How To Calculate The ROI Of DAM & Build A Business Case

Digital asset management software (DAM) is a powerful tool that can centralize your digital content, making it easier to organize and access. It boosts productivity, ensures consistent use of assets, eliminates duplicates and outdated files, and enhances overall efficiency. 

DAM software also improves team collaboration by providing a single source of truth for all assets and is a fortress of security. But these qualitative benefits don't always create a compelling enough case for executive buy-in regarding DAM’s ROI (impact on the bottom line). They want hard numbers to help justify the spending.

How Can DAM Impact ROI?

A DAM plays a pivotal role in ensuring consistent branding and compliance by providing easy access to up-to-date and approved assets and reducing the risk of high-cost errors. Moreover, it offers a streamlined way to create digital assets that align with brand guidelines, further solidifying brand identity across all marketing channels.

The analytics provided by DAM systems provide valuable insights into asset usage and performance, helping to make more informed decisions and optimize business strategies. These benefits can help improve a company's financial performance, demonstrating a clear and measurable return on investment.

Companies that implement these solutions reduce time wasted searching for files, significantly boosting operational efficiency. This, in turn, enhances productivity and delivers a substantial return on investment (ROI) through reduced overhead costs and improved resource management.

Improving ROI is also currently a major trend in digital asset management.

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ROI Calculation Method

Calculating DAM ROI involves a few key steps to ensure you capture all the benefits and costs accurately. 

Example:

• Benefits: $200,000
• Costs: $50,000
• ROI = 300%

The cost calculations below analyze the costs associated with not having a DAM system vs with one in place. Understanding these key terms is essential for companies to make informed decisions about digital management solutions.

• On-premise: Storing digital assets on owned hardware or local servers. Typically, the initial cost is quite high but becomes lower over time. The caveat is that the resources required to maintain this hardware/servers can be quite costly.
• Cloud-based: Storing digital assets on a server owned by a third party. Typically, the upfront cost is lower and ongoing costs cut down on required IT resources compared to on-premise solutions.
• Searching: Refers to the time-consuming and inefficient task of locating and retrieving digital files without a DAM system.
• Managing: Tasks involved with organizing, maintaining and updating digital assets. Without a DAM system, these activities can be labor intensive and costly.
• Productivity losses: This can include time spent searching for assets, duplications of effort, errors, and rework of assets. It also includes interruptions in people's days if team members are constantly asking for the most up-to-date assets.
• Productivity gains: This can include proper versioning control, automated processes, and other DAM best practices for retrieving the correct document quickly. This might involve searching using metadata or tags (capabilities that most DAM systems have built in).

Annual Cost Calculation Without DAM

• Storage costs:
  • On-premise: $12,000 for the first year, $2,000 each subsequent year
  • Cloud: $240/year
• Labour costs:
  • Searching: $18,000/year
  • Managing: $7,200/year
• Productivity losses: $60,000/year

Total annual cost:

• First year (on-premise): $97,200
• Subsequent years (on-premise): $87,200

OR

• First year (cloud): $85,440
• Subsequent years (cloud): $85,440

Annual Cost Calculation With DAM

• DAM system costs:
  • Initial setup and training: $18,000
  • Annual subscription: $6,000
• Storage costs: $120/year
• Labour costs:
  • Searching: $3,600/year
  • Managing: $1,800/year
• Productivity gains: $48,000/year

Total annual cost:

• First year: -$18,480 (net savings)
• Subsequent years: -$36,480 (net savings)

With a DAM system, your organization can experience significant cost savings primarily due to reduced labor and productivity gains, even after accounting for the initial setup and ongoing subscription costs.

How Does Company Size Impact The Focus of a DAM system?

How To Make A Business Case For DAM

Making a business case for a digital asset management system is about showing how it will help and why it's worth the investment. Here's a simple way to do it:

1. Identify the problem: Explain issues like wasting time looking for files, inconsistent branding, or spending too much on duplicate assets.
2. Showcase the solution: Show how a DAM system can fix these problems by keeping all assets in one place, making them easy to find, and ensuring consistent branding.
3. Highlight the benefits: This includes quick access to assets which saves time, cost reduction by avoiding duplicates in content creation, improved workflows and productivity, and consistent use of approved assets which maintains brand integrity.
4. Show the ROI: Use the ROI formula to calculate potential returns. List initial and ongoing costs, highlighting benefits like time and cost savings and revenue gains.
5. Provide examples: Share success stories from other companies implementing DAM systems. You can often find these online or from customers of the DAM provider.
6. Be ready for questions: Prepare clear answers to potential questions or concerns.

Steps To Choose The Right DAM Solution

When it comes time for your software selection process, consider creating a digital asset management RFP to help compare your options. Also review this simple guide for choosing the right digital asset management solution:

1. Assess your needs:
   1. What is the problem you want to solve? (This should already be in your business case)
   2. What assets need to be managed?
   3. How many departments and users will use the DAM system?
   4. Define metrics for measuring success based on your goals with a DAM system.
2. Create a requirements list:
   1. List essential features like metadata management, search capabilities, and user permissions.
   2. Include specific needs such as multi-language support or security features.
3. Research DAM system options:
   1. Research the DAM solutions that fit your requirements and objectives.
   2. Check reviews, case studies, and industry reports to gauge the reputation of vendors.
4. Evaluate usability, UX, and integration capabilities: Contact DAM vendors for demonstrations and trial versions with you and your key stakeholders to gather as much feedback as possible: Is the system intuitive and easy to use for all potential users? Does the system provide adequate training and support? Can the DAM system integrate with your existing tools and software with an API or other automation?
5. Consider customization, scalability and security features:
   1. Can the DAM system be customized to fit your content management needs?
   2. Can the solution scale with your organization as it grows?
   3. Are security measures in place to protect your assets, and are they compliant with relevant regulations and standards? (e.g., GDPR, HIPAA, etc.)
6. Calculate costs:
   1. Compare the pricing models of different DAM solutions (subscription-based, one-time payment, etc.).
   2. Include initial setup, training, and ongoing maintenance fees in your calculation.
7. Make a decision:
   1. Weigh pros and cons based on criteria and feedback.
   2. Select the solution that best fits your needs and budget.

Eliminate "Busy Work" And Save With A DAM Solution

DAM investment removes content bottlenecks and gives users instant access to company assets, ensuring that branded content is quickly available.

By eliminating the busy work we all get so caught up in, DAM platforms enable teams to prioritize core responsibilities, enhance operational efficiency, and optimize resource allocation, leading to measurable cost savings and productivity gains.

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