Thursday 28 May 2015

Improving Documentation ROI: Part 2 - Cost Areas

There are only 2 things that will improve your documentation ROI:

1 - Reduce costs
2 - Increase income.

That's it.  You can - and we will - break this down further, but in the final analysis to determine if you've been successful, costs must have gone down or income must have gone up, otherwise you haven't improved your ROI.  This is how any venture is measured, so don't kid yourself that documentation is somehow different.  When you're pitching your ideas to the people in charge of the budget, don't sell a dream, or a vision, or a future potential.  Sell the numbers.  That's all they'll want to see, and all you should need to give them.

If that sounds harsh, don't be disheartened.  I say these things because the long history of documentation, as wearily told round the LinkedIn camp fires and the forum watering holes by those old-timers who started working when computers were the size of rooms, is this: Not enough resources, not enough support, not enough belief from the higher-ups that documentation was worth the investment.  Some - many - companies buck this trend, but not that many.  If you want to buck that trend, and if you're reading this then I'm guessing you do, then go into the budget meeting with the hard figures that support your position.  That means calculating ROI.

Ok, </cynical-old-writer warning>, let's crack on.

In Part 1 we looked at how to calculate ROI.  In Part 2, we're going to look at the broad area of improving ROI by reducing costs.

There are 4 primary ways to reduce costs:

1 - Do the same with less.
2 - Do more with less.
3 - Do more with the same.
4 - Do more with more.

I'm not going to talk much about 1 and 2, because these generally indicate people losing their jobs, and I'm not a fan of that.  I write this blog to share knowledge, not to help people find ways to reduce staff. 
Also, there are, unfortunately, some managers who think that "doing more" means flogging their staff into the ground in order to get more out of them.  That's a woefully counter-productive strategy that just increases staff turnover and sick leave, and reduces motivation and productivity.  This series will hopefully show any of those managers who read it that there is a better way.

I'm going to focus on 3 and 4 - doing more with the same and doing more with more - because my hope is that you, dear reader, are interested in expanding your documentation world, not contracting it.

It might seem odd to suggest "doing more with more" is a way to cut costs, because surely if you hire an additional team member then your costs will go up, won't they?  Well, yes, superficially.  But if that additional team member gives you the resource you need to write documentation that saves other people in your company more than the cost of the hire, your cost per action across the company will actually go down.  To explain this more clearly, let's talk about that wonderful 80's power phrase, "Time is Money".

Although this phrase is most often associated with brash young City men with red braces and a Porsche, it actually first appeared in print via the pen (quill?) of Benjamin Franklin in a letter called Advice to a Young Tradesman, Written By an Old One:

"Remember that Time is Money. He that can earn Ten Shillings a Day by his Labour, and goes abroad, or sits idle one half of that Day, tho’ he spends but Sixpence during his Diversion or Idleness, ought not to reckon That the only Expence; he has really spent or rather thrown away Five Shillings besides."  

In modern economic parlance, "Time is Money" is known as an opportunity cost, which you're welcome to explore if you wish.  But for us economic novices, it's enough to understand that the cost of using a resource must factor in the value of what it could be used for instead. 

As an example, your company has 10 help desk consultants, each of whom cost the company £24000 a year.  Your new Technical Writer will also cost £24000 a year.  If that new Technical Writer can provide documentation that saves each of those help desk consultants 11% of their time, then that means a cost saving to the company of (10 x (11% of £24000)) - £24000 = £2400 (an ROI of 10%).  That cost of £2400 can then be "spent" by the help desk consultants using their time on other activities.  Hence your costs have superficially gone up, but your investment in that resource returns more than the cost of that resource.  The caveat, of course, is that your new Technical Writer must continue to provide a positive ROI every year, otherwise in year 1 your costs will be higher and your cost per action will be lower, but in year 2 your costs will be higher, and your cost per action will also be higher.

So what are the broad areas in which you can do more with the same or more with less?  Let's take a look:

1 - Reducing department costs (e.g. cost of tools)
2 - Reducing company costs (e.g. lowering the number of support calls)
3 - Improving department efficiency (e.g. single sourcing, homogenous documentation suites)
4 - Improving company efficiency (e.g. centralised documentation management using taxonomies)

There is a clear split here between direct costs (1 and 2) and indirect costs (3 and 4).  If you don't know the difference between direct and indirect costs, then for the sake of this series it's enough to understand that direct costs are related to a specific project or team (e.g. the cost of writing a help file for a product), and indirect costs are spread over a broad number of projects or teams (e.g. creating a centralised documentation management system that includes documentation for all of your products).  By their very nature, the ROI of direct costs is easier to measure than the ROI of indirect costs because the impact of an indirect cost can be difficult to trace and measure.  Nonetheless, we will try to find ways to measure indirect cost savings as we meet them.

In Part 3 we'll look in more detail at these types of cost.

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