The Total Economic Impact Of SAP BusinessObjects Analytics Key Findings

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1 Forrester Total Economic Impact Study Commissioned by SAP October 2016 The Total Economic Impact Of SAP BusinessObjects Analytics Key Findings SAP BusinessObjects Analytics solutions have helped organizations improve data analysis to be better informed, make better decisions, and react to opportunities and issues more quickly. This spotlight is a short version of a full Total Economic Impact (TEI) study. Readers can gain an introduction to the potential financial impact SAP BusinessObjects Analytics can have on their organizations, in areas such as data aggregation and normalization, report and dashboard creation, and data analysis and predictive analytics. To better understand the benefits, costs, and risks associated with implementation of SAP BusinessObjects Analytics solutions, Forrester interviewed four organizations with multiple years of experience using these analytics solutions from SAP across one or more of the following key analytics areas: planning, business intelligence, and predictive analytics. A composite, or representative, organization was developed to report cost and benefit findings. SAP BusinessObjects Predictive Analytics helped the composite organization reduce employee safety issues, and analysis and review of past task and service data led to significant process standardization. Benefits are $6,386,600 to $6,762,800 per year, and the total investment adds up to a net present value (NPV) of $10,235,709 with a 171% ROI. QUANTIFIED BENEFITS OF SAP BUSINESSOBJECTS ANALYTICS Based on the representative organization, benefits of SAP BusinessObjects Analytics include: Cost savings from improved and standardized processes of $2.4 million per year. Best practices and efficiencies are identified with data analysis on tasks and processes. By standardizing tasks, the composite organization enabled significant costs savings. Reduced employee problems and accidents, plus reduced turnover, leading to reduced costs of $3.2 million per year. Data is used to identify potential issues related to a variety of processes. Predicting possible safety issues before they happen helps reduce or eliminate those issues and helps improve employee job satisfaction. Report creation time saved of $376,200 to $752,400 per year with self-service tools. Reports are easier to create and manage and don t require waiting for data requests. Data management for financial consolidation time savings of $114,000 per year. Data normalization, cleanup, and consolidation tasks are much easier with automation. Improved IT resource requirements of $296,400 per year. IT tasks are reduced, including responding to data requests, administering data stores, and managing data sources. Financial Summary Of Three-Year Risk-Adjusted Results SUMMARY Results from the SAPcommissioned study, The Total Economic Impact Of SAP BusinessObjects Analytics. METHODOLOGY SAP commissioned Forrester to conduct a Total Economic Impact (TEI) study to provide IT and business leaders an understanding of the potential return on investment (ROI) they may realize after implementing SAP BusinessObjects Analytics. Forrester developed a TEI analysis based on four indepth interviews with IT and business leaders and decision-makers responsible for managing data analysis and reporting. REPRESENTATIVE ORGANIZATION This analysis uses a composite organization, based on interview results, to report cost and benefit findings. The organization is an international company with headquarters in the US, and 10,00 employees including 4,000 data developers, managers and consumers.. ROI 171% Task cost $6,000 per task Report Creation 97% faster Safety Issues 30%

2 TEI Analysis Is Based On Interview Responses From the information provided in the interviews, Forrester constructed a TEI framework for those organizations considering implementing SAP BusinessObjects Analytics, covered in greater detail in the full study. The TEI methodology includes analysis of benefits and costs with risk-adjustment, as well as consideration of long-term, or flexibility, benefits that affect investment decisions, to help organizations understand how to take advantage of specific opportunities, reduce costs, and improve the overall business goals of winning, serving, and retaining customers. Specifically, Forrester: Interviewed SAP marketing, sales, and consulting personnel along with Forrester analysts to gather data relative to the SAP BusinessObjects Analytics product and marketplace. Interviewed four current SAP BusinessObjects Analytics organizations to obtain data with respect to costs, benefits, and risks, including: A multinational software and services vendor with A Midwestern US hospital network made up of headquarters in the US, 9,000 employees dozens of hospitals and hundreds of clinics with worldwide, and focused on cloud, server, and 40,000 employees and 10,000 physicians. application technologies. A consulting services firm with more than 4,000 employees serving the Americas, Asia, and Europe. A Southwestern US transportation company providing short- and long-haul delivery provided by more than 4,000 drivers. Constructed a financial model representative of the interviews responses and designed a representative organization for illustrations. Risk-adjusted the financial model based on issues and concerns from the interviewed organizations. Based on the interview information, Forrester constructed a TEI framework, a composite company, and an associated ROI analysis that illustrates the areas financially affected. The organization is an international company with headquarters in the US, and 10,000 employees about 4,000 of which are involved in consuming data from dashboards and reports (as well as a much smaller group involved in developing and managing those data resources). After some consideration, the composite organization chose SAP BusinessObjects Analytics and began deployment in SAP BusinessObjects Analytics Helps Save Costs And Improve Safety Prior to the latest version of SAP BusinessObjects Analytics, most dashboard or reporting processes were ad hoc and spreadsheet-based, and predictive analytics for long-term forecasting was minimal or nonexistent; there was some use of older versions or alternative solutions. These homegrown attempts meant time-consuming data aggregation tasks, reliance on IT resources, and limited report usefulness since report data would be days or weeks old. With SAP BusinessObjects Analytics, customers were able to streamline and automate data aggregation steps; leverage report and dashboard templates that can be created and managed by business users; and take advantage of real-time data to make better decisions, identify issues and opportunities, and focus on the business. Specific benefits include: Process optimization. One key way SAP BusinessObjects Analytics delivered value was through improved and standardized process and task reviews. For the composite organization, this could include using data to identify cost savings related to healthcare procedures, as well as manufacturing processes, consulting services, and many other common business processes. The organization conducts an estimated 500 tasks like these each year. It has identified an average savings of $6,000 per task, adding up to a total of $2.4 million each year, including a risk adjustment applied to allow for more frequent decisions to go with a higher-quality and higher-cost option than originally planned. Using predictive analytics to avoid issues before they happen. Data can be used to review and understand what s happened in the past, but it can also be used to predict and avoid issues. For the composite organization, SAP delivered value with tools to combine and analyze data, as well as use that data to profile and predict issues. For example, one interviewed organization, the transportation company, used SAP BusinessObjects Predictive Analytics to identify when

3 drivers might be putting themselves in a riskier situation. The company could take real-time data from the trucks, as standard equipment for modern trucking rigs today allows for the collection of data such as speed, location, and frequency of stops. Comparing that data with historical norms, as well as other real-time data (such as weather and traffic), the transportation company can identify a driver who might be going a little too fast for conditions or only taking breaks at the last minute. The risk-adjusted value of reduced issues and employee turnover is $3.2 million per year. Time savings managing data and reports. With SAP BusinessObjects Analytics, report templating and data transformations can be set up once and used for each report over time. For example, a monthly financial report can be set up once and refreshed after every close period, with minimal report changes needed. This spreadsheet-based reporting looked like the following: First a request was sent to IT to receive the data, and every month minor changes were required to display data properly. That would require doing some extra table setup, refreshing charts and ensuring colors are correct, updating any formulas, and summarizing data properly. Some of that could be templated, but often small changes would require significant extra work. This would take so long that by the time the report was ready for distribution, the data was already stale. This adds up to 14,400 to 28,800 hours per year saved for report templating, creation, and updating. Based on standard average salaries and benefit realization rates, this totals $376,200 to $752,400 per year. This includes a small risk adjustment rate applied to allow for less-than-expected time saved or fewer new reports created in later years. Financial consolidation and data normalization time savings. Along with creating and updating reports (particularly related to the layout of the report and getting the data pasted in the report) is the important first step of reviewing, cleaning, normalizing, and validating data from each source, and then combining (and cleaning, reviewing, and normalizing) the data from each source into one report. That might mean checking and standardizing how dates or numbers are formatted, standardizing currencies, matching different column names across reports, and/or normalizing how account names and other common text data are displayed. With standard salary and benefit realization rates, this adds up to $114,000 of finance manager time saved per year. A small risk adjustment is applied to allow for unexpected future changes in data sources, such as if one subsidiary switched ERP systems. IT data management savings. The IT team also sees some benefit from SAP BusinessObjects Analytics. Previously, the composite organization required much more time from IT to collect and manage data requests. Today, the day-to-day tasks are much easier to complete. The composite organization estimates it can avoid hiring two skilled workers or reallocate them to other jobs. Based on standard salary assumptions, this adds up to $296,400 saved each year TABLE 1: Total Benefits (Risk-Adjusted) Benefit Category Year 1 Year 2 Year 3 Total PV Task and process cost savings $2,400,000 $2,400,000 $2,400,000 $7,200,000 $5,968,445 Employee safety and satisfaction improvements $3,200,000 $3,200,000 $3,200,000 $9,600,000 $7,957,926 Self-service report creation time saved $376,200 $451,440 $752,400 $1,580,040 $1,280,380 Financial consolidation time saved $114,000 $114,000 $114,000 $342,000 $283,501 IT and business productivity $296,400 $296,400 $296,400 $889,200 $737,103 Total benefits (risk-adjusted) $6,386,600 $6,461,840 $6,762,800 $19,611,240 $16,227,355

4 SAP BUSINESSOBJECTS ANALYTICS COSTS INCLUDE LICENSING, DEPLOYMENT, AND MANAGEMENT The representative organization experienced the following risk-adjusted costs. New costs related to SAP BusinessObjects Analytics include: Initial data analytics processes improvement investment costs of about $450,000. To enable the benefits detailed above, the composite organization estimates that internal resources spent a total 5,000 hours on implementation tasks over a five-month period for the on-premises SAP BusinessObjects Analytics solution. SAP BusinessObjects Analytics software costs of about $1.8 million in the initial period. Additionally, support and maintenance fees add up to almost $400,000 each year in subsequent years. SAP BusinessObjects Analytics resource costs and other ongoing costs of about $1 million per year. With the implementation of more advanced data reports and dashboards, part of the investment likely includes adding new development resources. The composite organization estimates five report and dashboard developers. Table 2 shows the total of all risk-adjusted costs as well as associated present values (PVs), discounted at 10%. TABLE 2: Total Costs (Risk-Adjusted) Cost Category Initial Year 1 Year 2 Year 3 Total PV Implementation costs $446,250 $0 $0 $0 $446,250 $446,250 Software costs $1,837,500 $399,000 $399,000 $399,000 $3,034,500 $2,829,754 Resource costs $0 $1,092,000 $1,092,000 $1,092,000 $3,276,000 $2,715,642 Total costs risk-adjusted $2,283,750 $1,491,000 $1,491,000 $1,491,000 $6,756,750 $5,991,646 SAP BUSINESSOBJECTS ANALYTICS INVESTMENT CAN HELP FUTURE OPPORTUNITIES Flexibility represents an investment in additional capacity or capability that could be turned into future opportunity or business benefit for some future additional investment. Put another way, it represents the value that can be obtained for some future additional investment, such as developing a new pen-and-touch-enabled app. This provides an organization with the ability to engage in future initiatives at a lower incremental cost, but not the obligation to do so. The representative organization identified two areas that they might consider in the future: Extending the implementation of SAP BusinessObjects Analytics to the cloud is a key focus. While there would be some migration investment required, organizations expect to be able to reduce costs in the long term. It also hopes to take advantage of the greater flexibility of cloud solutions, such as right-sizing licensing plans and expanding use to more users with mobile access flexibility while maintaining user-level security. Second, organizations want to take advantage of predictive analytics even the transportation company wants to expand its use to include more data sources and more people. Some examples reported by interviewed organizations include: While forecasting two or three months into the future is relatively accurate, six, 12, or 18 months is not. Improved predictive analytics could build a better picture of longer-term plans to improve a number of areas, such as proper recruiting and project planning, identification of new business markets and opportunities, and competitive analysis. The transportation company would like to expand its predictive analytics to include weather, truck location and nearby traffic, and fuel station locations to help ensure on-time delivery.

5 Cash flows - Millions Financial Summary The risk-adjusted financial results calculated in the Benefits and Costs sections can be used to determine the ROI, NPV, and payback period for the representative organization s investment in SAP BusinessObjects Analytics. Table 4 shows the risk-adjusted ROI, NPV, and payback period values. For more information, visit the SAP BusinessObjects Analytics enterprise business home page, where you can download a full, more-detailed Total Economic Impact (TEI) analysis of the benefits and costs of SAP BusinessObjects Analytics: TABLE 4: Cash Flow and Financial Summary $15 $10 $5 $0 ($5) Initial Year 1 Year 2 Year 3 Total costs Total benefits Cumulative total Metric Result Present Value of Costs ($5,991,646) Present Value of Benefits $16,227,355 Net Present Value (NPV) $10,235,709 ROI 171% Payback period (months) 5.6 DISCLOSURES The reader should be aware of the following: The study is commissioned by SAP 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 SAP. SAP reviewed and provided feedback to Forrester. 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. SAP provided the customer names for the interviews but did not participate in the interviews. 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. ABOUT TEI Total Economic Impact (TEI) is a methodology developed by Forrester Research that enhances a company s technology decision-making 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. The TEI methodology consists of four components to evaluate investment value: benefits, costs, risks, and flexibility , 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