ROI and the business value of IA




                    Eric Reiss
        10th Annual IA Summit
               March 20,...
“Nowadays, people know
 the price of everything
 and the value of nothing.”

               Oscar Wilde
Does anyone here doubt the value of IA ?
What do we do ?


Here are the conclusions of 400 IAs
Information architecture Model ver. 0.01
        (synthesis of ~900 terms, 8 April 2000)
                        Informati...
Clients know what they want




But we know what they need
Clients know what they want




But we know what they need



           This is the fatal disconnect
I want a better website.
Accessibility Mental models
  Personas Searchability
Knowledge                   Usability
                     management...
I want a better website.




Information architecture
„Es hört jeder doch nur,
 was er versteht.“
                Goethe
„Es hört jeder doch nur,
 was er versteht.“
                Goethe
„Es hört jeder doch nur,
“He hears only that
 was erhe understands”
 which versteht.“
                Goethe
“We believe [IA] is important. But we don't
 have scientific proof. This places us in
 the role of quasi-religious mission...
So, we invent
models and
methods...
We collect
thrilling
statistics...
And
worship
ROI.
Right tool

Wrong use
R      eturn     OI    n        nvestment

“If you hire me, you’ll probably get your money back.”
We talk about it.

But do we use the term correctly?
Benefits - Costs
ROI =
               Costs


  “The gains outweighed the costs.”
500 – 200
1.5 =
                  200


   “It provided a 150% return.”
Net income
ROI =
        Book value of assets
“Because the numerator (net income) is
 an unreliable corporate performance
 measurement, the outcome of the formula
 ROI ...
Net income + interest (1 - tax rate)
  ROI =
                      Book value of assets




Source: Steven M. Bragg, Busin...
“Return on Investment is based on historic
 data. It is a backward-looking metric that
 yields no insights into how to imp...
“In terms of gross averages, I estimate
 that spending about 10% of a project's
 budget on usability activities doubles
 u...
Cost of investment
PP =
     Cash flow per year


 “It paid for itself in three months.”
OPEX + CAPEX
TCO =
        Duration of project


  “It costs us USD 100 per month.”
“He hears only that
 which he understands”
              Goethe
“If they had wanted an MBA
 they would have hired an MBA.”


                  Dan Saffer
Cost of frustration
  Increased expenses
  Lost profits
  Reduced productivity
  Wasted development resources




Source: ...
Cost of frustration for Amtrak

Average reservation               $   220
Reservations per month        x       40,000

Po...
“I want to book a trip.”
“I can’t figure this out.”
“I guess I’ll say home.”
USD 16,000,000 per year...?

             0
     a l : 80
 Verb : 480
  Math
“Why did you send me this article?
 You guys are too smart to actually
 believe this bullshit.”


               E-mail fr...
We are not alone ...
Adlib Software ROI calculation for
the life-science industry (eCTD)
“ROI doesn’t enter into this calculation.
 eCTD is not a nice-to-have, it is a
 NEED-to-have. And the submissions –
 how d...
Cost of not finding information
Number of Employees
        x
Average salary
        x
Average number of pages and
sites v...
Cost of poor usability
Number of users
        x
Average salary
        x
Average number of application
visits per day per...
Cost of “Chip Dankort”
Number of supermarket checkout lines   7
      x
Average salary                         2 Dkr/min
 ...
315 Dkr = 2.6 hours!
“Sometimes a cracker is worth
 more than a handful of crumbs.”


                           Me
          (in reference to ...
ROI ≠ sale
Doing the math for Sterling
Loss        EUR 200,000 per month
Cost        EUR 17,181
PP          2.57 days
“Price is what you pay.
 Value is what you get.”


            Warren Buffett
Perceived benefit
Value =
              Price


   “I think it’s worth the price.”
Value ≠ ROI
ROI ≠ sale
Value ≠ sale
Every service represents “value”

This is a given - and “givens” are not competitive positions
We are selling a very strange service…
”Are these guys crazy ?”




”Let us move your stuff around and
   we’ll make it more valuable.”
Value is subjective


                      Value is emotional
Have you hugged your sitemap today?


                               Home page


                      Search             ...
“What’s good for
 General Motors is
 good for the country”
          Alfred P. Sloan
So, it’s not just about the value of information architecture.

       Is it about the potential value of information?
Action
  Wisdom




Understanding




 Knowledge




 Information




    Data
“There are two levers to
 set a man in motion:
 fear and self-interest.”

               Napoleon
If you don’t learn faster than your competition,
             you will ultimately fail.


     Information Architecture gi...
In declining markets, only
the popular companies
survive.

IA is the key to providing
superior online service.
OK. It’s not only about the potential value of information.

                      So, what is it?
“Appeal to reason and you
 may have no appeal at all.”

              Harry Beckwith
Reassurance
Comfort =
                        Worry


 “These folks will keep me out of hot water.”
        “These folks a...
Source: neatorama.cachefly.net
Some simple words of wisdom
     Make your clients feel comfortable.
     Make your clients look smart.
     Don’t sell to...
So what is an information architect ?


                   An instrument of social change!
communication
Our
 time
  has
come
Thanks!
Eric Reiss can (usually) be found at:
The FatDUX Group ApS
Strandøre 15
2100 Copenhagen
Denmark

Office: (+45) 39 29 67 77...
ROI And The Business Value Of Information Architecture
ROI And The Business Value Of Information Architecture
ROI And The Business Value Of Information Architecture
ROI And The Business Value Of Information Architecture
ROI And The Business Value Of Information Architecture
ROI And The Business Value Of Information Architecture
ROI And The Business Value Of Information Architecture
ROI And The Business Value Of Information Architecture
ROI And The Business Value Of Information Architecture
ROI And The Business Value Of Information Architecture
ROI And The Business Value Of Information Architecture
ROI And The Business Value Of Information Architecture
ROI And The Business Value Of Information Architecture
ROI And The Business Value Of Information Architecture
ROI And The Business Value Of Information Architecture
ROI And The Business Value Of Information Architecture
ROI And The Business Value Of Information Architecture
ROI And The Business Value Of Information Architecture
ROI And The Business Value Of Information Architecture
ROI And The Business Value Of Information Architecture
ROI And The Business Value Of Information Architecture
Upcoming SlideShare
Loading in...5
×

ROI And The Business Value Of Information Architecture

4,300

Published on

The information architecture community thinks business leaders want proof of ROI. But they don't. Firstly, the IA doesn't use the term correctly. Secondly, the business world is looking for trustworthy partners, not MBAs.

Published in: Design, Technology, Business
1 Comment
12 Likes
Statistics
Notes
  • This is a refreshing take on the topic of the value of usability - and the meaning of value. Wish I could have heard the actual presentation.
       Reply 
    Are you sure you want to  Yes  No
    Your message goes here
No Downloads
Views
Total Views
4,300
On Slideshare
0
From Embeds
0
Number of Embeds
2
Actions
Shares
0
Downloads
163
Comments
1
Likes
12
Embeds 0
No embeds

No notes for slide

ROI And The Business Value Of Information Architecture

  1. 1. ROI and the business value of IA Eric Reiss 10th Annual IA Summit March 20, 2009 Memphis, Tennessee
  2. 2. “Nowadays, people know the price of everything and the value of nothing.” Oscar Wilde
  3. 3. Does anyone here doubt the value of IA ?
  4. 4. What do we do ? Here are the conclusions of 400 IAs
  5. 5. Information architecture Model ver. 0.01 (synthesis of ~900 terms, 8 April 2000) Information Technology Standards •Navigate •Design •Search •Implement •Browse •Structure •Evaluate •Tag/index IA Goals •Meet user-needs User •Mediation Information •Usability Architect •Create •Added value •Analysis •Own •Model Policies •Edit •Classify Disciplines •Manage •Evaluate Information
  6. 6. Clients know what they want But we know what they need
  7. 7. Clients know what they want But we know what they need This is the fatal disconnect
  8. 8. I want a better website.
  9. 9. Accessibility Mental models Personas Searchability Knowledge Usability management I want a better website. Sensemaking Findability ScenariaExperience design Information architecture Storytelling Content management Thesauri User-centered design
  10. 10. I want a better website. Information architecture
  11. 11. „Es hört jeder doch nur, was er versteht.“ Goethe
  12. 12. „Es hört jeder doch nur, was er versteht.“ Goethe
  13. 13. „Es hört jeder doch nur, “He hears only that was erhe understands” which versteht.“ Goethe
  14. 14. “We believe [IA] is important. But we don't have scientific proof. This places us in the role of quasi-religious missionaries, desperately striving to convince the masses of the righteousness of our vision.” Peter Morville
  15. 15. So, we invent models and methods...
  16. 16. We collect thrilling statistics... And worship ROI.
  17. 17. Right tool Wrong use
  18. 18. R eturn OI n nvestment “If you hire me, you’ll probably get your money back.”
  19. 19. We talk about it. But do we use the term correctly?
  20. 20. Benefits - Costs ROI = Costs “The gains outweighed the costs.”
  21. 21. 500 – 200 1.5 = 200 “It provided a 150% return.”
  22. 22. Net income ROI = Book value of assets
  23. 23. “Because the numerator (net income) is an unreliable corporate performance measurement, the outcome of the formula ROI must also be unreliable to determine success or corporate value.” www.valuebasedmanagement.net
  24. 24. Net income + interest (1 - tax rate) ROI = Book value of assets Source: Steven M. Bragg, Business Ratios and Formulas
  25. 25. “Return on Investment is based on historic data. It is a backward-looking metric that yields no insights into how to improve business results in the future.” www.maxi-pedia.com
  26. 26. “In terms of gross averages, I estimate that spending about 10% of a project's budget on usability activities doubles usability. ” Jakob Nielsen
  27. 27. Cost of investment PP = Cash flow per year “It paid for itself in three months.”
  28. 28. OPEX + CAPEX TCO = Duration of project “It costs us USD 100 per month.”
  29. 29. “He hears only that which he understands” Goethe
  30. 30. “If they had wanted an MBA they would have hired an MBA.” Dan Saffer
  31. 31. Cost of frustration Increased expenses Lost profits Reduced productivity Wasted development resources Source: Jared Spool
  32. 32. Cost of frustration for Amtrak Average reservation $ 220 Reservations per month x 40,000 Potential income per month $ 8,800,000 Incomplete reservations 75% Potential loss per month $ 6,600,000 Recapture through usability 20% Potential gain per month $ 1,320,000 Potential gain per year $ 15,840,000 Source: Jared Spool
  33. 33. “I want to book a trip.”
  34. 34. “I can’t figure this out.”
  35. 35. “I guess I’ll say home.”
  36. 36. USD 16,000,000 per year...? 0 a l : 80 Verb : 480 Math
  37. 37. “Why did you send me this article? You guys are too smart to actually believe this bullshit.” E-mail from a client
  38. 38. We are not alone ...
  39. 39. Adlib Software ROI calculation for the life-science industry (eCTD)
  40. 40. “ROI doesn’t enter into this calculation. eCTD is not a nice-to-have, it is a NEED-to-have. And the submissions – how do you count these? Per product? Per country? New submission? Repeat submission? This is a vendor who really doesn’t understand our business.” A regulatory affairs officer
  41. 41. Cost of not finding information Number of Employees x Average salary x Average number of pages and sites visited per day per person x Several seconds of confusion each visit due to bad IA The cost of not implementing a cohesive information architecture Source: Jakob Nielsen / Peter Morville
  42. 42. Cost of poor usability Number of users x Average salary x Average number of application visits per day per person x Number of seconds of confusion each visit due to poor usability The cost of ignoring usability in on-line applications Source: Nielsen / Morville / Reiss (ed.)
  43. 43. Cost of “Chip Dankort” Number of supermarket checkout lines 7 x Average salary 2 Dkr/min x Average number transactions each day 1890 x Number of seconds waiting for chip 5 The cost of new 315 Dkr “Chip Dankort” Source: Eric Reiss
  44. 44. 315 Dkr = 2.6 hours!
  45. 45. “Sometimes a cracker is worth more than a handful of crumbs.” Me (in reference to granularity on the web)
  46. 46. ROI ≠ sale
  47. 47. Doing the math for Sterling Loss EUR 200,000 per month Cost EUR 17,181 PP 2.57 days
  48. 48. “Price is what you pay. Value is what you get.” Warren Buffett
  49. 49. Perceived benefit Value = Price “I think it’s worth the price.”
  50. 50. Value ≠ ROI
  51. 51. ROI ≠ sale
  52. 52. Value ≠ sale
  53. 53. Every service represents “value” This is a given - and “givens” are not competitive positions
  54. 54. We are selling a very strange service…
  55. 55. ”Are these guys crazy ?” ”Let us move your stuff around and we’ll make it more valuable.”
  56. 56. Value is subjective Value is emotional
  57. 57. Have you hugged your sitemap today? Home page Search Contact About us Sales Products History Dealer addresses Red products Mission Green products Data sheet Blue products
  58. 58. “What’s good for General Motors is good for the country” Alfred P. Sloan
  59. 59. So, it’s not just about the value of information architecture. Is it about the potential value of information?
  60. 60. Action Wisdom Understanding Knowledge Information Data
  61. 61. “There are two levers to set a man in motion: fear and self-interest.” Napoleon
  62. 62. If you don’t learn faster than your competition, you will ultimately fail. Information Architecture gives you a sustainable competitive advantage.
  63. 63. In declining markets, only the popular companies survive. IA is the key to providing superior online service.
  64. 64. OK. It’s not only about the potential value of information. So, what is it?
  65. 65. “Appeal to reason and you may have no appeal at all.” Harry Beckwith
  66. 66. Reassurance Comfort = Worry “These folks will keep me out of hot water.” “These folks are my friends.”
  67. 67. Source: neatorama.cachefly.net
  68. 68. Some simple words of wisdom Make your clients feel comfortable. Make your clients look smart. Don’t sell to focus groups. Sell to the guy on the other side of the table. Don’t sell a service. Sell a relationship. Be professional. More importantly, be personable. Source: Harry Beckwith / Eric Reiss
  69. 69. So what is an information architect ? An instrument of social change!
  70. 70. communication
  71. 71. Our time has come
  72. 72. Thanks!
  73. 73. Eric Reiss can (usually) be found at: The FatDUX Group ApS Strandøre 15 2100 Copenhagen Denmark Office: (+45) 39 29 67 77 Mobil: (+45) 20 12 88 44 Twitter: elreiss info@fatdux.com www.fatdux.com
  1. A particular slide catching your eye?

    Clipping is a handy way to collect important slides you want to go back to later.

×