building the rim business case: techniques to leverage for a compelling justification james watson,...
TRANSCRIPT
Building the RIM Business Case: Techniques to Leverage for a Compelling Justification
James Watson, PhD, Doculabs
Agenda
1. Introduction2. Challenges Clients Experience in
Developing Business Cases3. Cost and Benefit Categories4. Interactive Examples
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About Doculabs 3
Doculabs is a strategy consulting firm; our clients rely on us to help them improve the way they manage information. We provide services such as developing strategic roadmaps and business cases, program management, and content migration assistance.
Our consultants are experts in helping clients manage content such as Office documents, web content, email, customer communications, and records to improve operations, lower costs, increase revenue, and reduce risk.
Differentiators• 20+ years of information management experience• Objective recommendations • Provide empirical data from over 1,200 engagements• More than 550 customers in financial services, insurance,
energy, manufacturing, and life sciences
Global Risk and Compliance: Inspired to Innovate, Passion to Protect
Recognizing the growing role of information management and governance in compliance, in August 2014 Doculabs inaugurated a practice in Global Risk and Compliance. Under the leadership of Scott Swanson, CFE, Doculabs consultants now work with clients to assess their compliance programs, identify threats and vulnerabilities, and help them become proactive with risk and regulatory program governance.
Doculabs’ GRC services include:
• Organizational assessment
• Compliance risk review
• Cyber penetration testing
• Threat and vulnerability mapping
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How to Justify Investments?
One-Time Costs (“Cap Ex”)
Fines, Penalties, Judgments
• Frequency and magnitude difficult to measure
• Use of “scare tactics” – avoid the situation of competitor XYZ
Budgeted Costs (“Op Ex”)
Internal Labor, System Costs (Storage Hardware), Services Vendors
• On-going and measurable
• Spread across many departments and budgets, so difficult to collect
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Operating Costs – Two Primary Benefit Streams
Storage Hardware
Retain fewer documents and email , use less storage
• Easy to identify hardware expenses via purchase history and/or depreciation expenses within budget
• Often considered “hard” savings by management
Discovery Labor
Reduced discovery effort as less ESI must be culled and reviewed
• 3rd party service providers: direct, controllable expense
• For internal labor: potentially less controllable
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Direct vs. Indirect Expenses
Direct Expenses
Monies tied to acquiring equipment, services, internal labor
If the equipment removed, services cancelled or labor terminated, the expense is reduced proportionately
• Little question about the purchase price or fees from a vendor
• Easy to quantify historic expenses and expects costs (via proposals)
• Typically reflects the “cash” leaving a firm
Indirect (or allocated) Expenses
Fully burdened cost, typically including allocations for items such as management overhead, labor benefits, infrastructure, facilities, etc.
• Can be as much as 200%-300% of direct costs
• Often these expenses cannot be eliminated, and are just re-allocated if the direct expense is reduced
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Core Elements of a Business Case 7
Key Components of the Doculabs’ Business Case Modeling Framework
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Case Study 8
1. Business Case Analysis for Records Management: Overview
This spreadsheet provides a high-level estimate and business case analysis for the adoption of Doculabs recommended Records Management Strategy. The primary elements of the business case include:
1. Disposing email that is stored beyond its retention period
2. Eliminating unstructured content and files which can be determined to be: a non-record, not on legal hold or redundant (e.g. PST files)
3. Destroying paper records that are redundent to electronic records or beyond their retention period
4. Decreasing eDiscovery costs related to less content available for discovery.
Note that while there are interrelationships between these efforts, this spreadsheet is designed to isolate the major components in order to provide perspective on the potential savings and costs associated with each effort.Assumptions are noted on each tab or by referencing detailed data in detailed appendix tabs. Conversions between Gigabytes, Terabytes and Petabytes is using a straight 1,000 factor rather than 1,024 for simplicity.
By: Doculabs Inc., using data provided by the client during the information gathering and Current State Assessment.
Created: August 1, 2013.
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Current Costs 9
This tab summarizes current costs for storage by platform and data type, and compares it industry numbers.
By Platform
Platform
Installed Storage - Size in PB (Aug.
2013) Growth RateYr. / Yr. Reduction in Storage Costs Cost Per PB 2013
Industry Costs -Total Cost Per
PB Expected CostsSAN 1.100 10% 10% 4,000,000$ 4,400,000$ 7,000,000$ 7,700,000$ NAS 0.174 20% 10% 3,000,000$ 522,000$ 5,000,000$ 870,000$ WORM 0.146 20% 10% 3,000,000$ 438,000$ 6,000,000$ 876,000$ Total 1.420 5,360,000$ 9,446,000$
By Data TypeStructured Data 1.046 10% 10% 4,000,000$ 4,184,000$ 7,000,000$ 7,322,000$ Email 0.073 20% 10% 3,750,000$ 273,750$ 6,300,000$ 459,900$ Unstructured 0.185 20% 10% 3,000,000$ 555,000$ 5,000,000$ 925,000$ Other (voice rec's) 0.116 3,000,000$ 348,000$ Total 1.420 5,360,750$ 8,706,900$ Assumptions:
Tier 1 (SAN) = 3,640,000 per PB, Tier 2 (NAS) = 2,710,000 per PB, WORM = $2,740,000 per PB.Backup is an additional $3,470,000 per PB, on 10% of the data. Thus $.34 was added to the tier 1, 2, and WORM costs.Labor and infrastructure allocation are not included in current costs.
Annual Industry Costs
Annual Industry Costs
Annual Costs
4. Storage Cost Analysis - Current Year 2013
Annual Costs
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Savings Estimates 10
7. Savings: Unstructured Content and FilesThis tab highlights the base case for unstructured content, and forecasts the impact if disposable, aged, and obsolete content can be purged.
Unstructured Content 2013 2014 2015 2016 2017 2018 5 year TotalStorage (PB) 0.19 0.22 0.27 0.32 0.38 0.46Cost Per PB 3,000,000$ 2,700,000$ 2,430,000$ 2,187,000$ 1,968,300$ 1,771,470$ Total Cost 555,000$ 599,400$ 647,352$ 699,140$ 755,071$ 815,477$ 3,516,441$
Savings DriversDisposable File Types
Reduction % 8%Storage Reduction (PB) 0.018 0.021 0.026 0.031 0.037Savings 47,952$ 51,788$ 55,931$ 60,406$ 65,238$ 281,315$
Aged and Obsolete Content**Reduction % 30%Storage Reduction (PB) 0.080 0.096 0.115 0.138Savings -$ 194,206$ 209,742$ 226,521$ 244,643$ 875,112$
Total 47,952$ 245,994$ 265,673$ 286,927$ 309,881$ 1,156,427$
Assumptions*Disposable content types was based on industry averages provided by Doculabs, but not validated with actual client data.**Content older that 3 years will become "read-only," and users will have 6 months to move the content to a longer term retention environment. ** Assumption of 30% of content being older that 7 years was based on sample data from client, but not validated by Doculabs.
(Dispose of various unneeded file types from the NAS environment, such as .tmp, .ins, etc. Also includes .PSTs)
(Dispose of content that exceeds its retention period within the NAS and is not subject to legal hold.)
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Investments 11
UNSTRUCTURED CONTENT INITIATIVESName Total
Resource Cost
Hours Cost Hours Cost Cost1 Create process for cleanup of shared drive content (including approvals) 200 $15,400 150 $30,000 $45,4002 File analytics infrastructure and resources for shared drive cleanup 100 $7,700 0 $0 $7,7003 Pilot evaluation; develop staged migration/dispsosition plan for shared drives 200 $15,400 200 $40,000 $55,4004 Perform staged migration/disposition across departments 800 $61,600 1200 $240,000 $301,6005 Implement process for periodic purging of "unnecessary" files 400 $30,800 150 $30,000 $60,800
Costs: Client Resources Costs: 3rd Party Resources
LEGAL HOLD AND E-DISCOVERY INITIATIVESName TOTAL
Hours Cost Hours Cost Hardware/Storage Software COST1 Legal hold process reivew and hold management solution 400 $30,800 400 $80,000 $50,000 $100,000 $260,8002 Centralized record inventory and policy management solution 400 $30,800 400 $80,000 $50,000 $100,000 $260,8003 E-discovery automation solution 400 $30,800 400 $80,000 $50,000 $100,000 $260,800
1200 $92,400 1200 $240,000 $150,000 $300,000 $782,400
Costs: Client Resources Costs: 3rd Party Resources Costs: Infrastructure/Tech
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Net Impact 12
Net Impact Across All Categories and Initiatives (Estimated Savings minus Investment Estimates)Savings (tabs 6, 7, 8 and 9) 2014 2015 2016 2017 2018 Total
Email 44,348$ 47,895$ 51,727$ 55,865$ 60,334$ 260,169$ Unstructured Content 47,952$ 245,994$ 265,673$ 286,927$ 309,881$ 1,156,427$ Paper -$ -$ -$ -$ -$ -$ e-discovery 793,930$ 952,716$ 1,143,259$ 1,371,910$ 1,646,292$ 5,908,107$
Total Savings 886,229$ 1,246,605$ 1,460,659$ 1,714,703$ 2,016,508$ 7,324,703$
Investments (tab 10) 2014 2015 2016 2017 2018 Total Program 921,300$ 438,900$ 438,900$ 438,900$ 438,900$ 2,676,900$ Unstructured Content 577,800$ 1,242,600$ 332,400$ 332,400$ -$ 2,485,200$ Email 215,900$ 98,500$ -$ -$ -$ 314,400$ Paper -$ 77,195$ 36,875$ 36,875$ 36,875$ 187,820$ e-discovery 140,800$ 326,600$ 105,000$ 105,000$ 105,000$ 782,400$
Total Investments 1,855,800$ 2,183,795$ 913,175$ 913,175$ 580,775$ 6,446,720$
Net Benefit (Save less Invest) 2014 2015 2016 2017 2018 Total Net benefit (969,571)$ (937,190)$ 547,484$ 801,528$ 1,435,733$ 877,983$
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Sensitivity Analysis 13
3. Sensitivity AnalysisThis tab models the impact if savings were to be delayed by 1 year, or investments were to cost 30% more than originally estimated, or both.
Base Case 2014 2015 2016 2017 2018 TotalTotal Savings 886,229$ 1,246,605$ 1,460,659$ 1,714,703$ 2,016,508$ 7,324,703$ Total Investments 1,855,800$ 2,183,795$ 913,175$ 913,175$ 580,775$ 6,446,720$ Net benefit (969,571)$ (937,190)$ 547,484$ 801,528$ 1,435,733$ 877,983$
Savings Delayed 1 Year 2014 2015 2016 2017 2018 TotalTotal Savings 886,229$ 1,246,605$ 1,460,659$ 1,714,703$ 5,308,195$ Total Investments 1,855,800$ 2,183,795$ 913,175$ 913,175$ 580,775$ 6,446,720$ Net benefit (1,855,800)$ (1,297,566)$ 333,430$ 547,484$ 1,133,928$ (1,138,525)$
Investments Increase - 30% 2014 2015 2016 2017 2018 TotalTotal Savings 886,229$ 1,246,605$ 1,460,659$ 1,714,703$ 2,016,508$ 7,324,703$ Total Investments 2,412,540$ 2,838,934$ 1,187,128$ 1,187,128$ 755,008$ 8,380,736$ Net benefit (1,526,311)$ (1,592,329)$ 273,531$ 527,575$ 1,261,500$ (1,056,033)$
Savings Delayed 1 Year and Costs Increase 30% 2014 2015 2016 2017 2018 TotalTotal Savings 886,229$ 1,246,605$ 1,460,659$ 1,714,703$ 5,308,195$ Total Investments 2,412,540$ 2,838,934$ 1,187,128$ 1,187,128$ 755,008$ 8,380,736$ Net benefit (2,412,540)$ (1,952,704)$ 59,477$ 273,531$ 959,695$ (3,072,541)$
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Core Elements of a Business Case 14
Key Components of the Doculabs’ Business Case Modeling Framework
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Storage Calculator 15
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E-Discovery Calculator 16
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Interactive Calculators
• The two interactive calculator samples shown by James at the conference can be downloaded from www.doculabs.com:– Both are embedded in whitepapers discussing the variables
used and how the calculations work
• To use the interactive capabilities:– When you open the PDF files, you must “trust” the source to
enable the interactivity– Click on the buttons to perform calculations, change the
sliders to adjust variables, etc.
• Set up a briefing with a Doculabs consultant for a more detailed discussion
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Assumptions Description
Storage
• 500 terabytes of unstructured content contained in shared drives on Tier 1 storage
• 112.5 terabytes of email on Tier 1 storage• 62.5 terabytes of unstructured content in SharePoint on Tier 1 storage• Estimated 30% of email is duplicate content (7% of overall content)• Estimated over-retained content eligible for immediate purging is 20%
Growth • Shared drive volume growth at 35% per year• Email volume growth at 35% per year• SharePoint volume growth at 35% per year
Cost • Tier 1 storage costs of $4.00 per gigabyte per year • Tier 2 storage costs of $1.00 per gigabyte per year • Tier 3 storage costs of $0.25 per gigabyte per year • Storage costs decline by 10% per year over the next 3 years
Energy • Cost per kilowatt hour for storage power is $.09 (national average)• 1.55 lbs. of CO2 emissions per kilowatt hour
18Business Case Development – Storage
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Business Case Development – e-Discovery
Variable Description
Type of Event
• Standard Event – The most common type of litigation; e.g. small HR claims and/or other minor legal matters
• Rigorous Event – Less frequent than standard events; e.g. contractual, or intellectual property disputes
• Exhaustive Event – The least frequent yet the most costly type of litigation; e.g. class action lawsuits or U.S. Department of Justice actions
Categories and Numbers of Employees Involved
• Tier 1 – Employees involved in the matter and likely to possess unique and relevant information
• Tier 2 – Employees involved in the matter but likely to possess only redundant or non-relevant information
• Tier 3 – employees involved in some activities related to the matter, but highly unlikely to possess any relevant information
Data Storage per Employee
• Average email storage per employee (MB)• Average shared drive storage per employee (MB)• Average local storage per employee (MB)
Processing Costs – External Search Provider
• Processing cost per GB• Processing cost per email box
Costs of FTEs Involved in Discovery Effort
• Information Technology• Internal Legal Support• Internal Legal• External Legal• Third-party Review
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Summary Financial Metrics
Current Costs (3 yrs.)
Future Costs(3 yrs.)
Investment Savings(3 yrs.)
Storage via Archival
$11.5 $7.3 $2.1* $4.2
Discovery $19.5 $10.6 $2.1 * $4.7
Total $31.0 $17.9 $4.2 $8.9
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*The $4.2 million of investment shown in the e-Discovery calculator was split between the two benefit streams
Thank YouDoculabs, Inc.
(312) 433-7793
Contact: James Watson, PhD312-881-1620