Funding for your MAM – Part 2

Most companies have a yearly budget approval process where you submit projects to senior management for approval.  The main questions in this practice are how can this project save or make the company money.  As engineers or other production personnel they want us to show them what the Return On Investment (ROI) of the project will be.

To compute ROI, first you need to know what is the true cost of the project.  Yes, you have a budget to build the system but what are all the costs (Total Cost of Ownership – TCO) of your MAM?

Will you need additional employees to run or manage the system?
What are the yearly maintenance costs of the vendors?
WIll you need additional air-conditioning or power for the servers?
What are your data tape costs?
How much will your near line disk systems grow each year as more and more proxies are added to the system?
Do your internet costs go up now that you are selling assets directly to consumers?
What monies need to be set aside for system updates?
These and many more questions need to be answered so you know the full cost of the system over its expected lifetime.

Once you have all of this information gathered you need to look at the full savings/profit potential of the system.

What current systems can be retired and what are the savings of sunsetting them?
Can employees be repurposed to other groups/functions showing labor savings on your bottom line?
If you are shipping tapes what savings can be realized here in stock, transportation costs, dubbing and labor?
Will this system initially or in the future provide new revenue opportunities?
Can you now provide products through it that were not economically possible with physical media?

Once you have all of your information together look at it from a place of  maintaining the status quo rather than approving the new system.  Remember no executive ever got fired for saying no only yes, so it i important to make sure that you can overcome any conceivable arguments they might throw your way on the project.  Often when we go into budget meetings we are so passionate about our solution that we do not see anything negative about it.

Here are just a few areas that you should have answers on before any approval meetings:

Do you know what others in the industry have done with their systems and what problems did they run into?
What is the chance of success for the project?
Are you proposing something that has been done many times by others with a proven vendor and have a high chance of success or something paradigm changing?
If your proposed solution is new to the industry what are your realistic chances of success?

So how do you gather all of this information and also do your normal day job? Consultants and I am a big fan of them.  They have built similar systems in the past, have vendor relationships so they know what is possible technology wise and can spot workflow inefficiencies that you will be blind to since you are often too close to the day to day operations of your facility.

Pick wisely though since a mistake here will affect the rest of your project profoundly.  Ask for a list of similar projects they have worked on and references.  Then don’t call the reference they recommend  but use your own networks (LinkedIn is great here) to find people who you know either know directly or through good sources that will tell you the truth on the strategy recommended.

It is often better to talk to a day to day user than the EVP who commissioned the project.  You will get a much more honest opinion speaking with someone who lives and breathes the solution rather than a person who has staked their career on it.  Also, remember that there are always politics and agendas at any organization so try to talk to as many people as you can from many different companies so you can distill down to the truth of the solution implemented.  There will always be people who dislike anything new and will give you bad information as there are people who think everything is fine because they don’t use the system.

Next time we will look at the best way to budget.  If you are thinking of just copy/pasting a quote from the consultant or vendor we will see how that can create lots of issues for you later on.