ROI And The Business Value Of Information Architecture

ROI and the business value of IA

Eric Reiss10th Annual IA Summit

March 20, 2009Memphis, Tennessee

“Nowadays, people knowthe price of everythingand 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)

Information

InformationArchitect

Information

UserIA Goals•Meet user-needs•Mediation•Usability•Added value

•Navigate•Search•Browse•Evaluate

•Design•Implement•Structure•Tag/index

•Analysis•Model•Classify•Evaluate

•Create•Own•Edit•Manage

Standards

DisciplinesPolicies

Technology

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.

I want a better website.

Content management

Knowledge management Personas

Scenaria

Thesauri

Sensemaking

Accessibility

Storytelling

Usability

Findability

Searchability

Information architecture

User-centered design

Mental models

Experience design

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

“He hears only thatwhich he understands”

„Es hört jeder doch nur,was er versteht.“

Goethe

“We believe [IA] is important. But we don'thave scientific proof. This places us inthe role of quasi-religious missionaries,desperately striving to convince the massesof the righteousness of our vision.”

Peter Morville

So, we inventmodels andmethods...

We collectthrillingstatistics...

And worshipROI.

Right tool

Wrong use

eturn n nvestmentR“If you hire me, you’ll probably get your money back.”

O I

We talk about it.

But do we use the term correctly?

Benefits - CostsCosts

ROI =

“The gains outweighed the costs.”

500 – 200200

1.5 =

“It provided a 150% return.”

Net incomeBook value of assets

ROI =

“Because the numerator (net income) isan unreliable corporate performancemeasurement, the outcome of the formulaROI must also be unreliable to determinesuccess or corporate value.”

www.valuebasedmanagement.net

Net income + interest (1 - tax rate)

Book value of assetsROI =

Source: Steven M. Bragg, Business Ratios and Formulas

“Return on Investment is based on historic data. It is a backward-looking metric thatyields no insights into how to improve business results in the future.”

www.maxi-pedia.com

“In terms of gross averages, I estimatethat spending about 10% of a project'sbudget on usability activities doubles usability. ”

Jakob Nielsen

I estimate

Cost of investmentCash flow per year

PP =

“It paid for itself in three months.”

OPEX + CAPEXDuration of project

TCO =

“It costs us USD 100 per month.”

“He hears only thatwhich he understands”

Goethe

“If they had wanted an MBAthey would have hired an MBA.”

Dan Saffer

Cost of frustration

Source: Jared Spool

Increased expensesLost profitsReduced productivityWasted development resources

Average reservation $ 220Reservations per month x 40,000

Potential income per month $ 8,800,000

Cost of frustration for Amtrak

Source: Jared Spool

Incomplete reservations 75%Potential loss per month $ 6,600,000Recapture through usability 20%

Potential gain per month $ 1,320,000

Potential gain per year $ 15,840,000

“I want to book a trip.”

“I can’t figure this out.”

“I guess I’ll say home.”

USD 16,000,000 per year...?

Verbal: 800

Math: 480

“Why did you send me this article?You guys are too smart to actuallybelieve this bullshit.”

E-mail from a client

We are not alone ...

Adlib Software ROI calculation forthe life-science industry (eCTD)

“ROI doesn’t enter into this calculation.eCTD is not a nice-to-have, it is aNEED-to-have. And the submissions –how do you count these? Per product?Per country? New submission? Repeat submission? This is a vendor who reallydoesn’t understand our business.”

A regulatory affairs officer

Number of Employeesx

Average salaryx

Average number of pages and sites visited per day per person

xSeveral seconds of confusion each visit due to bad IA

The cost of not implementing a cohesive information architecture

Cost of not finding information

Source: Jakob Nielsen / Peter Morville

Number of usersx

Average salaryx

Average number of applicationvisits per day per person

xNumber of seconds of confusion each visit due to poor usability

The cost of ignoring usabilityin on-line applications

Cost of poor usability

Source: Nielsen / Morville / Reiss (ed.)

Number of supermarket checkout lines 7x

Average salary 2 Dkr/minx

Average number transactions each day 1890x

Number of seconds waiting for chip 5

The cost of new 315 Dkr“Chip Dankort”

Cost of “Chip Dankort”

Source: Eric Reiss

315 Dkr = 2.6 hours!

“Sometimes a cracker is worthmore than a handful of crumbs.”

Me(in reference to granularity on the web)

ROI ≠ sale

Doing the math for SterlingLoss EUR 200,000 per monthCost EUR 17,181PP 2.57 days

“Price is what you pay.Value is what you get.”

Warren Buffett

Perceived benefitPrice

Value =

“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

Home page

About usProducts

Sales

History

Red productsMission

Green products

Blue products

Dealer addresses

Data sheet

Search Contact

Have you hugged your sitemap today?

“What’s good forGeneral Motors isgood 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?

Wisdom

Understanding

Knowledge

Information

Data

Action

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

Napoleon

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

Information Architecture gives you asustainable competitive advantage.

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 youmay have no appeal at all.”

Harry Beckwith

ReassuranceWorry

Comfort =

“These folks will keep me out of hot water.”

“These folks are my friends.”

Source: neatorama.cachefly.net

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.

Some simple words of wisdom

Source: Harry Beckwith / Eric Reiss

So what is an information architect ?

An instrument of social change!

communication

Ourtimehas

come

Thanks!

Eric Reiss can (usually) be found at:The FatDUX Group ApSStrandøre 152100 CopenhagenDenmark

Office: (+45) 39 29 67 77Mobil: (+45) 20 12 88 44Twitter: elreissinfo@fatdux.comwww.fatdux.com