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At a minimum to create an enterprise-wide content management system that has the ability to manage per-content transactions, it costs approximately $1.5M. SG&A at $200K and Marketing at $120K are all fixed as this is needed to launch the company. Variable costs are all defined on a per customer engagement model.
Next, benchmarks comparing the dominant competitors in the web content management arena who could easily move into the monetization market are analyzed in Table 2. Operating Leverage and its Implications
Table 2:
Financial Analysis of Enterprise Content Management Systems Competitors -- Industry benchmarks
Company Name
Operating Income - 2008
Net Income - 2008
Gross Margin % - 2008
Inventory Turnover - 2008
Net Profit Margin % - 2008
Revenue per Employee - 2008
ROA % (Net) - 2008
ROE % (Net) - 2008
ROI % (Operating) - 2008
Peer Avg: $6,427,989,800
Peer Avg: 4,946,464,400
Peer Avg: 73.79
Peer Avg: 279.36
Peer Avg: 19.28
Peer Avg: $426,696
Peer Avg: 11.88
Peer Avg: 22.38
Peer Avg: 26.18
Autonomy Corp Plc
$191,634,000
$131,749,000
87.18
26.18
10.36
12.41
17.35
EMC Corp. (MA)
$1,568,936,000
$1,345,567,000
55.27
7.74
9.05
$352,388.00
5.81
10.5
9.64
Microsoft Corporation
$22,492,000,000
$17,681,000,000
80.8
57.06
29.26
$662,142.00
25.94
52.34
66.58
Open Text Corp
$100,379,000
$53,006,000
67.92
7.31
3.83
9.11
10.89
Oracle Corp.
$7,787,000,000
$5,521,000,000
The cost structures of this enterprise are primarily variable as they are reliant on client engagements to make the entire business model work. There are important lessons to be learned however in the structure of the business. First the ability to reward customers for their loyalty of purchase, discounting comparable content is critical (Hall, 2010). As the business model has low leverage the TCO and ROI of the model needs to concentrate on recurring revenues (Ives, 2009) as opposed to a "gold rush" mentality (McCormick, 2009). Due to the low leverage of the model and the assumption that the proposed content management system will be delivered over SaaS platforms, there is the need to look at how the proposed application can allow for localized b4randing and unique positioning (Murphy, Scharl, 2007).
References
Hall, E.. (2010, March). Lessons for U.S. media from European paid-content plays. Advertising Age, 81(9), 10.
Ives, N.. (2009, August). Before you base your business plan on paid content, read this. Advertising Age, 80(27), 1,20.
Peter Kafka. (2002, April). Partial Pay Dirt. Forbes, 169(10), 090-091.
William H. Manz. (2000). Floating "free" in cyberspace: Law reviews in the Internet era. St. John's Law Review, 74(4), 1069-1086.
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