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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.
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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: [email protected]
