The Total Economic Impact Of Autotask s Unified IT Business Management Platform

Transcription

1 A Forrester Total Economic Impact Study Commissioned By Autotask Project Director: Dean Davison September 2016 The Total Economic Impact Of Autotask s Unified IT Business Management Platform

2 Table Of Contents Executive Summary... 3 Disclosures... 4 TEI Framework And Methodology... 5 Analysis... 6 Financial Summary Study Conclusions Autotask: Overview Appendix A: Glossary Appendix B: Total Economic Impact Overview ABOUT FORRESTER CONSULTING Forrester Consulting provides independent and objective research-based consulting to help leaders succeed in their organizations. Ranging in scope from a short strategy session to custom projects, Forrester s Consulting services connect you directly with research analysts who apply expert insight to your specific business challenges. For more information, visit forrester.com/consulting. 2016, Forrester Research, Inc. All rights reserved. Unauthorized reproduction is strictly prohibited. Information is based on best available resources. Opinions reflect judgment at the time and are subject to change. Forrester, Technographics, Forrester Wave, RoleView, TechRadar, and Total Economic Impact are trademarks of Forrester Research, Inc. All other trademarks are the property of their respective companies. For additional information, go to

3 3 Executive Summary Autotask provides a technology platform that combines Professional Services Automation (PSA) and Autotask Endpoint Management (AEM). The unified solution streamlines the delivery of IT services, ticketing, and billing with contract terms and service-level agreements (SLAs). Autotask commissioned Forrester Consulting to conduct a Total Economic Impact (TEI) study and examine the potential return on investment (ROI) that IT service providers may realize by using PSA and AEM together. This study describes how using Autotask had an impact on two customers and provides a framework of costs and benefits for readers to evaluate the potential financial impact of Autotask on their organizations. Autotask provides a unified technology platform for professional services automation and endpoint management. The benefits and costs for the organizations that Forrester interviewed are: Improved productivity: $378,000. Reduced customer turnover: $513,000. Cost of Autotask license: $226,195. Cost of configuration: $42,000. To better understand the benefits, costs, and risks associated with Autotask, Forrester interviewed two existing customers with years of experience using Autotask. The organizations are both using Autotask s PSA that is unified with AEM at the Cost of employee training: $16,962. device, data, invoice, and reporting level. The combination allows service desk, operations, dispatch, and field technicians to understand contracted SLAs and quickly prioritize customer requests to optimize delivery. Prior to using AEM, the organizations used Autotask s PSA and resource management tools that were integrated in the traditional manner with Remote Monitoring and Management (RMM). However, these tools were still disconnected in many ways, requiring significant amounts of data to be processed and filtered manually. Previous to using AEM, when technicians had to make service calls, they had to take the time to look up the contract to determine the exact SLAs before knowing how to prioritize service calls. After using AEM, the information was accessible in the PSA system in tickets and reports. This reduced the need to access both systems, and many redundant processes were automated completely. The director at one of the firms said: Autotask gives us greater visibility of all our data and our customer issues across the board. Everybody is using the same dashboard and working to the same information. On average, these tools improved the productivity of our billable personnel by 1 hour every day. AUTOTASK INCREASES PRODUCTIVITY OF BILLABLE EMPLOYEES Forrester built a financial model based on a 30-user implementation, with the results shown in Figure 1. The analysis demonstrates realized benefits of $738,595 compared with incurred costs of $248,210. The final results are a net present value (NPV) of $490,385. FIGURE 1 Financial Summary Showing Three-Year Risk-Adjusted Results ROI: 198% Benefits PV: $738,595 Costs PV: $248,210 Payback: 3.7 months

4 4 Benefits. The following risk-adjusted benefits are representative of those experienced by the companies interviewed: Improved productivity of billable personnel. Productivity for billable employees increased by an average of 1 hour per day, and 50% of the increase was attributed to Autotask for a savings over three years totaling $378,000. Reduced cost of customer turnover. Customer service improved to higher levels, and the net result was that customer turnover dropped 12%. The cost of replacing the customers that would have been lost without the increase in service level performance saved the organization $513,000 over three years. Costs. The following risk-adjusted costs are representative of costs incurred by the companies interviewed: License cost for Autotask. Autotask pricing for PSA is based on active users, and pricing for AEM is based on the number of endpoints. For an organization with 30 billable employees and 2,500 endpoints, the cost totals $226,195 over three years. Cost to implement Autotask. One professional was hired for one month from Autotask to handle the implementation, including the effort to codify existing contracts into the system, at a cost of $42,000. Cost to train employees. Employees attended a two-day training course that incurred a productivity cost of $16,962. Disclosures The reader should be aware of the following: The study is commissioned by Autotask and delivered by Forrester Consulting. It is not meant to be used as a competitive analysis. Forrester makes no assumptions as to the potential ROI that other organizations will receive. Forrester strongly advises that readers use their own estimates within the framework provided in the report to determine the appropriateness of an investment in Autotask. Autotask reviewed and provided feedback to Forrester, but Forrester maintains editorial control over the study and its findings and does not accept changes to the study that contradict Forrester's findings or obscure the meaning of the study. Autotask provided the customer name for the interviews but did not participate in the interviews.

5 5 TEI Framework And Methodology INTRODUCTION From the information provided in the interviews, Forrester constructed a Total Economic Impact (TEI) framework for those organizations considering implementing Autotask. The objective of the framework is to identify the cost, benefit, flexibility, and risk factors that affect the investment decision, to help organizations understand how to take advantage of specific benefits, reduce costs, and improve the overall business goals of winning, serving, and retaining customers. APPROACH AND METHODOLOGY Forrester took a multistep approach to evaluate the impact that Autotask can have on an organization (see Figure 2). Specifically, we: Interviewed Autotask marketing, sales, and consulting personnel, along with Forrester analysts, to gather data relative to the marketplace. Interviewed two organizations currently using Autotask to obtain data with respect to costs, benefits, and risks. Constructed a financial model representative of the interviews using the TEI methodology. The financial model is populated with the cost and benefit data obtained from the interviews. Risk-adjusted the financial model based on issues and concerns the interviewed organizations highlighted in the interview. Risk adjustment is a key part of the TEI methodology. While the interviewed organizations provided cost and benefit estimates, some categories included a broad range of responses or had a number of outside forces that might have affected the results. For that reason, some cost and benefit totals have been risk-adjusted and are detailed in each relevant section. Forrester employed four fundamental elements of TEI in modeling Autotask s service: benefits, costs, flexibility, and risks. Given the increasing sophistication that enterprises have regarding ROI analyses related to IT investments, Forrester s TEI methodology serves to provide a complete picture of the total economic impact of purchase decisions. Please see Appendix B for additional information on the TEI methodology. FIGURE 2 TEI Approach Perform due diligence Conduct customer interviews Construct financial model using TEI framework Write case study

6 6 Analysis INTERVIEW HIGHLIGHTS Forrester interviewed two organizations that use Autotask. Both organizations had about two years of experience using PSA and six to eight months of experience using a unified PSA/AEM platform from Autotask. The financial analysis in this study blends the experience of the two companies and builds a financial model based on a 30-user organization. Both companies provided similar feedback to Forrester relative to their size about the customer experience and financial benefits of using Autotask. INDUSTRY REGION INTERVIEWEE BILLABLE EMPLOYEES Organization A United States CEO 10 contact center agents and 2,000 endpoints Organization B Europe Head, project management office 250 contact center and field technical employees and 20,000 endpoints Results The interview revealed that the organizations realized benefits that included: Efficiency. Autotask had an impact on not only the productivity of billable employees but also backroom operations. One executive said: Usually the accounts department is following up and asking, Can we bill yet? Today our delivery teams are proactively telling the accounts group when it s time to bill the client. It s a small change, but makes a significant impact on how a company operates. Accountability. The organizations were more responsive to customers. As part of a larger initiative to improve performance overall, using Autotask PSA and AEM together contributed to one organization reducing its average response time by 28% and meeting SLA response times 10% more frequently. When a call comes into the call center, our people can immediately see the SLAs and call history, which allows them to make better decisions about promising a return call or immediately escalating to a Level 2 technician. The lag time between decision and action is significantly reduced. Autotask gives us greater visibility of all our data and our customer issues across the board. Everybody is using the same dashboard and working to the same information. ~ Head of project management office, Organization B Intelligence. One executive told Forrester: We are able to look at a customer s contract, value of the customer, and how many tickets they ve created. We analyze the tickets to identify root causes that are impacting the customer. We are proactively solving customers problems, which not only cuts down the tickets that we receive but demonstrates to the customer that we are proactive and engaged in helping solve their problems.

7 7 FIGURE 3 Response Time Results Of One Organization

8 8 BENEFITS Based on the interviews, Forrester constructed a composite company and an associated ROI analysis that illustrates the areas financially affected. The composite organization is representative of the two companies that Forrester interviewed and is used to present the aggregate financial analysis in the next section. The composite organization was able to avoid costs through improved productivity of billable personnel and a reduced cost of customer turnover. Improved Productivity Of Billable Personnel The financial model is built around a company size of 30 billable employees, which lies between the two companies that Forrester interviewed. Specifically: The organization improved productivity by 1 hour per day. For 260 working days per year, that results in 7,800 saved hours, which is equivalent to four employees per year. It rolled out comprehensive programs for employee productivity. The programs included Autotask tools but were more comprehensive than just the tools. Over two years, this organization increased the average billable time for employees from 34% to 87%. The increased productivity allowed the organization to service its growing customer base without hiring an additional four employees, which avoided costs of $140,000 over three years. Forrester risk-adjusted this benefit downward by 10% to account for variability that readers may experience. The risk-adjusted benefit totaled $378,000 over three years. TABLE 1 Improved Productivity Of Billable Personnel Ref. Metric Calculation Year 1 Year 2 Year 3 A1 Billable employees affected by tools A2 A3 Annual hours saved (1 hour per employee per day for 260 days per year) Equivalent full-time employees (divided by 2,080 working hours/year, rounded) A1*260 7,800 7,800 7,800 A2/2,080 working hours A4 Average burdened salary $70,000 $70,000 $70,000 A5 Percent of improvement that is attributable to using Autotask, assuming other influential factors 50% 50% 50% At Improved productivity of billable personnel A3*A4*A5 $140,000 $140,000 $140,000 Risk adjustment 10% Atr Improved productivity of billable personnel (risk-adjusted) $126,000 $126,000 $126,000

9 9 Reduced Cost Of Customer Turnover Using a unified PSA/AEM solution, the organization significantly improved its customer service. Specifically: Response times increased by 28%, and the organization attained its response time SLAs 10% more frequently. Customer satisfaction increased by 3% to a 96.6% survey rating. Satisfaction among unhappy customers was reduced by 48% to only 3% of customers. The financial impact of improvements in customer satisfaction resulted in more customers renewing their service contracts. From the time before using Autotask to the time after using Autotask, renewal rates increased and customer turnover decreased. The impact equated to: A reduction in customer turnover that was equivalent to 12% of the organization s annual revenue. An equivalent benefit per year of $180,000. The previous cost of replacing this revenue would have required the equivalent of 1.5 sales reps per year at a total cost of salary and commission of $180,000. A financial savings over three years of $540,000. Forrester risk-adjusted this benefit downward by 5%, resulting in a three-year savings of $513,000. See the section on Risks for more detail. TABLE 2 Reduced Cost Of Customer Turnover Ref. Metric Calculation Year 1 Year 2 Year 3 B1 B2 Reduced value of customers that previously terminated contracts annually Bookings revenue that sales reps did not need to replace due to lower turnover 12% 12% 12% B1 * $10 million $1,200,000 $1,200,000 $1,200,000 B3 Average quota per salesperson B2/$800, B4 Burdened salary and commission $120,000 $120,000 $120,000 Bt Reduced cost of customer turnover B3*B4 $180,000 $180,000 $180,000 Risk adjustment 5% Btr Reduced cost of customer turnover (risk-adjusted) $171,000 $171,000 $171,000

10 10 Total Benefits Table 3 shows the total of all benefits as well as associated present values, discounted at 10%. Over three years, the organization expects all benefits to total a net present value of $738,595. TABLE 3 Total Benefits (Risk-Adjusted) Ref. Benefit Initial Year 1 Year 2 Year 3 Total Present Value Atr Improved productivity of billable personnel $0 $126,000 $126,000 $126,000 $378,000 $313,343 Btr Reduced cost of customer turnover $0 $171,000 $171,000 $171,000 $513,000 $425,252 Total benefits $0 $297,000 $297,000 $297,000 $891,000 $738,595

11 11 COSTS The composite organization incurred the following costs: License and initial configuration cost for Autotask. Cost to implement Autotask. Cost to train employees. License And Initial Configuration Cost For Autotask The organization paid license fees to Autotask. The pricing for PSA is based on the number of active users, and the price for AEM is based on the number of active endpoints. The total cost included setup fees and license fees that totaled $226,195 for a 30-user model. Because the model is based on list prices for Autotask, Forrester did not risk-adjust this cost. TABLE 4 License Cost For Autotask Ref. Metric Calculation Initial Year 1 Year 2 Year 3 C1 PSA configuration $5,995 C2 PSA license cost (per user) $75 per month *30 users $27,000 $27,000 $27,000 C3 AEM configuration $4,200 C4 AEM license cost (per endpoint) $1.50 per month *2,500 endpoints $45,000 $45,000 $45000 Ct License and initial configuration costs for Autotask C1+C2 +C3+C4 $10,195 $72,000 $72,000 $72,000 Risk adjustment 0% Ctr License and configuration costs for Autotask (risk-adjusted) $10,195 $72,000 $72,000 $72,000

12 12 Cost To Implement Autotask The organization hired one professional services personnel from Autotask, primarily to codify existing contracts in the unified PSA/AEM system. In addition to the licensing prices, the organization paid for 160 hours at $250 per hour for a total investment of $40,000. Forrester risk-adjusted this cost upward by 5%, resulting in a cost of $42,000. TABLE 5 Cost To Implement Autotask Ref. Metric Calculation Initial Year 1 Year 2 Year 3 D1 One Autotask professional for one month 160 hours 160 D2 Average hourly cost $250 Dt Cost to implement Autotask D1*D2 $40,000 Risk adjustment 5% Dtr Cost to implement Autotask (risk-adjusted) $42,000

13 13 Cost To Train Employees The organization put its 30 billable employees through two days of training to use Autotask. While the team did require a short learning curve to effectively leverage the new tools, the benefit realized was nearly instantaneous, as using the tools was intuitive and, in some cases, automated. The total cost for training 30 employees was $16,154. Forrester risk-adjusted this cost upward by 5%, resulting in a risk-adjusted cost of $16,962. TABLE 6 Cost To Train Employees Ref. Metric Calculation Initial Year 1 Year 2 Year 3 E1 Two days of training for 30 employees (in years) 30*8*2 480 E2 Average burdened salary $70,000 Et Cost to train employees E1/2,080*E2 $16,154 Risk adjustment 5% Etr Cost to train employees (risk-adjusted) $16,962 Total Costs Table 7 shows the total of all costs as well as associated present values, discounted at 10%. Over three years, the organization expects costs to total a net present value of $248,210. TABLE 7 Total Costs (Risk-Adjusted) Ref. Benefit Initial Year 1 Year 2 Year 3 Total Present Value Ctr License cost for Autotask $10,195 $72,000 $72,000 $72,000 $226,195 $189,248 Dtr Cost to configure Autotask $42,000 $0 $0 $0 $42,000 $42,000 Etr Cost to train employees $16,962 $0 $0 $0 $16,962 $16,962 Total costs $69,157 $72,000 $72,000 $72,000 $285,157 $248,210

14 14 RISKS Forrester defines two types of risk associated with this analysis: implementation risk and impact risk. Implementation risk is the risk that a proposed investment in Autotask may deviate from the original or expected requirements, resulting in higher costs than anticipated. Impact risk refers to the risk that the business or technology needs of the organization may not be met by the investment in Autotask, resulting in lower overall total benefits. The greater the uncertainty, the wider the potential range of outcomes for cost and benefit estimates. Quantitatively capturing implementation risk and impact risk by directly adjusting the financial estimates results provides more meaningful and accurate estimates and a more accurate projection of the ROI. In general, risks affect costs by raising the original estimates, and they affect benefits by reducing the original estimates. The risk-adjusted numbers should be taken as realistic expectations since they represent the expected values considering risk. Table 8 shows the values used to adjust for risk and uncertainty in the cost and benefit estimates for the organization. Readers are urged to apply their own risk ranges based on their own degree of confidence in the cost and benefit estimates. TABLE 8 Benefit And Cost Risk Adjustments Benefits Adjustment Improved productivity of billable personnel 10% Reduced cost of customer turnover 5% Costs Adjustment License and configuration cost for Autotask 0% Cost to implement Autotask 5% Cost to train employees 5%

15 15 Financial Summary The financial results calculated in the Benefits and Costs sections can be used to determine the ROI, NPV, and payback period for the organization s investment in Autotask. Table 9 below shows the risk-adjusted ROI, NPV, and payback period values. These values are determined by applying the risk-adjustment values from Table 8 in the Risks section to the unadjusted results in each relevant cost and benefit section. FIGURE 4 Net Benefits Chart (Risk-Adjusted) $700,000 $600,000 $500,000 $400,000 $300,000 $200,000 $100,000 $0 ($100,000) ($200,000) Initial Year 1 Year 2 Year 3 Total costs Total benefits Net benefits (cumulative) TABLE 9 Net Benefits (Risk-Adjusted) Initial Year 1 Year 2 Year 3 Total Present Value Costs ($69,157) ($72,000) ($72,000) ($72,000) ($285,157) ($248,210) Benefits $0 $297,000 $297,000 $297,000 $891,000 $738,595 Net benefits ($69,157) $225,000 $225,000 $225,000 $605,843 $490,385 ROI 198% Payback 3.7 months

16 16 Study Conclusions Forrester interviewed two organizations using a unified implementation of Autotask PSA and AEM tools. Despite differences between the organizations size and geography, both realized similar costs and benefits relative to company size. Organization A recognized a time savings equivalent to 1 hour per day per technician, 50% of which was attributed to using Autotask. Organization B achieved similar results on a considerably larger scale as part of a broader initiative to improve efficiency, which included Autotask. By building a financial model that is representative of both organizations and based on a 30-user organization, Forrester developed a model that shows that the investment in Autotask may be recouped in less than four months and result in a 198% ROI. Specifically: For a 30-user company, a first-year investment of $141,157 yielded annual benefits of $297,000 and a net benefit of $605,848 in three years. The organizations also realized additional performance results such as reduced customer response times, improvements in achieving SLA targets, and increases in customer satisfaction that contributed to customer retention; these benefits are expected to have a further impact on ROI results.

17 17 Autotask: Overview The following information is provided by Autotask. Forrester has not validated claims and does not endorse Autotask or its offerings. AUTOTASK S UNIFIED IT BUSINESS MANAGEMENT PLATFORM IS ENTIRELY UNIQUE TO OUR INDUSTRY. Our platform centralizes people, devices and data and automates processes and workflows associated with CRM, time and materials, projects, SLAs, and RMM. Unlike other combined solutions, our Endpoint Management doesn t just integrate with Autotask, it IS Autotask. By combining Remote Monitoring and Management (RMM) with the Professional Services Automation (PSA) service delivery engine, we enables MSPs and ITSPs to deliver superior service quality, higher profitability and a superior user experience. Legacy PSA AEM integrations can be complicated, time consuming and frequently create barriers to efficiency that are very familiar to ITSPs: Ticket inefficiency: single ticket queues with no intelligent routing or workflows. Inflexibility: rigid workflows that make it difficult to alter processes for individual customers, devices or monitors. Disparate reporting: no ability to consolidate device, delivery and service data for context and contractual cross-reference. Only Autotask s unified IT Business Management platform provides the following benefits to ITSPs: One company to maintain and support the integration and the two products. Improved efficiency and actionable, unified analytics: Advanced ticket integration, routing and handling. Real-time asset database with contract compliance and dashboard visibility. Single Sign-On for secure, convenience, seamless navigation. Unified ticket experience makes it easier to identify, resolve, and document incidents. Integrated dashboards and analytics that elevate insights and guide continuous service improvement. Setup and deployment are easy: Simple, streamlined set-up with preconfigured dashboards to allow you to quickly get up and running. While legacy integrations are tactical, providing moderate efficiency but nothing else, Autotask s unified platform is strategic. We give IT service providers a simple, scalable, SaaS architecture that enables a level of efficiency and scalability that is unachievable using traditional integrations and on-prem solutions: 9,000+ global technology service providers rely on Autotask to track KPIs and identify growth opportunities. Our born-in-the-cloud user interface with 99.99% uptime, four years running. We offer localized support and free training around the globe. For more information, visit

18 18 Appendix A: Glossary Discount rate: The interest rate used in cash flow analysis to take into account the time value of money. Companies set their own discount rate based on their business and investment environment. Forrester assumes a yearly discount rate of 10% for this analysis. Organizations typically use discount rates between 8% and 16% based on their current environment. Readers are urged to consult their respective organizations to determine the most appropriate discount rate to use in their own environment. Net present value (NPV: The present or current value of discounted future net cash flows given an interest rate (the discount rate). A positive project NPV normally indicates that the investment should be made, unless other projects have higher NPVs. Present value (PV: The present or current value of (discounted cost and benefit estimates given at an interest rate (the discount rate. The PV of costs and benefits feed into the total NPV of cash flows. Payback period: The breakeven point for an investment. This is the point in time at which net benefits (benefits minus costs equal initial investment or cost). Return on investment (ROI: A measure of a project s expected return in percentage terms. ROI is calculated by dividing net benefits (benefits minus costs by costs). A NOTE ON CASH FLOW TABLES The following is a note on the cash flow tables used in this study. The initial investment column contains costs incurred at time 0 or at the beginning of Year 1. Those costs are not discounted. All other cash flows in years 1 through 3 are discounted using the discount rate at the end of the year. PV calculations are calculated for each total cost and benefit estimate. NPV calculations are not calculated until the summary tables are the sum of the initial investment and the discounted cash flows in each year. Sums and present value calculations of the Total Benefits, Total Costs, and Cash Flow tables may not exactly add up, as some rounding may occur.

19 19 Appendix B: Total Economic Impact Overview Total Economic Impact is a methodology developed by Forrester Research that enhances a company s technology decisionmaking processes and assists vendors in communicating the value proposition of their products and services to clients. The TEI methodology helps companies demonstrate, justify, and realize the tangible value of IT initiatives to both senior management and other key business stakeholders. TEI assists technology vendors in winning, serving, and retaining customers. The TEI methodology consists of four components to evaluate investment value: benefits, costs, flexibility, and risks. BENEFITS Benefits represent the value delivered to the user organization IT and/or business units by the proposed product or project. Often, product or project justification exercises focus just on IT cost and cost reduction, leaving little room to analyze the effect of the technology on the entire organization. The TEI methodology and the resulting financial model place equal weight on the measure of benefits and the measure of costs, allowing for a full examination of the effect of the technology on the entire organization. Calculation of benefit estimates involves a clear dialogue with the user organization to understand the specific value that is created. In addition, Forrester also requires that there be a clear line of accountability established between the measurement and justification of benefit estimates after the project has been completed. This ensures that benefit estimates tie back directly to the bottom line. COSTS Costs represent the investment necessary to capture the value, or benefits, of the proposed project. IT or the business units may incur costs in the form of fully burdened labor, subcontractors, or materials. Costs consider all the investments and expenses necessary to deliver the proposed value. In addition, the cost category within TEI captures any incremental costs over the existing environment for ongoing costs associated with the solution. All costs must be tied to the benefits that are created. FLEXIBILITY Within the TEI methodology, direct benefits represent one part of the investment value. While direct benefits can typically be the primary way to justify a project, Forrester believes that organizations should be able to measure the strategic value of an investment. Flexibility represents the value that can be obtained for some future additional investment building on top of the initial investment already made. For instance, an investment in an enterprisewide upgrade of an office productivity suite can potentially increase standardization (to increase efficiency and reduce licensing costs. However, an embedded collaboration feature may translate to greater worker productivity if activated. The collaboration can only be used with additional investment in training at some future point. However, having the ability to capture that benefit has a PV that can be estimated. The flexibility component of TEI captures that value. RISKS Risks measure the uncertainty of benefit and cost estimates contained within the investment. Uncertainty is measured in two ways: 1) the likelihood that the cost and benefit estimates will meet the original projections and 2) the likelihood that the estimates will be measured and tracked over time. TEI risk factors are based on a probability density function known as triangular distribution to the values entered. At a minimum, three values are calculated to estimate the risk factor around each cost and benefit.