How does the technology work? Digital asset management systems help firms create a digital warehouse that stores all company media and information, tagged by common names, or metadatainformation, say, about when a photo was shot, who shot it, where it was used and so forthaccessible at the click of a mouse and in a form that can be sent anywhere, anytime, and in seconds. That might not sound like much, but when used as part of a business strategy to cut costs and find ways to use in-house data to spawn new revenue opportunities, DAM can be worth millions.
But DAM isn't for everyone. Systems, whether created in-house or bought off the shelf, can be expensive. Paul Ritter, an analyst with The Yankee Group, a Boston-based technology research firm, says the software alone can run as high as $250,000, and companies may end up spending thousands more to install it, not to mention thousands more, still, to learn how to use it and fold it into an overall business strategy. "Some companies are charging three, four or even five times more on the professional services end than what the software costs," Ritter says, "because it's a complex installation and integration effort"especially if the information assets that a company needs to digitize are old, or could, in paper form, fill dozens of warehouses around the globe.
Building a DAM system also can create cultural challenges, depending on how many different names the company uses, across its various business units for a particular piece of information, or how many old and new technology formatsfrom 8-track tape to floppy disksthat information assets are stored on. Often, some companies find, some of the most valuable information can literally walk out the door every night. At Martha Stewart Living, for example, CIO Sheila Beauchesne says that at one time, the only clues about where some of the company's 93,000 assets could be found lay in the heads of a couple of veteran staffers.
It's no wonder, then, that a growing number of companies, pressed by ever-more urgent needs to cut costs and create new revenue opportunities, are starting to experiment with DAM. In a March 2003 CIO Insight survey of 501 CIOs, 36 percent said DAM wasn't yet on their radar screens, but some 18 percent said they've already deployed DAM, and another 15.8 percent said they're testing various DAM applications in pilot projects. Another 30 percent said they're tracking development. (See "Doing More with Less.") "The economy is forcing many companies, even those with strong products, to realize they can't sell their way out of the downturn and that, instead, they need to economize," says Michael Moon, CEO of GISTICS Inc., an Emeryville, Calif.-based tech research firm, "and economizing must become a permanent part of the business strategy." Adds AMR Research Inc. senior analyst Jim Murphy: "The industry jargon is 'We need to leverage our existing resources.' And from an IT perspective, DAM is about leveraging existing resources."
Consider MSO. In recent months, as efficiencies have been ordered internally across the company's various divisions, the company is using its two-year-old DAM project to help it weather the economic fallout from CEO Martha Stewart's December 2001 sale of her stake in ImClone Systems Inc. Even now, says Morningstar Inc. analyst T.K. MacKay, who tracks MSO for investors: "Advertisers are not committing to buying ad space in the company's flagship Martha Stewart Living magazine, and management is having difficulties negotiating with retailers to take over the lucrative merchandising business." Indeed, on April 30, MSO announced a loss of $4.51 million for the first quarter of 2003, its second consecutive quarterly loss since going public three years ago. The company's 2002 annual report quotes Stewart as saying the company won't be back in the black until 2004, or later. With the economic downturn, cost-cutting is now the recipe of the day at MSO, and CIO Beauchesne is already using DAM to cook up savings. Conceived in early 2001, not long before Stewart's ImClone woes, the DAM system aims to completely digitize the company's nearly 100,000 assetseverything from photographs of Martha's rose garden to her recipe for osso bucco and her advice for removing port wine from beige silk toile. The idea: Give the media giant the ability to more quickly, and cheaply, repurpose its vast storehouse of information for reuse, repackaging and resale. The strategy has not only cut dramatically the number of photo images the company needs to shoot and re-shoot, Beauchesne says, but can cut the cost of doing business throughout the company. "We have editors, researchers and photo archivers who have all seen productivity gains from this so far," says Beauchesne. In addition, the average story research time has been cut from six hours to 20 minutes. "We had people who were literally going back and flipping through old magazines to try to find some particular topic," says Beauchesne, "so everybody saw the DAM program as a big benefit right away." Considering the recent cutbacks in the company's Internet division alone40 of its 90 staff members were eliminated in a recent round of layoffsanalysts say the DAM program isn't only a "good thing," it's critical.
And now, spurred by the need for more cost-cutting and innovation, Beauchesne has served up an even bigger idea: This year, she's using DAM to help MSO execs plot a new business strategy that would use DAM to enable the bundling of various types of content into single packages that could be sold to individual customers, as customized content, for a feea project scheduled to get off the ground sometime this summer. Beauchesne says MSO is looking over customer data to get a sense of what types of premium content might sell best.
For now, though, the big win for many companies experimenting with the technology is speed and productivity gains from enhanced collaboration. At the WorldWide Retail Exchange, a 63-member consortium including Target, Campbell Soup Co., J.C. Penney Co. Inc., Royal Ahold N.V., Kmart Corp., Wegmans Food Markets Inc. and a variety of other food, textile and manufacturing companies can, for a fee, store their digital assets on the WWRE's secure DAM system. Using its program, members are cutting their marketing costs on advertising circulars and reaping a variety of other benefits. Members can use the one-year-old system not only to collaborate on joint marketing campaigns, but also to store and share its most commonly used digital assets, such as photographs of fabric, buttons, people and products. "A lot of textile and electronics companies have suppliers in the Far East, and DAM gives them the ability to share designs in real time across the globe," says product director Maureen Phillips-Houser, who runs the DAM program for WWRE.
In the textile business, for example, clothing manufacturers who supply Target and J.C. Penney and other WWRE members send people around the globe, from Paris to Australia, looking for new trends in color, fabric and style. Information is collected and sent back to the design team, which then begins the design process for, say, a new shirt. Today, that process is manualtrend managers have to physically send fabric samples and other data by mail. "You don't have any control over who gets these assets and what they do with them," says Phillips-Houser. Using WWRE's asset manager software, member retailers will still send out trend managers, but now those managers can go back to their hotel rooms at night, upload their images, check them into WWRE's central repository and share them with their design teams, in real time, anywhere in the world. WWRE also gives members access to more than 400 Adobe Illustrator files that show line drawings of a point of measure for, say, a clothing pattern, or how to measure a shoulder or cuff. "It makes data-sharing inside a company much easier, and data-sharing across retailers much easier, too," Phillips-Houser says. And the savings are undeniable. "The average cost to produce a single beauty shot is about $300, so if you capture 5,000 beauty shots over the course of a year and you're able to share that one image across the organization, you can save over a half-million dollars just in providing a single repository for all of your operating companies," she says.
This article was originally published on 05-01-2003
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