The ROI of Design Systems: Executive Summary
Managing the complexity of a large digital portfolio is never easy and this is particularly true for organizations that must be always on-time and always on-brand.
But for digital leaders, managing complexity is only part of the challenge. The other is sustainable ROI. As global instability and rampant inflation add to the headwinds created by the pandemic, a financially sustainable approach to product development has never been more urgent.
Are Design Systems the solution? For many organizations, the answer is yes.
To help determine if Design Systems are right for your organization, we’ve outlined both the business case and the key inputs you need to calculate ROI. We’ve also included a pragmatic approach to the funding and the procurement process. If you’re considering an investment in Design Systems, this overview provides everything you need to make the case and obtain funding.
To determine the benefits that a Design System can offer you, we're looking the quantify improvements in the following areas:
- Brand Work
- Customer Experience
- Employee Experience
Using the above, we can give a more accurate assessment of how a Design System can help you!
The ROI of Design Systems: The Business Case
The Business Case
Great ideas delivered sustainably at speed and scale win markets. Whether your goal is to win an existing category or to invent an entirely new one, the research is clear - first movers dominate. But to be a first mover and sustainably deliver at scale, Design Systems are necessary.
To understand why, our business case examines how Design Systems power the three domains of modern Experience Design.
As your organization scales, maintaining brand fidelity across many digital channels can be challenging. Oftentimes, these challenges are the result of brand usage guidelines that are out of date or ill-suited for use within omnichannel digital environments.
An effective Design System addresses these problems by streamlining your organization's Brand Work. Brand Work consists of Brand Remediation and Brand Refreshing.
For the sake of simplicity, we'll merge these two categories into one calculation referred to as Brand Work Costs at the bottom of this chapter. If you'd like an even more in-depth explanation of the differences, you can refer
Remediation of off-brand experiences at scale typically requires spending valuable time and resources on bugs rather than new and improved experiences. To address this, and to avoid future harm to the brand, Design Systems ensure brand consistency using a systematic approach.
Design Systems support progressive elaboration. They also provide organizations with a pragmatic way to respond to change, evolve their brand, and propagate those changes en masse. As depicted in the diagram below, the process of deploying portfolio-wide brand updates across multiple product teams can be managed in a systematic way through a versioning and automation process.
Ultimately, from a branding perspective, the business case for Design Systems boils down to protecting the brand while gaining efficiencies to:
- Create a single source of truth and maintain brand fidelity across all digital touchpoints
- Reduce off-brand remediation effort, i.e. rework and churn
- Enable the evolution, automation and propagation of renewed brand assets en masse
Having clarified the business need from a brand perspective, our next step involves estimating the cost savings we believe Design Systems create through improved brand consistency and automation. To generate those estimates, we’ve included the following calculator, which combines the costs of work done on Brand Remediation and Brand Refreshing.
Cost of Brand Work
How did we calculate total cost?
We take a simple calculation of how much your overhead is for your technical employees. We multiply the number of technical staff by their average total compensation (which is their work benefits and their salary).
Next, we multiply that number by how much of your employees' total time working is spent on brand rework that can be reduced. Based on our research, this number can be anywhere between 2%-4%.
That number may sound low, but our research is based on two general principles:
- Not all of your employees' time will be spent specifically on brand rework
- To a certain degree, there will always be unforeseen brand rework that occurs that is unplanned. Design Systems help reduce the time it takes to tackle this unplanned rework and some avoidable reworks
Finally, the savings are based on a simple 20% reduction in time spent on rework. This is due to an industry standard of 20% UI coverage by a design system. In other words, you can expect to spend about 20% less time re-treading old ground if you use a design system.
Design Systems Help Your Brand Evolve
Managing brand assets and ensuring consistency across a large digital portfolio can be arduous without the right systems in place. Design Systems can significantly reduce the cost of remediating off-brand experiences, as well as the effort required to deploy a new brand expression or experience across your digital properties.
Design Systems Can Help Your Customer Experience Constantly Evolve
For many customers today, a great product and service may get their attention, but it will not win their loyalty. Instead, what consumers really want for their loyalty are experiences - the more personalized, the more memorable, the better.
But for many organizations, earning that loyalty means creating customer experiences that are on par with those of leading CX organizations like Apple, Adobe and Google. To meet that bar, your organization must continuously improve on two fronts:
The first, is the interaction experience, which anchors on three key questions:
- Is it easy to connect with the company?
- Does it seem like the company knows me?
- Does this experience match other best-in-class services I use?
The second is the product experience and your customer’s perception of:
- How well the product works
- How easy it is to use
- And most importantly, whether it made life better in some meaningful way
On this point, it’s important to note that customer perceptions of what good looks like and what good feels like will continue to evolve with technology acceleration and emergent CX trends. To better manage this continuous evolution, modern organizations use Design Systems to test new experiences while they simultaneously refine what exists now.
To power this self-sustaining approach, Design Systems provide organizations with the two key capabilities that every organization operating digital at scale needs to stay ahead of an evolving CX curve.
The first capability is speed. In our experience, Design Systems strongly correlate with the Pareto Principle, aka the 80/20 rule. As depicted in the diagram below, delivery times typically improve on the order of 40 to 80% as Design Systems reach 20% UI coverage.
The second capability is adaptability. As depicted below, Design Systems create the atomic design elements product teams need to continuously adapt the customer experience as technology and consumer trends change without reinventing the wheel.
Accordingly, these efficiency gains can be reinvested into new revenue-generating business outcomes. By reducing the cost of production, and improving time to market, Design Systems provide product teams with the capability to simultaneously test multiple experiences at the same time. In this way, teams can learn quickly what works and what doesn’t rather than going all-in on one solution.
In summary, from a customer experience perspective, we believe the business need is clear. Best in class customer experiences powered by Design Systems are the only way to:
- Consistently improve both interaction and product experience
- Speed time to market by removing 80% of the effort (the Pareto Principle)
- Reinvest efficiency gains into new revenue-generating opportunities
We've provided a calculator to estimate the potential benefits that a Design System can offer you mentioned above.
Potential Revenue with Time Saved
How did we calculate the new delivery time?
The new delivery time is a simple multiplication of your current delivery time and the time reduction provided from a Design System
How did we calculate the experimentation value? What is it?
Firstly, an experiment in this context is considered any initiative your company takes to improve an existing product or service. The experimentation value is how much revenue these experiments provide your company in total.
We calculate the total experimentation value by multiplying the following:
- How many experiments your company will conduct across all products and services you provide
- The success rate of all the experiments your company conducts (we use a conservative estimate of about 33%)
- How much of an improvement a successful experiment provides to your bottom line (we estimate about a 1% improvement in your overall revenue)
- Your company's total revenue
How did we calculate revenue using time saved?
To clarify, this value is the additional revenue created with the time that a Design System saves.
Using the total experimentation value, we divide this number by 52 to get the weekly experimentation value. Next, we multiply this by the amount of time saved to get the additional revenue.
In other words, this calculation is trying to quantify to following: "If I spent my time savings on more revenue improving experiments, how much more revenue could my company generate?"
Design Systems Give Your Teams More Time
When product teams are chronically overloaded with work, finding enough time and capacity to improve CX, test new experiences and generate new cash flows can be daunting. As the data in the calculations prove, Design Systems have the potential to regain the time and capacity your organization needs to develop a best-in-class CX practice.
Design Systems Can Streamline Your Employee Experience
Employee experience matters. If you want great CX, pay attention to EX.
Design Systems improve the employee experience by automating or at least reducing common product development challenges that create excessive wait times and lead to increased multi-tasking and decreased motivation.
Reducing the wait time your technical employees suffer through relieviates this problem and lets your employees produce more.
In essence, Design Systems help teams pull value whenever they need it, exactly how they need it, so that work starts and finishes sooner, with less wait time in what is often called a single-piece flow.
For employees and product teams, working in a single-piece flow has many advantages. As shown in the diagram above, a single-piece flow eliminates the need to multitask which in turn reduces the harmful effects of continuous context switching on quality and morale. Similarly, for product leaders, operating in a single-piece flow enables the consistency needed to reliably meet commitments, and accelerate the feedback loops that improve time to learning.
Naturally, these benefits extend to the organization as well. In our experience, when employees and teams attain focus and flow, overall throughput, or the rate at which an organization monetizes its products and services will also improve. As shown in the diagram below, improving the employee experience to increase throughput can have a big impact on an organization's top line.
Throughput Improvement with DS
Design Systems can Increase Productivity
High-performing organizations understand that improving the employee experience provides a lot of upside. Qualitatively, happier employees are easier to attract and retain. Quantitatively, improved productivity and throughput are the keys to increasing revenue.
The ROI of Design Systems: Calculating the ROI and Payback Period
What is the Total Benefit That a Design System Could Give Me?
Now to bring it all together, we'll use the values from the calculators in the previous chapters to determine how much a Design System can truly benefit your organization. We'll then compare these benefits with the costs you might incur.
Calculating the Investment Costs
When estimating the costs, choose completeness over accuracy. In other words, start with the most comprehensive list of costs you can think of first. As you learn more, you can always adjust the accuracy of your estimates as you work through the process.
To help, we’ve included a few ballpark estimates of costs you might incur below. Use them as a placeholder, or replace them with your own. Input the estimated sum to complete your calculation.
- Consulting (assessment, roadmap, etc.) - $400,000
- New Software Licenses - $100,000
- Vendors - $1,500,000
- Training Workshops and Support - $100,000
Total Value Gained and ROI
Now that we’ve clarified how to calculate the ROI and the Payback Period, the next step is to think about the implementation. Where do we go from here and how do you get stakeholders to buy in?