Don’t make the multi-million dollar mistake Microsoft did with video

Way back in 2007, a forward-thinking company created a video portal for employee-generated content for the purposes of knowledge sharing, training and engagement.

That company was Microsoft. The cost to create and maintain that system: $6.2 million, with 2.49 million in direct IT costs alone, over the first 3 years.  

They called it the Microsoft Academy portal, and they’ll tell you it was worth the cost – noting a 569% ROI and an annual cost avoidance of $13.9 million in their white paper detailing the success of the system. Difficult numbers to argue with.

But—that price tag is steep for most organizations. That’s especially true today, as video content management system (VCMS, or “enterprise YouTube”) technology has become readily sourced at a fraction of that cost, making it comparatively easy to stand up an internal video library, complete with features to enable recording, live streaming, editing, viewing, transcoding, reporting, and more.


Why Build A Business Video Library In The First Place?

Microsoft began the Academy portal project with several goals in mind:

  • To significantly decrease the number of expensive instructor-led, onsite training sessions and other live events, and to more easily share video from those live events that do take place;
  • To promote knowledge sharing by subject matter experts (where they also noted, “Almost everyone in your organization is a SME in one form or another”);
  • To increase the speed and convenience of that knowledge sharing, especially across disparate teams, thereby boosting the company’s competitive advantage;
  • To provide employees with a central repository for video content that can be viewed on demand;
  • To provide users with additional video-related functionality, including mobile uploading and content searching and subscribing;
  • To encourage a less hierarchical, more open company culture; and finally,
  • To encourage employee engagement by meeting three key needs people have, namely: sharing, learning and connecting.

With the goals above in mind, Microsoft began to develop the Academy portal to address the common needs of what it considered to be four key business scenarios:

  • Knowledge sharing by managers and other key decision makers;
  • Substitution for expensive onsite employee training;
  • Substitution for events both large and small, including conferences
  • Peer-to-peer knowledge sharing and learning.


Building Microsoft’s Enterprise YouTube

Building the Academy portal was a massive undertaking. Here’s a small slice of what was required:

  • Executive management approval, from a vast group of internal stakeholders
  • Custom software engineering, seeking to create some of the essentials of video management, including a single, enterprise-wide library, transcoding to make videos playable across devices, as well as the ability to tag and share individual videos
  • Staffing a video content portal team, with dedicated budget and employees to help create and manage video podcasts
  • Internal employee promotion and marketing, including loaning video cameras to employees and engaging a marketing agency to brand and promote the platform
  • Custom content management services, including dedicating staff to assist with content uploading, adding search tags, writing content descriptions and more.

Since then, Microsoft has incurred further expense for ongoing maintenance, continued technology enhancements, program and product management, and promotional efforts.


Was It Worth It? Microsoft Calculates ROI

Microsoft concludes its case study by discussing in detail the return on investment they’ve calculated for Academy portal, and the results are stunning. Broken out by category:

  • For substitution of classroom trainings, they calculated an ROI of 18x.
  • For substitution of smaller in-person events, ROI came in at 5x.
  • And for substitution of large events, ROI was 79x.

“Overall, the money spent on Academy over a 3-year lifespan was about $2.1 million per year, but the total costs saved and avoided per year were about $13.9 million. ROI for the 3-year period is estimated at 569%,” their case study reads.


Cost Comparison: What If Microsoft Had Bought Its VCMS?

For Microsoft, the benefits were worth the huge efforts, high price tag and lengthy process of building a video content management system.

But what if they had just sourced one instead?

First, Microsoft would have saved money.

Microsoft attributes 40% of the Academy portal’s $6.2 million price tag—$2.49 million in total—to direct IT-related costs, including hardware and software, management, hosting, support, and implementation. The rest is chalked up to overhead and operating costs, including program and account managers, business operations, and marketing promotions.

For a company like Microsoft—an enormous global organization rolling out a VCMS company-wide all at once—and based on their 3-year Academy portal adoption rates, an on-premises, sourced VCMS like Panopto would amount to 7-figure savings. Many organizations—even large organizations—would see costs that are a small fraction of what Microsoft paid.

Second, Microsoft would have gotten a more advanced video platform.

Not only would Microsoft had spent less to source their VCMS, they’d have gotten virtually instant access to a complete, fully-functional VCMS that already does everything they had scoped and much more—without the multi-year setup process.

So when it comes to enabling video across your organization, what’s better: Build or Buy?

For a complete discussion, cost and feature comparisons, and the answer to that question, download our latest white paper, “Your Corporate YouTube: Build or Buy?” today.