MM: We have seen other DAMs in similar businesses using what we’ve called an ROI dashboard. People log onto it and there’s a little admin panel. It basically says, “Here is the total volume,” to-date, year-to-date or whatever. “We estimate that it eliminated 595 DVDs at a fully-burdened cost of $74.00 to burn and ship and receive.” The data summarizes year-to-date savings: x-amount of money or x-number of hours in reworking or redoing preexisting pieces that they couldn’t find. This would’ve been based on historical baseline information that you would’ve gotten prior to deploying the system.

BG: Prior to moving forward I worked up a return on investment, obviously, to sell it to my boss—so that I could embark on this venture. Although our main goal at the onset was for protection of assets, a library that held everything and was accessible to finding images for layouts, etc. However, I did think that it would save designers time and I wanted to put a value to it. After asking several people throughout the firm how much time they spent tracking down hard-drives, looking at web-native systems we came up with about a fifth of their time each week was spent searching for images. This was the case for many people in the company. So if it were a 50-hour week, maybe 10 hours a week could be saved.

I also put a cost savings to the many downloads that we get charged for from vendors and FedEx shipments which probably end up being $350,000 a year in savings.

MM: As you begin to look at some of the baseline data that you gathered to build your business case, that will probably help inform what kind of reports you’d like to have on an ongoing basis.

BG: Yes, agree.

MM: One of the other things that we’ve learned from other people in situations similar to yourself is setting up departmental benchmarks. In terms of basic asset reuse as well as who creates more reusable stuff as opposed to less reusable stuff. It’s just simply a report card for your asset creator communities, in terms of who creates the more reusable stuff. That kind of starts to set up a game to create more reusable stuff.

In some cases, we’ve seen companies put incentives in place for asset creators to want to create more reusable stuff as a function of how they do layers and PhotoShop files or Illustrator files. How well they’ve done meta-tagging, et cetera.

As you were talking about some of the technologies that you really appreciated in a state of the art DAM platform, you’d mentioned the XMP metadata piece. The flexible user interface. The high-speed data transfer and the reporting functions. Were there any other features of a DAM system that you wanted to have?

BG: I think the workflow capabilities were something always in the back of my mind. A couple of the vendors that I looked at had workflow capabilities built in, but it wasn’t my initial criteria for going out and embarking to build an image library. If they had workflow services, it was a plus.

AS: DAM customers are increasingly realizing that having a secure yet accessible content archive is only a first step. There is a growing premium connected to the availability of integrated tools and services that drive and optimize key workflows. [NOTE: Andrew Salop joins this interview. As a consultant, he worked with BJ Gray in implementing the DAM at Victoria's Secret]

MM: Then at that point, you applied activity-based costing. We already identified that the current-state workflow entailed 300 steps. How many steps did the new, enhanced workflow—entail?

TM: 200.

MM: So clearly, a third of the steps went away?

TM: Absolutely.

MM: Now activity-based costing allowed you to calculate with fairly good accuracy the economic value of eliminating those 100 steps.

TM: That’s correct.

MM: And do you recall what that was?

TM: I couldn’t put my finger right on that number, but I know it was more than the cost of the software.

MM: Right. So in the course of that, you also were able to estimate gains in cycle time. Is that right?

TM: Yes. In fact, that was a major thrust. We knew that we wanted to produce the catalog twice. At that point, we were only producing it once a year.

MM: So basically, you were going to be able to double your cycle time. Not double, but cut it in half.

TM: Cut it in half.

MM: So once you identified that that was a change worth making, the pain associated with the gain would be that there were 100 steps missing with economic value of $500,000 or $400,000. And halving the cycle time would produce incremental sales—as a function of being able to get refreshed content out there.

TM: Yes.

Ancillary Benefits

MM: The other benefit is that now you had your website and your catalog more closely synchronized.

TM: Right.

MM: So you didn’t have one price one place and another in another.

TM: Right.

MM: That would reduce a certain number of customer service cycles. Or discounts that were more like “make-goods,” as a function of satisfying the customer. Right?

TM: Right.

MM: Great result! So take us through what the merchandiser did with page-profit analysis.

TM: One of the things that we saw immediately that was advantageous when you think about the fact that all it is – is data. You used to look at a Quark or InDesign page—and say, “Okay. That’s a design page. Type in the information. Import a picture.”

Once the mindset or paradigm shift happened, people started looking at that as data. Then you started saying, “You know what? There’s other data we might want to be able to look at on this page, after we’ve already sent the page to the printer.”

If you can populate data on a page in a price table, does there have to be a price? No.

It could be the amount of sales for that particular SKU or that particular product grouping. Or it could be the number of units that were sold that year. All you have to do is change the data field that it’s pulling to the page.

MM: In the current state, Tom, you had merchandisers that would own a particular category or categories of product. With a felt-tip pen, they overwrote on a print catalog page the quarter or the beginning inventory position, end inventory position, items sold, gross revenues.

TM: Sales and gross profits. And they would actually be looking at a green bar, writing information into a catalog—sometimes using the spreadsheet on their screen to compile data if they needed to compile it. Because the green bar wouldn’t do that.

Each of the product managers would be doing this. So there were five product managers that would spend two to four weeks every cycle populating their pages in their catalog.

All of the product managers wanted to have all of the information, so they’d switch books and they’d mark up somebody else’s book—until all five product managers had all five master books marked up with that information—hand-written.

MM: So the idea then in the future-state is, “Wouldn’t it be cool if we took a PDF or the InDesign document that had the 900-page document and simply did an automated overlay?” A data overlay from the database of beginning inventory position—end inventory position—gross revenues—profits—returns. Simply just published directly—almost as a transparency or an overlay to the actual thing on the page.

TM: Absolutely. That’s exactly what we did. We could do that in the course of a weekend.

MM: With that kind data without the effort, merchandisers could begin to understand patterns and correlate particular presentations or configurations of products that produce a “lift,” in terms of increased sales. Thus, they could begin to understand, “If I put that product here, I get a 3% bump. If I put that same product over here, then I take a 5% hit.”

TM: Yes. There are additional modules that you can get that even do more forecasting than those types of simple analyses, too.

MM: Such as?

TM: It’ll say, “If you put it in the upper right-hand quarter or the lower left-hand corner.” Or, “Is it on the first page of the section or is it on the cover, too?” “Is it on the back cover? Is it on the inside front cover?” “Are you presenting it on the web differently? Are you even presenting it on the web?” There are lots of different ways to look at that type of data.

MM: So then as you develop the future-state capability, you started to really define work-cells that enable you and your automation team to really optimize the productivity of individual workers. Did I get that right?

TM: Yes.

MM: Let’s get to another idea that you had shared with me. Tom, Hubert remains fairly unusual in that that they use activity-based accounting. Would you explain “activity-based accounting?” And how that clarified the cost of the current-state operation?

TM: Activity-based costing at Hubert involved an exercise that was completed every year that depicted the different activities cross-referenced with percentage-of-time-spent on those activities for each position in the company.

Then, as an additional caveat, there was an activity that was called, “IT Involvement.” You could gauge how much IT or technology needs were being done for that, as well. Another piece of that, of course, was how much building space you used—and different things like that.

On a yearly basis, we would look at the different activities, define different numbers to those, and then the accounting group would take those percentages—knowing what the overhead was, and additionally knowing what money you spent. For instance, in the catalog piece, you spent so many millions of dollars to print the catalog and to buy the paper. So those pieces were applied to that activity, as well.

Then you were able to say, “Well, if it takes us this much time activity-wise to produce a catalog and we need to produce another catalog, how much activity would that take?”

Then, apply that to the timesavings that you would anticipate to enhance that or to decrease that activity—based on a particular software like database publishing. Then you have a “soft dollar ROI.”

However, as everybody knows, once you commit to a soft-dollar ROI, it becomes a hard-dollar ROI.