Taxonomy Strategies LLC
Making the Business Case for
Taxonomy
Joseph A. Busch
September 27, 2005
Copyright 2005 Taxonomy Strategies LLC. All rights reserved.
Agenda
 Taxonomy value propositions
 What the research says
 Example ROI
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Taxonomy issues, problems, and concerns
 Enormous volumes of information within organizations
 Diversity of assets
 Content and technology
 Complex and IT-oriented standards
 .NET, SOAP, WSDL, etc.
 Limited (if any) integration with applications:
 Search engines
 Information management applications
 Back office transaction-based systems
 Analytical systems
 …
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Fundamentals of taxonomy ROI
 Tagging content using a taxonomy is a cost, not a benefit.
 There is no benefit without exposing the tagged content
to users in some way that cuts costs or improves
revenues.
 Putting taxonomy into operation requires UI changes
and/or backend system changes, as well as data
changes.
 You need to determine those changes, and their costs, as
part of the ROI.
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Finding information should not be about
“Feeling Lucky”
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Finding information requires multiple approaches
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about 3,890,000 results
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2,199 results
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Agenda
 Taxonomy value propositions
 What the research says
 Example ROI
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Usability research—
Taxonomy compared to search results lists
 “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)
 “The category interface is superior to the list interface in
both subjective and objective measures.”
Hao Chen & Susan Dumais
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Taxonomy compared to search result lists
Median Search Time in
Seconds
Category is
36% faster
Category is
48% faster
140
120
100
80
60
40
20
0
Category
Source: Chen & Dumais
Taxonomy Strategies LLC The business of organized information
List
In top 20 results
Not in top 20 results
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Time saved—
Taxonomy compared to search result lists
 1 hour per day searching x 36% faster = 22 minutes each
day
 22 minutes x 250 working days per year = 5500 minutes
or 92 hours per year
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Time saved—
Taxonomy compared to search result lists
Benefit:
Service efficiency increase
Number of customer service calls/month
50,000
Average cost per call
$
Total call costs per year
$ 3,600,000
Increase in productivity by browsing
information
Service costs savings per year
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36%
$1,296,000
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Trusted advisers—
Taxonomy avoids costs
 “The amount of time wasted in futile searching for vital
information is enormous, leading to staggering costs …”
Sue Feldman,
 Poor classification costs a 10,000 user organization $10M
each year—about $1,000 per employee.
Jakob Nielsen, useit.com
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Knowledge workers spend up to 2.5 hours
each day looking for information …
Communicating
Searching
Creating
… But find what they are looking for only 40% of
the time.
Source: Kit Sims Taylor
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Knowledge workers spend more time re-creating
existing content than creating new content
Communicating
Recreating
existing
content
25%
Searching
Creating
new
content
8%
Source: Kit Sims Taylor (cited by Sue Feldman in her original article)
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Cost saved by not recreating content
Benefit:
Increase in productivity
Number of employees
100
Average employee salary
$
Employee costs per year
$5,000,000
Increase in productivity from not recreating content
Employee cost savings per year
Taxonomy Strategies LLC The business of organized information
50,000
25%
$1,250,000
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Agenda
 Taxonomy value propositions
 What the research says
 Example ROI
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Key Factors in ROI
 Breadth
 “How many people will metadata affect?”
 Repeatability
 “How many times a day will they use it?
 Cost/Benefit
 “Is this a costly effort with little or no benefits?”
Source: Todd Stephens, Dublin Core Global Corporate Circle
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Some common taxonomy ROI scenarios
 Customer support
 Cutting costs
 Increased sales
 Knowledge worker productivity
 Less time searching, more time working
 Avoiding re-creating information that already exists
 Catalog site
 Increased sales
 Increased productivity
 Compliance
 Avoiding penalties
 R&D productivity
 Faster time to market
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How to estimate costs—
Tagging
Taxonomy Facet
Hier?
Typical
CV Size
Time/
Value
(min)
Avg #
values /
Item
$ / Min
Cost/
Element
Audience
N
10
0.25
2
$
0.42
$
0.21
Content Type
N
20
0.25
1
$
0.42
$
0.11
Organizational Unit
Y
50
0.5
2
$
0.42
$
0.42
Products & Services
Y
500
1.5
4
$
0.42
$
2.52
Geographic Region
Y
100
0.5
2
$
0.42
$
0.42
Broad Topics
Y
400
2
4
$
0.42
$
3.36
1080
5
15
$
7.04
TOTALS
Inspired by: Ray Luoma, BAU Solutions
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How to estimate costs—
Assumptions
ASSUMPTIONS
Enterprise SW License
$ 100,000
Maintenance/Support
15%
SW Implementation
200%
Legacy Content Items
100,000
Content Growth Rate
15%
Tagging/Item
$
Enterprise Taxonomy
$ 100,000
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7.04
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How to estimate costs—
Total cost of ownership (TCO)
Description
Year 1
Year 2
Year 3
Year 4
Year 5
SW
Licenses
$
100,000
Maintenance
Implementation
$
$
15,000
$
15,000
$
15,000
$
15,000
$
30,000
$
30,000
$
30,000
$
30,000
$
105,525
$
105,525
$
105,525
$
105,525
$
15,000
$
15,000
$
15,000
$
15,000
$
165,525
$
165,525
$
165,525
$
165,525
200,000
App Tech Support
Tagging
Legacy Content
$
703,500
Ongoing
Taxonomy
Creation
$
100,000
Maintenance
TOTAL
$ 1,103,500
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Sample ROI Calculations
Description
Year 1
Year 2
Year 3
Year 4
Year 5
Costs
Software Licenses/
Maintenance
$
100,000
$
15,000
$
15,000
$
15,000
$
15,000
Implementation/Support
$
200,000
$
30,000
$
30,000
$
30,000
$
30,000
Taxonomy Creation/
Maintenance
$
100,000
$
15,000
$
15,000
$
15,000
$
15,000
Legacy/Ongoing Tagging
$
703,500
$ 105,525
$
105,525
$
105,525
$
105,525
Benefits
Productivity increases
$
-
$ 125,000
$ 1,250,000
$ 1,250,000
$ 1,250,000
Service efficiency gains
$
-
$ 129,600
$ 1,296,000
$ 1,296,000
$ 1,296,000
Yearly Net Benefits
$(1,103,500)
$
$ 2,380,475
$ 2,380,475
$ 2,380,475
Payback period
1.4
89,075
Years until Benefits = Costs
Inspired by: Todd Stephens, Dublin Core Global Corporate Circle
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Summary
 Taxonomy Value Propositions
 Find information faster
 Avoid recreating information that already exists
 Increase sales
 Avoid compliance penalties
 Improve R&D effectiveness
 Don’t sell “taxonomy”, sell the vision of what you want to
be able to do.
 Do the calculus (costs and benefits)
 Quantify the tangible & intangible benefits
 Quantify the total cost of ownership including maintenance & tagging
 Support your calculations with research
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Taxonomy Strategies LLC
Questions
Joseph A. Busch
+ 415-377-7912
jbusch@taxonomystrategies.com
http://ww.taxonomystrategies.com
September 27, 2005
Copyright 2005 Taxonomy Strategies LLC. All rights reserved.
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)
http://bailando.sims.berkeley.edu/papers/cacm02.pdf
Sue Feldman. "The high cost of not finding information." 13:3 KM
World (March 2004)
http://www.kmworld.com/publications/magazine/index.cfm?action=
readarticle&Article_ID=1725&Publication_ID=108
K.S. Taylor. "The brief reign of the knowledge worker," 1998.
http://online.bcc.ctc.edu/econ/kst/BriefReign/BRwebversion.htm.
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