Forrester Total Economic Impact Study

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Forrester Total Economic Impact Study

  1. 1. Forrester TEI StudyPaul HamptonDirector of Product Marketing
  2. 2. Maidenhead, UK Global Headquarters Atlanta, US HeadquartersAlfresco is now the largest open sourcecontent management company in the world.Founded in 2005, with offices in London & AtlantaOver 3.5 million community downloads250+ global channel partners2,500 customers in 55 countries, including…
  3. 3. The Document ManagementAlfresco Platform Records Management Web Content Services Enterprise Collaboration Open Source Platform
  4. 4. Government Finance Media & Entertainment Software RetailTravel & Logistics Manufacturing Education
  5. 5. The Total Economic Impact™ of AlfrescoEnterprise Content Management SolutionStephen Powers – Principal Analyst & Research DirectorSebastian Selhorst –TEI Consultant1st of February 20125 © 2011 Forrester Research, Inc. Reproduction Prohibited Research, Inc. Reproduction Prohibited © 2009 Forrester
  6. 6. Agenda§  ECM Market Overview§  What Is Total Economic Impact (TEI)?§  Study overview§  Key findings from the case study –  Costs –  Benefits –  Risk adjustments§  Conclusions and ROI6 © 2011 Forrester Research, Inc. Reproduction Prohibited
  7. 7. What is ECM? Software used by an enterprise to manage, retain, and put to use unstructured information such as office documents, document images, Web content, rich media, corporate records, and computer output7 © 2011 Forrester Research, Inc. Reproduction Prohibited
  8. 8. Organizations without ECM8 © 2011 Forrester Research, Inc. Reproduction Prohibited
  9. 9. Organizations recognize the importance of ECM, andcontinue to invest “Over the next 12 months, how will your deployments or usage of ECM change? Will the number of deployments or usage . . . ?” Remain the same 20% Be scaled back 4% Dont know 5% Increase 71% Base: 252 ECM decision-makers Source: Forrester’s October 2011 Global Enterprise Content Management Online Survey9 © 2011 Forrester Research, Inc. Reproduction Prohibited
  10. 10. ECM can help organize your content throughout it’slifecycle Create Publish Workflow Content Collaboration Repository Promote Review/ (Records Approve Management) Version Archive Approve Workflow Revise Destroy10 © 2011 Forrester Research, Inc. Reproduction Prohibited
  11. 11. Drivers for ECM selection §  Compliance needs §  Archiving §  Better content search §  Policy instrumentation and management across multiple repositories §  eDiscovery support, proactive support models §  Moving employees off of file systems and sharing documents through email §  Collaboration and Social11 © 2011 Forrester Research, Inc. Reproduction Prohibited
  12. 12. Content comes in three “flavors” Source: “Plan Your ECM Strategy For Business, Persuasive, Transactional, And Foundational Needs”12 © 2011 Forrester Research, Inc. Reproduction Prohibited
  13. 13. ECM technologies support each part of the content spectrum Source: “Plan Your ECM Strategy For Business, Persuasive, Transactional, And Foundational Needs”13 © 2011 Forrester Research, Inc. Reproduction Prohibited
  14. 14. ECM suites are still an ideal; multiple systems support different content types “How many enterprise content management solutions are currently utilized by your firm?” Two 21% Three or more 42% One 31% Zero 6% Base: 252 ECM decision-makers Source: Forrester’s October 2011 Global Enterprise Content Management Online Survey14 © 2011 Forrester Research, Inc. Reproduction Prohibited
  15. 15. Content-centric technologies within the ECM functionality sets Source: “Plan Your ECM Strategy For Business, Persuasive, Transactional, And Foundational Needs”15 © 2011 Forrester Research, Inc. Reproduction Prohibited
  16. 16. Content-centric technologies within the ECM functionality sets (cont.) Source: “Plan Your ECM Strategy For Business, Persuasive, Transactional, And Foundational Needs”16 © 2011 Forrester Research, Inc. Reproduction Prohibited
  17. 17. What’s changing the ECM market? §  Proliferation of “SharePoint for the masses” that merges a powerful collaboration platform with ECM. §  Application-specific strategies §  Content-focused solutions offer an alternative to the once highly-touted ECM suite ideal §  Cloud deployments §  Industry-specific solutions17 © 2011 Forrester Research, Inc. Reproduction Prohibited
  18. 18. Snapshot of the ECM market Traditional ECM suite vendors •  End-to-end ECM offerings that manage all four content types on a single platform. Open source solutions •  Open source solutions that tend to focus on a subset of content types. Content-focused vendors •  Focus on specific content technologies instead of trying to be one-size-fits-all solutions. Cloud vendors •  Cloud-based solutions that tend to reduce initial startup costs and streamline implementations Industry-specific players •  Vendors who focus on ECM for specific verticals (e.g. healthcare, legal, and higher education). European vendors •  Some vendors focus on regional markets.18 © 2011 Forrester Research, Inc. Reproduction Prohibited
  19. 19. But implementing ECM isnt as it may seem “What are the biggest challenges facing ECM in your organization today? Select all that apply.” Base: 252 ECM decision-makers Source: Forrester’s October 2011 Global Enterprise Content Management Online Survey19 © 2011 Forrester Research, Inc. Reproduction Prohibited
  20. 20. Where to start? Define ECM strategy Do you have an ECM strategy that balances IT, risk, and business needs? Have you categorized which types of content you will be supporting? Have you considered all the ECM components that you may or may not need? Have you considered how online content fits into the overall customer experience management ecosystem?20 © 2011 Forrester Research, Inc. Reproduction Prohibited
  21. 21. Use best practices to guide ECM implementations §  Engage stakeholders throughout the project lifecycle §  Have strong governance policies and establish a governance board §  Take a multichannel and customer view §  Empower business users §  Agility will be the new mantra §  Build high octane taxonomies §  Assess metadata concerns at every phase21 © 2011 Forrester Research, Inc. Reproduction Prohibited
  22. 22. Agenda§  ECM Market Overview§  What Is Total Economic Impact (TEI)?§  Study overview§  Key findings from the case study –  Costs –  Benefits –  Risk adjustments§  Conclusions and ROI22 © 2011 Forrester Research, Inc. Reproduction Prohibited
  23. 23. What is Total Economic Impact?§  Forrester’s TEI is the “Language of Value”§  TEI ≠ TCO –  TEI provides a complete economic picture of tech purchase decisions§  Captures and quantifies the voice of the customer relative to technology investments –  Based on existing customer experience with the product/service§  Third-party, objective case study§  The four fundamental elements of TEI:23 © 2011 Forrester Research, Inc. Reproduction Prohibited
  24. 24. Agenda§  ECM Market Overview§  What Is Total Economic Impact (TEI)?§  Study overview§  Key findings from the case study –  Costs –  Benefits –  Risk adjustments§  Conclusions and ROI24 © 2011 Forrester Research, Inc. Reproduction Prohibited
  25. 25. Study Overview - The TEI Process Conduct Construct financialPerform due Design composite Write case customer model using TEI diligence organization study interviews framework§  Customers for the interviews were provided by Alfresco: –  A large financial service organization –  A large provider of quality information serving with more than 15,000 employees –  A large US health insurer with more than 8,000 employees –  A global pharmaceutical and chemical company with around 40,000 employees§  All of the interviewed organizations have used Alfresco in production for more than ten months25 © 2011 Forrester Research, Inc. Reproduction Prohibited
  26. 26. Study Overview – Interview Highlights §  All of the interviewed organizations already had experience with ECM solutions from other vendors §  Alfresco platform was deployed as part of a new initiative within the company §  The common business objectives for deploying Alfresco were to: –  Achieve a well-integrated and flexible document management environment –  Give access to document management capabilities to a large number of users –  Contain the software licenses and maintenance costs §  Overall integration took between 2 to 6 months §  Number of end users: between 300 and 35,000 §  Number of documents managed by Alfresco: between 100,000 and 3.5 million26 © 2011 Forrester Research, Inc. Reproduction Prohibited
  27. 27. Study Overview – Interview Highlights (continued) §  Alfrescos commercial open source model well accepted –  Cost-effective and managed solution –  High degree of innovation –  Increased developer productivity and control over the ECM environment §  Three out of four interviewees were participating in Alfresco’s open source community. §  Common integration challenge: efforts for rollouts were often underestimated. A way to mitigate these implementation risks was to hire or contract with highly experienced consultants and Java developers.27 © 2011 Forrester Research, Inc. Reproduction Prohibited
  28. 28. Study Overview – The Composite Organization §  The composite organization that has been created for this study has following characteristics: –  A large financial services company based in the US –  About 10,000 employees in 15 countries –  Huge volume of unstructured content stored in different point content management solutions and on local shared drives –  Objective: create a new knowledge-sharing and collaboration platform accessible by all employees28 © 2011 Forrester Research, Inc. Reproduction Prohibited
  29. 29. Agenda§  ECM Market Overview§  What Is Total Economic Impact (TEI)?§  Study overview§  Key findings from the case study –  Costs –  Benefits –  Risk adjustments§  Conclusions and ROI29 © 2011 Forrester Research, Inc. Reproduction Prohibited
  30. 30. Costs: Total costs (non-risk-adjusted) 26% 29% §  Alfresco subscription §  Integration costs 9% §  Hardware investment §  Training costs 36% Initial Year 1 Year 2 Year 3 Total PV*Total costs ($578,000) ($106,000) ($106,000) ($106,000) ($896,000) ($841,606) * Present Value30 © 2011 Forrester Research, Inc. Reproduction Prohibited
  31. 31. Benefits: Avoided Software License Costs §  Avoid software licenses and maintenance costs for an alternative commercial ECM solution §  Assumptions –  Avoided upfront license fee including first-year maintenance: $800,000 –  Annual software maintenance costs as percentage of upfront license fee: 18% §  3 -year non-risk adjusted benefit (present value) of $ 954,470 Year 1 Year 2 Year 3 Total PV* Avoided Software License $800,000 $144,000 $144,000 $1,088,000 $954,470 Costs * Present ValueSource: Forrester Research, Inc. 31 © 2011 Forrester Research, Inc. Reproduction Prohibited
  32. 32. Benefits: IT Maintenance Cost Savings §  Composite organization gets rid of several point content management solutions at departmental level and part of their local shared drives §  Resulting in a reduction of efforts regarding administration, maintenance, upgrades, and governance §  Assumptions –  Composite organization was able to re-assign the equivalent of 1 full-time resources to other tasks –  average annual fully loaded compensation of $100,000 §  3 -year non-risk adjusted benefit (present value) of $248,685 Year 1 Year 2 Year 3 Total PV* Total IT Maintenance Cost $100,000 $100,000 $100,000 $300,000 $248,685 Savings * Present ValueSource: Forrester Research, Inc. 32 © 2011 Forrester Research, Inc. Reproduction Prohibited
  33. 33. Benefits: Use Of Less Expensive Developer Resources §  The interviewed organizations reported that it was easier and more cost- efficient to find and hire skilled Java developers than developers with special knowledge about a commercial ECM solution §  Assumptions –  Composite organization hires two more Java developers at an average fully loaded annual salary of $100,000 instead of two specialized ECM developers at a 40% higher rate. §  3 -year non-risk adjusted benefit (present value) of $198,948 Year 1 Year 2 Year 3 Total PV* Use Of Less Expensive $80,000 $80,000 $80,000 $240,000 $198,948 Developer Resources * Present ValueSource: Forrester Research, Inc. 33 © 2011 Forrester Research, Inc. Reproduction Prohibited
  34. 34. Benefits: IT Cost Avoidance Due To Use Of Open Source Stack §  The Alfresco platform supports the full open source stack. Some of the interviewed organizations actually took advantage of it and decided to use an open source database instead of a commercial database §  Assumptions –  Avoided commercial database license cost: $30,000 –  Avoided annual database maintenance costs: $6,000 §  3 -year non-risk adjusted benefit (present value) of $42,194 Year 1 Year 2 Year 3 Total PV* IT Cost Avoidance Due To $36,000 $6,000 $6,000 $48,000 $42,194 Use Of Open Source Stack * Present ValueSource: Forrester Research, Inc. 34 © 2011 Forrester Research, Inc. Reproduction Prohibited
  35. 35. Benefits: Integration And Development Efficiencies §  The interviewed companies that had experience with the integration between Alfresco and different enterprise tools reported productivity gains for their IT staff mainly due to the access to the source code, the use of a common programmer language, and the support of the open source community §  Assumptions –  Composite organization integrates Alfresco ECM with its CRM system –  One-time cost savings of $50,000 §  3 -year non-risk adjusted benefit (present value) of $45,455 Year 1 Year 2 Year 3 Total PV* Integration And Development $50,000 $0 $0 $50,000 $45,455 Efficiencies * Present ValueSource: Forrester Research, Inc. 35 © 2011 Forrester Research, Inc. Reproduction Prohibited
  36. 36. Benefits: Total benefits (non-risk-adjusted) Year 1 Year 2 Year 3 Total PV* Avoided software license costs $800,000 $144,000 $144,000 $1,088,000 $954,470 IT maintenance cost savings $100,000 $100,000 $100,000 $300,000 $248,685 Use of less expensive developer $80,000 $80,000 $80,000 $240,000 $198,948 resources IT cost avoidance due to use of $36,000 $6,000 $6,000 $48,000 $42,194 open source stack Integration and development $50,000 $0 $0 $50,000 $45,455 efficiencies Total benefits $1,066,000 $330,000 $330,000 $1,726,000 $1,489,752 3% 3% Avoided software license costs 13% IT maintenance cost savings Use of less expensive developer resources 17% 64% IT cost avoidance due to use of open source stack Integration and development efficienciesSource: Forrester Research, Inc. 36 © 2011 Forrester Research, Inc. Reproduction Prohibited * Present Value
  37. 37. Future potential flexibility options By introducing Alfresco ECM, the composite organization also created options for realizing more benefits in the future in a variety of ways: §  Replacement of other commercial enterprise document management solutions §  Integration with other enterprise tools §  Powering a company intranet37 © 2011 Forrester Research, Inc. Reproduction Prohibited
  38. 38. Risk-adjustment factors The risk component in the TEI methodology is used as a filter to capture the uncertainty surrounding different cost and benefit estimates. If a risk-adjusted ROI still demonstrates a compelling business case, it raises confidence that the investment is likely to succeed. Low Original High Mean Alfresco subscription 98% 100% 105% 101% Integration costs 100% 100% 115% 105% Costs Hardware investment 98% 100% 105% 101% Training costs 98% 100% 105% 101% Avoided software license costs 50% 100% 100% 83% IT maintenance cost savings 90% 100% 105% 98% Benefits Use of less expensive developer resources 90% 100% 105% 98% IT cost avoidance due to use of open source stack 90% 100% 105% 98% Integration and development efficiencies 90% 100% 105% 98%Source: Forrester Research, Inc. 38 © 2011 Forrester Research, Inc. Reproduction Prohibited
  39. 39. Agenda§  ECM Market Overview§  What Is Total Economic Impact (TEI)?§  Study overview§  Key findings from the case study –  Costs –  Benefits –  Risk adjustments§  Conclusions and ROI39 © 2011 Forrester Research, Inc. Reproduction Prohibited
  40. 40. Financial summary, ROI, and payback periodThrough interviews with 4 Alfresco customers, Forrester found that theseorganizations benefit from the deployment of Alfresco’s ECM solution in theform of: –  Avoided software license and maintenance fees –  IT maintenance cost savings –  Use of less expensive developer resources –  IT cost avoidance due to use of open source stack –  Integration and development efficiencies 3 year risk-adjusted estimate ROI 53% Payback period (months) 10 months after go live Total costs (present value) ($862,022) Total benefits (present value) $1,316,786 Net present value $454,764Source: Forrester Research, Inc. 40 © 2011 Forrester Research, Inc. Reproduction Prohibited
  41. 41. Factors affecting benefits and costs §  Technology supported by the company §  Prior experience with open source products §  Prior experience with enterprise-wide ECM deployments §  Scope and functional requirements §  Control of customizations41 © 2011 Forrester Research, Inc. Reproduction Prohibited
  42. 42. Thank you © 2009 Forrester Research, Inc. Reproduction Prohibited
  43. 43. Questions?•  Download the Forrester TEI study –  http://bit.ly/alf-tei•  Download Alfresco Enterprise –  http://bit.ly/alf-try

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