Cruce Saunders: Content as a Valuable Enterprise Asset – Episode 193

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Content is a precious business asset and should be treated as such in enterprise accounting.

Cruce Saunders has been making the case for content as a financial asset for many years, arguing that much of it should be accounted for like the durable machinery that powers a factory, not like an ephemeral one-time business expense.

He still sees a lot of work ahead, but Cruce is more hopeful lately that coordinated efforts by content leaders can get content out of the expense category and into an asset category on the corporate balance sheet.

We talked about:

• his work at [A], a consultancy that focuses on intelligent content supply chains for large enterprises
• the accounting principles that show why content should be viewed as an asset on a balance sheet, not an expense on a profit and loss statement
• the kinds of content that should be treated as enterprise assets: documentation, support content, durable marketing content, and other types of content that deliver value over the long term
• how to calculate the value of content assets and to track their performance
• how the absence of financial-industry standards make it difficult to capitalize some content assets
• the first step in showing the value of content: building an ROI framework
• the unique value of content models in transforming content from an expense item to a valuable asset
• the benefits of the service-oriented architectures that well-modeled content permits
• the need for content-industry leaders to come together around the goal of ensconcing content as an enterprise asset

Cruce’s bio

Cruce Saunders is the Founder and principal at [A], simplea.com. [A] serves organizations utilizing headless, composable content and generative AI to craft next generation content supply chains and publishing architecture. Clients include complex enterprise publishers as well as growing mid-market companies.

As a thought leader, Cruce hosts the Towards a Smarter World podcast and The Invisible World of Content YouTube series. He has been a keynote speaker around the world at conferences and an invited speaker at enterprises in the US, Europe, and Asia. Topics regularly discussed in these series and talks include AI, content intelligence, content operations, content engineering, personalization, governance, content structural and semantic standards, and enterprise transformation.

Cruce also founded a product team that builds tools to support the content data modeling needs. This group has built the Schematica suite of tools for content interoperability, including CoreModels, RealContent, and ContentFlow.

Connect with Cruce online

• LinkedIn
• [A] simplea.com
• Towards a Smarter World podcast
• The Invisible World of Content YouTube series
• Schematica

Video

Here’s the video version of our conversation:

Podcast intro transcript

This is the Content Strategy Insights podcast, episode number 193. Anyone who works with content understands its value. But getting business executives and financial standards bodies to treat content like the valuable asset that it is has been a challenge. Cruce Saunders has advanced the idea of content as a precious business asset for years. There’s still lots to do, but he’s hopeful now that coordinated efforts by content leaders might get content out of the expense category and onto the corporate balance sheet, where it belongs.

Interview transcript

Larry:
Hi everyone. Welcome to episode number 193 of the Content Strategy Insights podcast. I am really delighted today to welcome to the show Cruce Saunders. Cruce is the principal and founder at [A], which you can find at simplea.com. He also does this brilliant website (actually a podcast; I misspoke) called Towards a Smarter World. So welcome Cruce. Tell the folks a little bit more about what you’re up to these days.

Cruce:
Hey, Larry, it’s great to be here. And it’s amazing, it’s taken this long for us to finally get together in podcast form, even though we’ve had a chance to know each other over the years and evolve with the industry together. [A] is the content intelligence service. We’ve been building and managing content supply chains for some of the largest enterprise organizations for some years and just celebrated our 12th year in existence. But also doing a lot of content operations, outsourcing for organizations, especially mid-market organizations that need some additional full cycle help. So we have a team upwards of 25 folks, and many of them are working in the back office of the content operations of businesses.

Cruce:
And so we do content engineering, content operations, and content strategy, which of course, as you know, has got lots of different permutations and definitions. But mostly working with content that enterprises use as an asset to create value across a large portfolio of channels and systems. And I really think that’s really at the essence of what this next world is evolving into, is using data and content assets to create and manage value across every aspect of an enterprise and all the interactions with customers with AI, or with humans or with both. It’s an important and valuable asset at the essence of an organization’s ability to do what it does in the world.

Larry:
Yeah. As you say that, I’m like, “Well, yeah, obviously.” And yet there are many organizations that still don’t value content as an asset. I guess first let’s back up a little bit. I don’t know how many of my listeners have studied finance and accounting, but to talk about the difference between assets and costs and the balance sheet versus a P&L. Can you talk to us a little bit about the difference between those and maybe set up how we need to make the transition from the way it’s often thought about now to thinking about content more as an asset?

Cruce:
Well, for most organizations, content operations tend to become essentially expenses, and content itself then gets classified into this expense of creating, for example, marketing campaigns within the quarter. And so there’s budget and there’s spend within that quarter in order to create content artifacts of various kinds. Interestingly, even durable content assets like for example, technical documentation that is included along with a company’s core product, for example, or it’s essential to the delivery of that product, even those long-term content assets are being classified as expenses. So an expense is basically, once it’s spent, the organization never needs to account for it again, it’s gone. When you’re dealing with a spend on a balance sheet, you’re dealing with a capital expense, you’re purchasing something that is going to have a durable and ongoing value, it’s going to deliver value over multiple quarters, and therefore it is capitalized and then depreciated over time.

Cruce:
So if you buy, for example, on a farm, you buy a backhoe, the backhoe is not something that you expense in one quarter because it’s going to be working and doing work for you for many years. And so you put it on your balance sheet and you depreciate it over time, which means you reduce its value by its useful life over time. And the IRS in the US has lots of different rules for what allows you to depreciate assets, but every accounting regime has this same dichotomy between things that are expenses and things that are capital investments.

Larry:
Yeah. Hey, one thing… One Of the main sources for my original thinking about this is a blog post you did or an article you did on the Simple [A] website, I think almost 10 years ago now, about content alchemy, about turning these content artifacts and things into endurable assets. And one of the examples used in that article is, the perception of the lack of value in content as it used to just be a fish wrapper. After you read the newspaper, you wrapped up the fish, you put it in the fridge, that was all it was. But that doesn’t really apply these days. What’s the transformation that’s ensued that makes this more valuable than fish wrappers?

Cruce:
Yeah. Well, I mean, when you think about it, content is, and data, are at the very, very root of all value and enterprise ends up delivering to customers. It’s the basis for customer experience, for sales, for support. Very often content is a part of the product in some way, shape or form. We’ve worked for financial services firms where they say, “We’re basically content and code. That’s what we do.” And so interestingly, the code gets capitalized, but the content does not. And so really, a lot of organizations have this strange relationship with some of this valuable material, where they are treating it like a fish wrapper when it is in fact doing work. And that work is something that’s lasting over time. That support article is serving customers for potentially years and it’s being updated and maintained like you’d update and maintain a piece of equipment. In the old world where everything was very physical, assets were very tangible and seeable as things. In this world, especially the AI mediated world, there’s a perception that the content is ephemeral and it goes away.

Cruce:
But as we know in enterprise content operations and internal management, we’re really dealing with an ongoing thing that’s very real. It’s the webpages, it’s the mobile apps, it’s the advertisements, it’s the emails. These things are all being created out of a base of knowledge that the organization maintains and curates and passes on at great expense. The knowledge management industry has a great amount of rigor in the application of corporate knowledge into enterprise channels of service, but we don’t maintain a accounting relationship with those assets the same way we do a management relationship with content assets. And that’s the change I think needs to eventually happen in our industry and all the industries that really rely on content and data as the basis of value.

Larry:
That’s interesting. You just mentioned knowledge management, now I’m thinking that, I don’t know how that’s accounted for, but there’s a perception in many enterprises that like, “Whoa, these people know a lot. We better capture it and reuse it.” And most if not all of that knowledge that’s captured from the enterprise is expressed as content or can be expressed as content. So that seems like, is that a possible inroad into getting enterprise folks? I guess we’re mostly talking about the C-suite and particularly maybe the CFO to start thinking about content as an asset.

Cruce:
I believe that the biggest change will happen when the FASB rules, at least in the United States, the Federal Accounting Standards Board, when those rules for being able to recognize content assets are explicitly extended to include business content in addition to content that we all recognize as assets already like movies. If you’re Netflix for example, or you’re Disney, your balance sheet is very heavy with content already, because you produce durable assets that people then license and pay you for. But when you look at content assets, they’re creating value and sometimes people are paying for that content directly, like training. So the training asset should be capitalized because if you’re making money on it, that’s very clearly an exchange for an asset.

Cruce:
Software is already seen as an intangible intellectual property that’s an asset. But I believe business content of all kinds, including documentation, content support content, even long durable value marketing content should be capitalized to the extent to which it is able to provide ongoing value. So it is a fish wrapper if it’s today’s news, and tomorrow nobody’s going to read it again. So if you’re typing in ephemeral news, then that is an expense because you’re not going to get any ongoing value from that. If you deprecate or take that article off the site and it’s not generating anything in terms of inbound traffic, then it doesn’t need to be capitalized if it’s short duration. But if you’re dealing with content assets that have a longer lifespan, a shelf life, they’re going to be in the corporate inventory for a while and they’ll be producing some sort of value, even if it’s displacing the cost of getting new eyeballs to your site by making sure that instead of Google being paid per click, you’ve got enough organic content that it’s bringing in actual new visitors to your website.

Cruce:
That right there is an example of a cost displacement value add that has durable value. And if that’s happening over a period of time, you can actually calculate how much value a given article has contributed in terms of the number of new site originations happening on that asset. And then what happens afterwards, if there’s a value to, for example, converting somebody from one phase of the funnel to another phase, like they’ve anonymized themselves, what is the value of that anonymization?

Cruce:
And if you can increment the value of that asset with the value of that behavior, you can actually track, begin to track on a per content item basis the value of your content asset portfolio. So you can look at it as a portfolio of assets that’s performing work in the world, and you need to know, well, what is the work you want that asset to do and how much is that worth? And if you can calculate those things, you can begin to calculate a monetary value for that asset. And if the cost to produce it is lower than the value that’s being added by that asset, you can see your return on investment on a per asset basis as well. Very, very cool stuff. The world of AI starts to get even more interesting.

Larry:
Yeah, no kidding. Because well, I’ll set that aside for a minute, because just that notion of having metrics and mechanisms in place to identify and measure the value of individual content assets, it just drives me nuts that most of what I’ve seen in my experience has been like webpage analytics like Google Analytics and things like that where there’s so much more going on behind the scenes, especially in composable content where you’re putting things together. And it sounds like from the way you’re talking that you’ve actually figured out a way to look at things on a per-item basis and begin to discern their value. Can you talk a little bit, is that something you’ve actually done for your clients?

Cruce:
We’ve built metadata regimes that allow for the calculation of value on a per-asset basis, but we’ve still found a hesitance to invest in the aggregation of that time, real time data. For example, I believe along with, for example, JavaScript triggers that when an event happens, you can automatically trigger the incrementing of value to a given asset. So you can say, “Okay, somebody converted on this asset, we just got a form filled, therefore update the metadata associated with that buy, whatever that conversion is worth.” Some organizations that might be $10,000 and some organizations that might be 25 cents and you might get thousands of them every hour. So you never know what the dynamics are, depends on the organizational environment. We’ve created the infrastructure with our content models that allows for that, but we haven’t seen a lot of follow through on the investment to maintain that because there’s no ability to capitalize the asset yet according to the FASB rules. Creative allocations would say that there are organizations in a position to be able to make those designations of capitalization today.

Cruce:
That’s defensible, just on the basis of other intangible intellectual property. But it’s not popularized within corporate America. And I believe that the big seed shift will happen where this kind of accounting on a per content asset level will be necessary and incentivized once we can actually see more organizations having their CFOs look at content assets in a whole new way. And the same is true of data assets. Organizations that have customer data have something incredibly valuable. And as AI starts to become more and more dependent on large amounts of data and creates these massive competitive differentials and economic advantages, the underlying data also needs to be valued as an asset. So I believe we’re right at the cusp of when this is going to become obvious to more and more people that we need to go ahead and look seriously at how to account for capitalizing content and data asset.

Larry:
Yeah, you’re making me more hopeful now when you talk about, because there’s so much fuss around data right now, and I think even back to pretty early on, Jeff Bezos, I don’t know how much of a true visionary he was, but pretty early on he realized that the customer value, the real value of the company was in the customer data he was collecting and what he could do with that. And you’ve mentioned that people do value IP, that I assume at Netflix that catalog or something must be on their balance sheet, not just not accounted for as an expense.

Larry:
There’s also the old notion in the merger and acquisitions world of goodwill. That you’ll pay more for a company than the books might indicate just because you know there’s something else there. So it seems like there’s a lot of precedent. And you just mentioned what you think the mechanisms might be, but do you have any success stories or I guess, something ideally a how-to manual for anybody in a content strategy role who can influence this stuff? But any tips for how to highlight for other people this value that we’re kind of noodling on here?

Cruce:
Yeah, I mean, what we’ve been able to do with clients that are in the advocacy roles that are making changes within content portfolios is just build an ROI framework for the assets under their management. And so that’s really a good first step is, if you’re justifying, for example, the investment in building an upgraded content supply chain, you’re going to need to be able to justify that on the basis of the assets that are flowing through it, what value they’re generating. So it’s important to build a framework and it uses the same kind of criteria we’ve talked about so far, which is what is our overall content strategy aimed at achieving in terms of business value? Now, let’s break that down in terms of the assets that are then created to drive that business value. What are our content types, and then what are the individual functions that each content type is performing?

Cruce:
So if I have a white paper, what is it doing? If I’ve got an e-commerce a catalog page, what work is it doing? It’s selling my product. If I got a support article, what is the work it’s doing? It’s deflecting a call from coming into our call centers at very expensive rate. So what is the value of that deflection? How can I begin to understand what the influence of my articles are on that deflection? What are the content quality and behavior metrics that we can leverage in order to understand that the health and effectiveness of our asset portfolio? Putting that kind of thinking together is really important for executive sponsorship of large scale content initiatives. We’ve seen it very successfully employed at a number of organizations.

Cruce:
I wish we had seen it then provide more value at a C level on an ongoing basis. We find that these things are used but then often end up being somebody’s expense line item at the end of the day. And that’s the part I continue to be hopeful will change in this coming period of time. I’ve been hopeful about it for a decade though, but I think we’re right about there now. I think we’re getting riper and riper and readier and readier to go ahead and capitalize content assets and data assets.

Larry:
Yeah, no, and I think, like I said before, maybe the current emphasis on the value of data and the emergence of data products and all this data supply chains and all this stuff related to AI might do that. But hey, I want to touch on one thing I know it’s a subject near to dear to both of our hearts. You mentioned part of that accounting is the kind of content types, and you mentioned earlier in passing the content model. To me, it seems like a content model could be one of these other enterprise assets, the model itself. But tell me a little bit about how you see a content model fitting into this helping promote the value of content.

Cruce:
Very astute and yes, yes, yes, yes, Larry. That is probably the most durable and most impactful aspect of a content portfolio, is the underlying models that actually are applied across the entire content supply chain. I believe content models have an incredible value. We’ve seen it in lots and lots of settings. Without managing the models, you are always managing something disposable. Because you’re putting all of your definitions for your content in the content itself and then shipping it off without being able to share it with any other content asset. So this happens all the time in enterprises that decide to have separate CMS platforms for every single department, and each one has their own content repositories, and all of them are dealing with similar topics. For example, the same product is being discussed between support and pre-sales, but they don’t share a model, and therefore none of that information can be reused or shared.

Cruce:
When you are explicit and define your model, make it a thing, make it a process as part of your overall content operations, you have content engineer processes and folks that help to support the development and management of those models, you now have somebody paying attention to the plumbing of your enterprise. And so it’s like the schematics for your electrical and plumbing systems that apply to each one of your factories and just being able to use those schematics means you don’t have to reinvent the wheel every time you build a new factory, or every time you need to expand or connect to that factory, you’ve got something you can manage and maintain. So that’s a valuable thing. And it creates affordability, reusability, all the things that every organization that desires to scale needs. This is actually at the essence of what Jeff Bezos and Amazon created so well, was a service-oriented architecture with APIs underpinning every bit of interoperable business process that happens at Amazon.

Cruce:
So new businesses can spawn and exchange information because everybody knows what a customer record looks like, and there’s a standardized API, there’s a standardized model, and it’s managed. When you have a standardized model, you can manage all of your content sources, all of your data sources, and in this new world of AI, you now have a reference for what structure looks like to provide to the AI and say, “Hey, this is what content structure is and this is what we’re going to do with it on the output.” And then you can have the LLMs actually help you move content from format to format. We’re working on that a lot, that’s one of the things I’m spending my most amount of my time on right now, is finding a way to get schemas to be explicit.

Cruce:
So we’ve created a software application for that – Core Models – in which we are allowing organizations to manage the model as a thing and then provide that model out to large language models and AI or out to systems via a JSON export and other XML exports and other sorts of permutations of the schema. And so I’m a big fan of this idea that models are much more, models are much more than specs that happen one time. They’re living, breathing parts of an organization. And in that way, they also can be part of a capitalized set of content operations that an enterprise uses to drive value.

Larry:
Yeah. And as you’re talking, I’m thinking it’s not a big leap from a model and a schema and all of a sudden you got a knowledge graph and an ontological understanding of your enterprise content. I assume that might be in your bailiwick as well.

Cruce:
Well, graphs, so this is getting a little esoteric, but at risk of doing that, content models are not boxes and arrows on a Visio diagram or on some sort of visual interface. That is just one output form. But underneath it there represent content types and elements and attributes and various collections of these things that have relationship to other content types, elements, attributes. In that way, it is very much a graph. It is very much an ontological relationship between all the nodes in any given schema place, schema environment. So I think of it as a schema graph. So when we look at content modeling, we’re not looking at modeling like a spreadsheet in a singular application, we’re looking at the model as something that needs to be mapped into a larger set of applications.

Cruce:
And therefore, because it’s about the mappings, it becomes, it can’t help but become a graph. And this is why I believe all the folks that are moving towards knowledge graphs are heading in the absolute right direction, especially as AIs are starting to rely more and more on graph knowledge structures as a way to understand and store a permanent sense of understanding, or at least a dependable set of understanding about what truth is in an organization as opposed to trying to decipher unstructured text.

Larry:
Yep. Thanks. No, sorry for dragging. I just have to, that’s an interest of mine. I had to go down that rabbit hole. But hey Chris, I can’t believe it. We’re coming up close to time already. But before we wrap, is there anything last? Anything you want to revisit from the conversation or just want to make sure you share before we wrap up?

Cruce:
Well, content is an asset. If you’re treating it as an asset, it’s good to start making the case for actually recognizing it on the balance sheet of an organization. Anyone that is interested in moving in that direction, please reach out. I’m really keen to work with an industry group on this topic because I believe it will be the sea change that helps shift all the content leaders roles within organizations towards the positions they should be, which is curators and managers of durable enterprise value that are at the highest level of impact on an organization. Not the part of the equation where it’s the, “Oh yeah, we need content to fill in this box on this website that somebody decided we needed.” But we’re delivering content asset value that’s durable as part of an enterprise strategy.

Cruce:
And I believe that ultimately an association or industry group will need to come together around this. And I’m looking forward to having conversations with those in the industry that share that goal, that aim as we put together a bigger case for the larger market so that we can collect our efforts into something that will really take the world in a new direction with the way we work with knowledge towards durability, interoperability, value, and interconnection in a new set of coherence that we’re reaching for as a society that I think we can really impact through our leadership.

Larry:
Well, I’m inspired. I’ll just say that. But hey, and if others are and they want to connect with you, what’s the best way to connect to online Cruce?

Cruce:
Check out LinkedIn. I’m on LinkedIn. I’m pretty easy to find there, and that’s a great place to touch base as a first step.

Larry:
Excellent. I’ll put that in the show notes as well. Thank you so much, Cruce.

Cruce:
Thanks, Larry. Thanks everyone.