations are not
calculated until the summary tables and are the sum of the initial investment and the discounted
cash flows in each year.
Example Table
Ref. Category Calculation Initial cost Year 1 Year 2 Year 3 Total
Source: Forrester Research, Inc.