Strategies LLC Taxonomy September 27, 2005Copyright 2005 Taxonomy Strategies LLC. All rights reserved. Making the Business Case for Taxonomy Joseph A. Busch

2 Taxonomy Strategies LLC The business of organized information Agenda v Taxonomy value propositions v What the research says v Example ROI

3 Taxonomy Strategies LLC The business of organized information Taxonomy issues, problems, and concerns v Enormous volumes of information within organizations v Diversity of assets  Content and technology v Complex and IT-oriented standards .NET, SOAP, WSDL, etc. v Limited (if any) integration with applications:  Search engines  Information management applications  Back office transaction-based systems  Analytical systems  …

4 Taxonomy Strategies LLC The business of organized information Fundamentals of taxonomy ROI v Tagging content using a taxonomy is a cost, not a benefit. v There is no benefit without exposing the tagged content to users in some way that cuts costs or improves revenues. v Putting taxonomy into operation requires UI changes and/or backend system changes, as well as data changes. v You need to determine those changes, and their costs, as part of the ROI.

5 Taxonomy Strategies LLC The business of organized information Finding information should not be about “Feeling Lucky”

6 Taxonomy Strategies LLC The business of organized information Finding information requires multiple approaches

7 Taxonomy Strategies LLC The business of organized information about 3,890,000 results

8 Taxonomy Strategies LLC The business of organized information 2,199 results

9 Taxonomy Strategies LLC The business of organized information Agenda v Taxonomy value propositions v What the research says v Example ROI

10 Taxonomy Strategies LLC The business of organized information Usability research— Taxonomy compared to search results lists v “We found that users preferred a browsing oriented interface for a browsing task, and a direct search interface when they knew precisely what they wanted.” Marti Hearst (and others) v “The category interface is superior to the list interface in both subjective and objective measures.” Hao Chen & Susan Dumais

11 Taxonomy Strategies LLC The business of organized information Taxonomy compared to search result lists Median Search Time in Seconds In top 20 results Not in top 20 results Category is 36% faster Category is 48% faster Source: Chen & Dumais

12 Taxonomy Strategies LLC The business of organized information Time saved— Taxonomy compared to search result lists v 1 hour per day searching x 36% faster = 22 minutes each day v 22 minutes x 250 working days per year = 5500 minutes or 92 hours per year

13 Taxonomy Strategies LLC The business of organized information Time saved— Taxonomy compared to search result lists Benefit:Service efficiency increase Number of customer service calls/month 50,000 Average cost per call $ 6 Total call costs per year $ 3,600,000 Increase in productivity by browsing information36% Service costs savings per year $1,296,000

14 Taxonomy Strategies LLC The business of organized information Trusted advisers— Taxonomy avoids costs v “The amount of time wasted in futile searching for vital information is enormous, leading to staggering costs …” Sue Feldman, v Poor classification costs a 10,000 user organization $10M each year—about $1,000 per employee. Jakob Nielsen, useit.com

15 Taxonomy Strategies LLC The business of organized information Knowledge workers spend up to 2.5 hours each day looking for information … … But find what they are looking for only 40% of the time. Source: Kit Sims Taylor

16 Taxonomy Strategies LLC The business of organized information 25% 8% Knowledge workers spend more time re-creating existing content than creating new content Source: Kit Sims Taylor (cited by Sue Feldman in her original article)

17 Taxonomy Strategies LLC The business of organized information Cost saved by not recreating content Benefit:Increase in productivity Number of employees 100 Average employee salary $ 50,000 Employee costs per year $5,000,000 Increase in productivity from not re- creating content25% Employee cost savings per year $1,250,000

18 Taxonomy Strategies LLC The business of organized information Agenda v Taxonomy value propositions v What the research says v Example ROI

19 Taxonomy Strategies LLC The business of organized information Key Factors in ROI v Breadth  “How many people will metadata affect?” v Repeatability  “How many times a day will they use it? v Cost/Benefit  “Is this a costly effort with little or no benefits?” Source: Todd Stephens, Dublin Core Global Corporate Circle

20 Taxonomy Strategies LLC The business of organized information Some common taxonomy ROI scenarios v Customer support  Cutting costs  Increased sales v Knowledge worker productivity  Less time searching, more time working  Avoiding re-creating information that already exists v Catalog site  Increased sales  Increased productivity v Compliance  Avoiding penalties v R&D productivity  Faster time to market

21 Taxonomy Strategies LLC The business of organized information How to estimate costs— Tagging Taxonomy FacetHier? Typical CV Size Time/ Value (min) Avg # values / Item$ / Min Cost/ Element AudienceN $ 0.42 $ 0.21 Content TypeN $ 0.42 $ 0.11 Organizational UnitY $ 0.42 Products & ServicesY $ 0.42 $ 2.52 Geographic RegionY $ 0.42 Broad TopicsY40024 $ 0.42 $ 3.36 TOTALS $ 7.04 Inspired by: Ray Luoma, BAU Solutions

22 Taxonomy Strategies LLC The business of organized information How to estimate costs— Assumptions ASSUMPTIONS Enterprise SW License$ 100,000 Maintenance/Support15% SW Implementation200% Legacy Content Items100,000 Content Growth Rate15% Tagging/Item$ 7.04 Enterprise Taxonomy$ 100,000

23 Taxonomy Strategies LLC The business of organized information How to estimate costs— Total cost of ownership (TCO) DescriptionYear 1Year 2Year 3Year 4Year 5 SW Licenses $ 100,000 Maintenance $ 15,000 Implementation $ 200,000 App Tech Support $ 30,000 Tagging Legacy Content $ 703,500 Ongoing $ 105,525 Taxonomy Creation $ 100,000 Maintenance $ 15,000 TOTAL $ 1,103,500 $ 165,525

24 Taxonomy Strategies LLC The business of organized information Sample ROI Calculations DescriptionYear 1Year 2Year 3Year 4Year 5 Costs Software Licenses/ Maintenance $ 100,000 $ 15,000 Implementation/Support $ 200,000 $ 30,000 Taxonomy Creation/ Maintenance $ 100,000 $ 15,000 Legacy/Ongoing Tagging $ 703,500 $ 105,525 Benefits Productivity increases $ - $ 125,000 $ 1,250,000 Service efficiency gains $ - $ 129,600 $ 1,296,000 Yearly Net Benefits$(1,103,500) $ 89,075 $ 2,380,475 Payback period1.4Years until Benefits = Costs Inspired by: Todd Stephens, Dublin Core Global Corporate Circle

25 Taxonomy Strategies LLC The business of organized information Summary v Taxonomy Value Propositions  Find information faster  Avoid recreating information that already exists  Increase sales  Avoid compliance penalties  Improve R&D effectiveness v Don’t sell “taxonomy”, sell the vision of what you want to be able to do. v Do the calculus (costs and benefits)  Quantify the tangible & intangible benefits  Quantify the total cost of ownership including maintenance & tagging v Support your calculations with research

Strategies LLC Taxonomy September 27, 2005Copyright 2005 Taxonomy Strategies LLC. All rights reserved. Questions Joseph A. Busch

27 Taxonomy Strategies LLC The business of organized information Bibliography M. Hearst, A. Elliott, J. English, R. Sinha, K. Swearingen & K. Yee. “Finding the Flow in Website Search.” 45 Communications of the ACM (Sept 2002) Sue Feldman. "The high cost of not finding information." 13:3 KM World (March 2004) readarticle&Article_ID=1725&Publication_ID=108 K.S. Taylor. "The brief reign of the knowledge worker,"