April 2023

The Total Economic Impact™ Of IFS Solutions Deployed In The Cloud

Cost Savings And Business Benefits Enabled By IFS Solutions Deployed In The Cloud

IFS logo

A Forrester Total Economic Impact™ Study Commissioned By IFS, April 2023

Table Of Contents

Advancements in the cloud drive future-fit organizations to digitally transform the underpinnings of their operations. Meanwhile, a generation of legacy enterprise software faces deprecation. This inflection point offers firms the opportunity to reimagine their foundational systems for supply chain and logistics, product engineering, and corporate administration, with an eye to sustainability. Today’s digital operations platforms foster an ecosystem of partnerships, automation, and leading-edge technologies.

Deployed to the cloud, IFS’s end-to-end, enterprise resource planning, service management, and asset management solutions deliver future-fit digital operations. For both hybrid-configured organizations and those seeking to operate fully in the cloud, IFS offers a flexible journey to evergreen software with the trusted partnership of Microsoft Azure deployment and cloud hosting. IFS cloud-deployed solutions enable corporate sustainability innovations and offer wide-ranging industry expertise with technical capabilities and artificial intelligence.

IFS commissioned Forrester Consulting to conduct a Total Economic Impact™ (TEI) study and examine the potential value enterprises may realize by transforming their digital operations with IFS in the cloud. 1 This study seeks to provide readers with framework to evaluate the potential financial impact of IFS cloud solutions on their organizations.2

To better understand the business and sustainability benefits and risks associated with this investment, Forrester interviewed six representatives of companies with experience migrating to IFS with cloud and hybrid-cloud configurations. For the purposes of this study, Forrester aggregated the interviewees’ experiences and combined the results into a single composite organization that is based in North America with global operations and is supported by 5,000 employees. It is a capital-intensive organization with a manufacturing element and five production sites across as many continents

The six interviewees noted that prior to investing in IFS cloud solutions, their legacy environments could no longer support their business needs. This made it impossible for them to scale sustainably and harvest the potential efficiencies and insights from automation and other advanced technologies. The prior environments included manual, redundant, and inconsistent processes. Outdated technologies resulted in crashes and costly downtime, while major, regular software releases and patch updates resulted in significant internal IT costs.

After their investments in IFS solutions and deploying these in the cloud, the interviewees’ organizations automated processes across production and operational business units, yielding organizationwide labor efficiencies.

Key results from the investment included reduced capital and operational expenditures, more uptime for end users, and faster time to value compared to the legacy environments.

Consulting Team: Courtenay O’Connor, Veronica Iles, Nahda Nisa

Key Statistics

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    Benefits PV
    $36.61M
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    Sustainability - Related Benefits PV
    $13.83M
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    Reduced Inventory Carrying Costs
    20%
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    Avoided Reporting
    2,800+ hours

Key Findings

Quantified benefits. Three-year, risk-adjusted present value (PV) business and sustainability benefits for the composite organization include:

  • Labor efficiencies of $18.5 million reallocated to growth drivers.

    The composite organization achieves immediate and ongoing user and nonuser labor productivities. The savings are reallocated across its profit centers, helping expand valuable operations while greatly diminishing unit costs.

  • Twenty percent reduction in inventory carrying costs, lowering capex by $12.3 million.

    With IFS supply chain insights, the composite organization reduces obsolescence, transportation, and inventory holding expenses, reducing the physical sprawl and effort required to maintain the legacy infrastructure.3

  • Reporting and uptime efficiencies valued at over $4.3 million.

    By retiring manual processes, the composite organization avoids over 2,800 hours of rote reporting, allowing resources to work on higher-value activities. Coupling these insights with improved uptime, key executives and decision-makers harvest and act on key insights while ensuring business continuity.

  • Savings of $1.5 million from decommissioning hardware and moving to an evergreen software approach.

    IFS solutions hosted in the Azure cloud ecosystem, the composite organization retires 70% of its hardware. This saves on license, support, update, and patch costs, and costs to maintain legacy hardware, while helping to decrease physical and carbon footprints.4

Unquantified benefits. Benefits that are not quantified in this study include:

  • A shift to agile systems and processes.

    The IFS enables a shift to agile systems and processes, which enhances process efficiency, improves employee satisfaction and support, and opens new markets.

  • Mobile enablement.

    The IFS cloud environment provides the infrastructure for future-fit advancements in operational processes, such as mobile capabilities needed to achieve many of the automation-related labor efficiencies.

  • Improved data security and governance.

    Interviewees noted the significant gains in governance and security with IFS compared to their organizations’ antiquated, legacy enterprise resource planning (ERP) systems. With better user controls and evergreen software updates, the containerized IFS cloud solutions safeguard critical systems from cyberthreats.

  • Further sustainability impacts.

    IFS cloud-deployed solutions also present opportunities for more sustainable business operations. These include lowering direct emissions through more efficient equipment operation and reducing travel and truck rolls with better business processes.

Costs.Costs for the composite organization include:

  • IFS licenses, maintenance, and cloud services.

    The composite remotely deploys IFS to the cloud, including the ERP and workforce management systems (WMS), and utilizes the cloud hosting services with Microsoft Azure.

  • Internal training and implementation.

    The composite organization involves technical and business resources in the IFS deployment and trains power users and end users.

  • Implementation, support services, and technology costs.

    The incurs costs related to technical, communications, and data services.

The representative interviews and financial analysis found that a composite organization experiences benefits of $36.61 million over three years. Nearly 38% of these benefits focus on sustainability for a total of $13.83 million in sustainability benefits.

“Every day, we agree on why we are deploying IFS cloud solutions: to move away from the combustion engine, to enter new markets, and to grow a profitable company that can last a hundred more years.”

IT manager, manufacturing

Benefits (Three-Year)

Labor efficiencies reallocated to growth activities Capital cost efficiencies Reporting and uptime efficiencies Savings from decommissioning legacy on-prem environment

TEI Framework And Methodology

From the information provided in the interviews, Forrester constructed a Total Economic Impact™ framework for those organizations considering investing in IFS solutions deployed in the cloud.

The objective of the framework is to identify the business and sustainability benefit, flexibility, and risk factors that affect the investment decision. Forrester took a multistep approach to evaluate the impact that IFS cloud solutions can have on an organization.

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    DUE DILIGENCE

    Interviewed IFS stakeholders and Forrester analysts to gather data relative to IFS cloud-deployed solutions.

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    INTERVIEWS

    Interviewed six representatives at organizations exploring various configurations of IFS solutions deployed in the cloud to obtain data with respect to business and sustainability benefits and risks. .

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    COMPOSITE ORGANIZATION

    Designed a composite organization based on characteristics of the interviewees’ organizations.

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    FINANCIAL MODEL FRAMEWORK

    Constructed a financial model representative of the interviews using the TEI methodology and risk-adjusted the financial model based on issues and concerns of the interviewees.

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    CASE STUDY

    Employed fundamental elements of TEI in modeling the investment impact: business and sustainability benefits, flexibility, and risks. Given the increasing sophistication of business case analyses related to IT investments, Forrester’s TEI methodology provides a comprehensive picture of the total economic and sustainability impact of purchase decisions. Please see Appendix A for additional information on the TEI methodology.

DISCLOSURES

Readers should be aware of the following:

This study is commissioned by IFS and delivered by Forrester Consulting. It is not meant to be used as a competitive analysis.

Forrester makes no assumptions as to the potential business or sustainability-related benefits that other organizations will receive. Forrester strongly advises that readers use their own estimates within the framework provided in the study to determine the appropriateness of an investment in IFS solutions deployed in the cloud.

IFS 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.

IFS provided the customer names for the interviews but did not participate in the interviews.

NEXT SECTION: The IFS Solutions Deployed In The Cloud Customer Journey

Interviews

Role Industry Region Total Employees
Chief information officer (CIO) Technology Global operations 853
Global ERP director Chemicals Global operations 10,000
Director of service management Food packaging Global operations 25,000
Director of engineering and IT Manufacturing Global operations 550
IT manager Manufacturing Global operations 700
Maintenance development manager Manufacturing European and North American operations 14,000

Key Challenges

Interviewees’ organizations came from prior ERP environments that no longer met their day-to-day business needs, much less positioned the organizations to sustainably scale, adapt, and innovate. Common challenges differed between representatives based on whether their organization was an existing or new IFS customer.

  • Challenges for existing IFS customers.

    Two interviewees’ organizations were existing IFS customers that upgraded to IFS cloud solutions. Their challenges related to:

    • Legacy environments that were not interoperable with future-fit technologies like machine learning and AI.

      Over-customization of their legacy IFS environments meant that the organizations were not positioned to effectively adopt advanced IFS software releases in conjunction with the cloud-deployed version. The global ERP director at a chemicals company that was an existing IFS customer noted how their organization missed advancement opportunities because it did not have IFS solutions deployed in the cloud. They said: “We feel pain points with our solution as it is highly customized. We are not able to utilize all the improvements IFS is doing on a running basis, which are launched on their new cloud versions.”

    • Limited new opportunities for insights and efficiencies.

      Within the capabilities of their prior IFS solutions, the existing IFS customers had already harvested low-hanging fruit and had no further areas to gain efficiencies without major process and technology overhauls.

    • Costly in-house IT management.

      With IFS instances in-house and on-premises, the CIO from the technology company shared that the burden of managing the digital environment around the clock exceeded the capacities of their organization’s internal team. They said: “Our on-premises environment required a lot of hardware, servers, and communications to other companies. It was very hands-on, and it became very tricky when it came to updates and support.”

  • Challenges for net-new IFS customers.

    Four interviewees’ organizations were brand new to IFS and came from various end-state configurations, including fully cloud-deployed as well as hybrid infrastructures. Their challenges included:

    • Inefficiencies related to manual reporting processes and costly downtime.

      Interviewees discussed highly manual reporting environments that often fell short of quality assurance requirements. With the lack of visibility, some interviewees noted the risk of costly downtime was a lingering concern that haunted their prior ERP environments.

      • The director of engineering and IT in the manufacturing industry shared, “The ERP had a major crash and also lacked day-to-day support.” This caused a major disruption in the legacy ERP environment.
      • The CIO at the technology company lamented the constant anxiety that went along with managing the environment in-house. They said: “It was hard for us to maintain good availability and redundance because our small IT team didn’t have the resources to maintain 24/7 support. We couldn’t trust our uptime because we didn’t have staff onsite or online. In general, risk was higher.”
      • The director of service management at the food packaging company noted the inability of their organization’s prior environment to capture and action critical data points. They said: “Our data in the legacy resource planning operation is scattered. We don’t have a unique database; we have many different instances.”
    • Technology environments with extensive hardware and capex.

      In some cases, interviewees reported legacy environments over 20 years old, requiring a significant level of hardware, infrastructure, and energy to operate. Regular upgrades and ongoing maintenance added costs to the IT resource and capital expenditures.

    • Poor usability and limited mobile experience.

      Routine processes consisting of manual reporting and reconciliation procedures hampered end-user experiences, particularly in purchasing and accounts payable and IT reporting.

      • The director of engineering and IT in the manufacturing industry described a prior environment that was not user-friendly. They said: “Processes in our legacy ERP were extremely manual. We were managing large portions of our business using spreadsheets. It was very expensive for me to maintain [structure query language] (SQL) reports, then turn that paperwork into usable data. This meant we were always looking in our rearview mirror.”
      • The maintenance development manager in the manufacturing industry cited poor user experience in their organization’s prior environment. They said: “The system was outdated. It was not supported anymore, and it had some really poor usability. User experience was not very good. It was hard to build for mobile.” This impacted employee retention and required specific, increasingly rare skill sets.
“With disparate data everywhere, there were around 5 million data points that we had no control over in our legacy environment.”

Director of service management, food packaging

Cloud Adoption Decision-Making Factors

When it comes to cloud migration, the question is no longer if, but when and in what way: fully cloud or hybrid? Build or buy? Industry-specific or horizontal solution?

As the single largest user and distributor of cloud technologies globally, the US is the largest cloud market in the world. Forrester’s 2021 data shows that among US enterprise infrastructure decision-makers, 94% are using at least one type of cloud deployment. A majority of these are using multiple deployment models of either hybrid or multicloud, with similar trends seen globally (see Figure 1).5

There are as many road maps to the cloud as there are organizations. No one-size-optimizes-all solution exists. Rather, firms must evaluate a series of characteristics to determine the right approach to the cloud: build their own, migrate to a single source of truth, modernize existing solutions, or replace them altogether (see Figure 2).6

Global Enterprise Cloud Adoption

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Figure 1. A growing number of global enterprise infrastructure decision-makers are using at least one type of cloud deployment with many using multiple deployment models of either hybrid or multicloud.

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Source: Forrester Research, Inc. Unauthorized reproduction, citation, or distribution prohibited

Figure 2. For a Total Economic Impact perspective on the benefits of industry digital transformation, an enterprise should evaluate the benefits, costs, flexibility, and risks associated with an appropriate industry cloud use case for it.

A Path To Hybrid-Cloud Infrastructure

As cloud computing enters its second decade, organizations that embrace it are often customer-led, insights-driven, fast, and connected — even in hybrid formats. But not everything is right for the cloud. Some firms may optimize with a hybrid mix of cloud services.

Building a hybrid cloud business case should be workload-specific while considering network gravity in the cloud versus on-premises decisions.

Pertaining to the physical proximity of processing to the data being processed, in the hybrid model, the data and its processing will span both external cloud services and on-premises services as close as possible, with high-capacity network connections between them.

Getting cloud right isn’t easy. Adapting to a hybrid or fully cloud model requires mastering new technologies and adjusting to new modes of self- service delivery, so proper change management is essential once the road map has been established (see Figure 3).7

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Network gravity may require some firms to optimize with a hybrid mix of cloud services
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Figure 3. A hybrid-cloud deployment can depend on many inputs. Organizations should consider a right-sourcing approach that works for their individual circumstances.

Customer Deployment Journey

While for some complex organizations, rolling out new digital operations platforms (DOPs) may take years, the decisions related to cloud journeys are very much current (see Figure 4).

However, to align with a future-fit end state that optimizes cloud advantages specific to their organizations, digital businesses must tackle massive change. In particular, core technology elements, operational systems, and processes that hold them back must be transformed now.

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Figure 4. Interviewees said their organizations were in various stages of digitally transforming their resource planning structures.

Investment Objectives

The interviewees’ organizations searched for a DOP solution that would enable them to:

  • Improve uptime, serviceability, and reliability.
  • Streamline customizations and fine-tune processes.
  • Digitize and automate processes for rapid efficiencies and decrease as many manual interactions as possible, including through mobile-enabled processes.
  • Manage the complexity of a sophisticated operational footprint within a single, global instance.
  • Support a sustainable business operation by both reducing travel time between production environments and reducing carbon footprints through better planning and reduced on-premises hardware.

Interviewees’ organizations selected IFS cloud-deployed solutions because IFS supported their sustainable business targets. These included to:

  • Shift to the cloud incrementally and strategically.
  • Lower carbon footprints through better planning and reduced on-premises hardware and energy consumption.
  • Consolidate inventories and gain efficiencies in equipment maintenance and deprecation.
  • Reduce travel time between sites.
“Keeping our software more up to date is very important. That’s one of the reasons we’re moving to the cloud.”

CIO, technology

Why Deploy IFS Solutions To The Cloud?

Based on their investment objectives, interviewees cited several reasons for selecting IFS as their organization’s DOP solution, including:

    • Unmatched functionality.

      Several interviewees stated that IFS had the strongest demonstration of their advanced functionality.

    • Evergreen approach to software.

      Interviewees noted that IFS’s evergreen concept was an attractive way to stay on top of new functions and improved processes in the coming upgrades of the software.

    • Enables sustainable innovation.

      Several interviewees noted that IFS allowed their organizations to tackle automations and other processes that decrease their carbon footprints, optimize equipment lifecycles, and enter new, more sustainable markets for the environment and for their businesses.

    • Dedicated, trusted partner.

      Interviewees said they viewed both IFS and Microsoft, the cloud-hosting partner, as dependable service providers that could ensure 24/7/365 handling of redundancy and backup, upgrades, and delivery. Interviewees from IFS customers that upgraded to cloud deployment stated that their organizations’ close relationship with IFS was an important decision-making factor.

“We believe IFS is one of the best-in-class software companies for service organizations.”

Director of service management, food packaging

Composite Organization

Based on the interviews, Forrester constructed a TEI framework, a composite company, and a business and sustainability benefits analysis that illustrates the areas financially affected. The composite organization is representative of the six interviewees, and it is used to present the aggregate financial analysis in the next section. The composite organization has the following characteristics:

  • Description of composite.

    The global, billion-dollar organization has a capital-intensive manufacturing element and 5,000 employees. The composite organization is shifting from a fully on-premises ERP environment to a hybrid configuration, retaining 30% of its physical technology infrastructure.

  • Deployment characteristics.

    The composite organization adopts an agile, land-and-expand deployment model across its five plant locations and 20 business units to be captured in IFS across its five production sites. It opts for a remote deployment of an ERP and WMS within the IFS environment.

With IFS, the composite organizations transitions from a fully on-premises environment to one that is 70% deployed to the cloud by the end of Year 3. The platform and open APIs are hooked up to middleware, offering the cloud environment sandbox for use within a few weeks.

Key Assumptions
  • $1 billion annual revenue
  • 5,000 employees
  • 20 entities in IFS
  • Five production sites
In optimizing capital and operational expenditures, the composite organization seeks to maximize the environmental benefits of IFS cloud solutions.

Enabling Sustainability Innovation

Sustainability-focused companies see better financial results than their peers. According to Forrester research, the business value of sustainability extends beyond process efficiencies and cost avoidances to impacting revenue growth from new opportunities, employee retention, attracting new investments, regulatory compliance, and the innovation that sustainability incubates.8

As more consumers hold companies accountable for sustainability efforts, organizations globally are incorporating sustainability strategies into organizational objectives. Forrester research highlights how sustainability can improve infrastructure optimization, stating: “Across the infrastructure stack, sustainability is synonymous with optimization, and optimization leads to efficiency.”9

Organizations often think conservatively about enterprise software modernization because they have significant financial investments and worry about too much disruption to the business or the possible failure of a technology project that is too big.

The enterprise software market has been one of the slowest to modernize in any real way during the past 20 years for many reasons. Historically, ERP business systems of the past have been complex, inflexible, expensive to change, and poorly suited for modern digital businesses, which results in slower cloud adoption than other business functions like digital transformation of the customer experience.10

Digital operations platforms can provide aspiring organizations with insights on the breadth of their operational and infrastructure footprint and related emissions. This baseline can chart improvements toward creating future-fit, optimized organizations.

Forrester Research points to new corporate sustainability benchmarks emerging (see Figure 5).11 Furthermore, several interviewees noted sustainability concerns in overhauling their organizations’ enterprise systems. Sustainability was seen as a key part of delivering brand promise and opening new markets for interviewees.

“We want to be a modern and green company and to last for at least another 100 years.”

IT manager, manufacturing

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Figure 5. Sustainability initiatives are top of mind for the Fortune Global 200. Ninety-five companies are in the Fortune Global 200 are in manufacturing sectors with varied levels of maturity in their sustainability approaches.

NEXT SECTION: Analysis Of Benefits

Total Benefits

Ref. Benefit Year 1 Year 2 Year 3 Total Present Value
Atr Labor efficiencies reallocated to growth activities $2,340,000 $7,020,000 $14,040,000 $23,400,000 $18,477,385
Btr Capital cost efficiencies $3,375,000 $5,062,500 $6,750,000 $15,187,500 $12,323,441
Ctr Reporting and uptime efficiencies $1,534,246 $1,724,998 $1,972,601 $5,231,845 $4,302,432
Dtr Savings from decommissioning legacy on-prem environment $3838,670 $616,950 $863,730 $1,864,350 $1,507,600
Total benefits (risk-adjusted) $7,632,817 $14,424,308 $23,626,133 $45,683,258 $36,610,503

Labor Efficiencies Reallocated To Growth Activities

  • Evidence and data.

    Interviewees said their organizations anticipated and realized early labor efficiencies when deploying IFS to the cloud. They reported efficiency forecasts ranging from 5% to 10% of FTEs when fully deployed.

    • The IT manager in the manufacturing industry shared that their organization learned much about the reality of its processes and mined efficiencies from the newly discovered insights. They said: “We found that a lot has happened out in the production area that we were not aware of that has come up to the surface with IFS deployed in the cloud. We understand what’s happening in a much better way than before.”
    • The director of engineering and IT in the manufacturing industry noted extensive manual processes in their organization’s prior environment that were automated early in the IFS deployment. They shared: “Purchasing took about six people each an hour per day, five days a week manually matching invoices and, probably 85% of the time, it would match and go straight to payment. With IFS, now those people will only have to look at exceptions, the 15% that don’t match instead of every single invoice. Just by standardizing visibility and digital processes, we anticipate there will be a lot of operational efficiencies to be gained that our legacy ERP just doesn’t support at all.”

    Interviewees noted that as their organizations scaled, costs savings were reallocated to growth activities.

    • The global ERP director in the chemicals industry described how IFS’s environment required less customization and testing, freeing up some of the IT hours needed compared to their organization’s prior environment and allowing them to reallocate efforts to value-add projects. They said: “We have a large team of 35 working on compliance, support tickets, and training our 5,000 IFS users. That team will be able to utilize their efforts into value-added and improvement projects rather than testing and verifying complex and difficult crimps into the application.”
    • The director of engineering and IT in the manufacturing industry noted significant value to be gained from the workforce management solution. They said: “We anticipate that with the IFS scheduling and planning module, scheduling will be done by one person instead of three people. And then those resources can then be focused on gaps in procurement, customer returns, and customer concerns. Sustainability is a benefit from an accuracy and consistency standpoint. There’s a lot of labor associated with paper processes.”
  • Modeling and assumptions.

    In aggregate, the composite organization experiences considerable time savings across user and nonuser groups, with increasing efficiencies as the solution scales its usage level across the organization.

    • Process automation for employee-facing systems drive efficiencies for all 5,000 employees, including nonuser roles.
    • The number of users onboarded to IFS double year over year, driving efficiencies of 1% in Year 1, 3% in Year 2, and 6% in Year 3.
    • IFS automations yield the highest concentration of efficiencies in the following business units: purchasing, finance, human resources, payroll, and supply chain management.
    • The average fully burdened annual salary of an employee is $104,000.
  • Risks.

    Forrester recognizes that these results may not be representative of all experiences and the benefit will vary depending on the following factors:

    • The velocity of labor efficiencies will be realized as a direct function of adoption and will be impacted by any challenges or delays of a phased deployment.
    • An organization may not roll out the workforce management use case in the first or second years of its investment or may never deploy IFS for workforce management, in which case the benefit may be delayed or not present at all.
    • Companies with larger hourly or contract employee workforces may have a larger percentage of their labor resources managed under IFS, resulting in higher levels of financial impact.
  • Results.

    To account for these risks, Forrester adjusted this benefit downward by 10%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $18.5 million.

Labor Efficiencies Reallocated To Growth Activities

Ref. Metric Source Year 1 Year 2 Year 3
A1 Number of employees Composite 5,000 5,000 5,000
A2 Average fully burdened annual salary of an employee TEI standard $104,000 $104,000 $104,000
A3 Labor efficiencies with IFS through automation Interviews 1.0% 3.0% 6.0%
A4 Productivity recapture TEI standard 50% 50% 50%
At Labor efficiencies reallocated to growth activities A1*A2*A3*A4 $2,600,000 $7,800,000 $15,600,000
Risk adjustment ↓10%
Atr Labor efficiencies reallocated to growth activities (risk-adjusted) $2,340,000 $7,020,000 $14,040,000
Three-year total: $23,400,000 Three-year present value: $18,477,385

Capital Cost Efficiencies

  • Evidence and data.

    IFS solutions deployed to the cloud allowed interviewees’ organizations to enable edge and IoT devices and harness the power of automation and machine learning to lower their capital expenditures and inventory carrying costs. Leveraging these emerging technologies allowed interviewees and their organizations to position inventory efficiently ahead of anticipated demand and close to customers, which can help reduce an enterprise’s carbon footprint.12 Forrester research indicated these technologies solutions can further give insight and increase efficiency in asset-intensive industries, helping to:

    • Reduce the carbon footprint and energy consumption of massive cloud data centers by storing and analyzing data in the location it’s created can.
    • Decrease critical resource use (e.g., water and energy); minimize waste.
    • Lower hazardous greenhouse gas (GHG) emissions.
    • Improve health and safety of customers and employees and satisfy compliance requirements.
    • Give citizens, customers, and employees insights into harmful air pollutant levels at a given place and time.13

    IFS supply chain insights offered interviewees’ organizations broader perspective into their capital infrastructures, improving their abilities to control costs related to procurement and inventory in several ways, such as reduced transportation and inventory holding expense, reducing the physical sprawl and effort required to maintain the legacy infrastructure.

    • The director of engineering and IT in the manufacturing industry shared, “With the WMS and the warehouse management processes, we anticipate we’ll reduce our total inventory by about 20%.”
    • The IT manager in the manufacturing industry similarly charted significant inventory reductions for their organization while it maintained the ability to service customers. They said: “Since we are able to follow the production much better, we will be able to scrap less. We will reduce the cost of capital within each factory, but also the amount of stored product that we need to maintain a good service level to our customers. We will be able to consolidate the inventories that we have between sites in a much better way, saving us approximately $20 million.”
  • Modeling and assumptions.

    The composite organization experiences efficiencies in its capital costs as follows:

    • The composite organization’s average inventory balance is 15% of annual revenues or $150 million with a carrying cost of 25% of inventory balance.
    • With efficiencies IFS’s cloud-derived insights affords, the composite reduces the cost of carrying its inventory by 10% in Year 1. As the organization scales IFS deployed in the cloud, it adds additional 5% effectiveness in Years 2 and 3, respectively.
  • Risks.

    Forrester recognizes that these results may not be representative of all experiences and the benefit will vary depending on:

    • The organization’s average inventory balance as a portion of overall revenues and broader trends in supply chain logistics.
    • The organization’s carrying cost of inventory driven by the volume, scale, and complexity of its capital assets. .
    • The impact of potential e-waste resulting from large volumes of new and legacy devices and batteries associated with IoT and edge devices.14
    • An organization’s sustainability benefits from AI/ML solutions will vary, as will any reduction in environmental footprint.15
  • Results.

    To account for these risks, Forrester adjusted this benefit downward by 10%, yielding a three-year, risk-adjusted total PV of $12.3 million.

  • Customer Sustainability Journey

    Companies that are sustainability-focused see better financial results than their peers due to multiple cascading impacts organizationwide.

    Operational efficiency affects bottom- and top-line growth and supports an innovative work culture. Having a general sense of making a positive effect on the planet motivates employees to find creative solutions around archaic processes and ways of working.

    The director of service management in the food packaging industry described a comprehensive corporate sustainability strategy.

    The interviewee related a sustainability plan through 2040, adding that their organization is moving quickly with sustainability ambitions, including making sizable investments in:

    • Solar panels and renewable energy, reducing carbon emissions, and adding energy back to the grid.
    • A virtual-reality training environment to reduce foot traffic from physical training centers, further reducing the organization’s carbon footprint.

    The interviewee shared, “We want to increase the number of machines that we have on service, but we want to service those machines with more optimizations [and] less trips attending those machines at customer sites.”

    To achieve these optimization and sustainability goals, the company puts IFS at the center of its sustainable resource planning ecosystem.

Capital Cost Efficiencies

Ref. Metric Source Year 1 Year 2 Year 3
B1 Average inventory balance Composite $150,000,000 $150,000,000 $150,000,000
B2 Inventory reductions with IFS Interviews 10% 15% 20%
B3 Carrying cost of inventory Assumption 25% 25% 25%
Bt Capital cost efficiencies B1*B2*B3 $3,750,000 $5,625,000 $7,500,000
Risk adjustment ↓10%
Btr Capital cost efficiencies (risk-adjusted) $3,375,000 $5,062,500 $6,750,000
Three-year total: $15,187,500 Three-year present value: $12,323,441
“The IFS environment deployed in the cloud is more reliable with better quality, uptime, and better redundancy.”

CIO, technology

Reporting And Uptime Efficiencies

  • Evidence and data.

    The interviewees shared several benefits of IFS related to improving visibility into their organizations, speed, consistency, reliability, and quality of insights across their organizations.

    Interviewees noted that by automating and streamlining reporting processes, IFS saved their organizations’ IT departments thousands of hours of manual reporting.

    • The maintenance development manager in the manufacturing industry shared the impact of the information hubs organized in IFS, saying: “IFS has ‘lobbies’ in their system that are very good at collecting and visualizing data. Because of the complexity of our organization, we’re anticipating more accurate reporting with more detailed descriptions of the work, which will connect the right assets at the correct level.”
    • The director of engineering and IT in the manufacturing industry described how IFS impacted their organization’s ability to act on data-driven insights. They said: “We can make better decisions on a daily basis rather than constantly looking in the rearview mirror. With IFS, we can standardize the visibility with digital processes.” They also noted that IFS user-querying capabilities would eliminate 80% of the reporting efforts required in the prior environment. They said: “We have about 200 different SQL reports that we are leveraging daily, weekly, monthly. With the IFS reporting portal, we will only produce 20% to 25% of those now.”
    • The director of service management in the food packaging industry also looked forward to improving decision-making with IFS. They said, “This type of solution will help us to make data-driven decisions that have no bias.”

    Interviewees also described how IFS is reducing downtime.

    • The CIO in the technology industry welcomed the peace of mind that IFS provided through its improved uptime and redundancy, allowing their team to focus on higher-value activities. They said: “Uptime, serviceability, and reliability are some of our main goals. We have also been able to maintain the environments and have them updated more frequently, so management of the environment is much easier now, and we can do it in a more controlled way with more quality. Now, we can focus on things that are closer to the business and more important for the company like other cloud services.”
    • The director of engineering and IT in the manufacturing industry described the downtime and lack of support in their organization’s prior environment, saying: “The system was down for seven or eight days. So, that was one incident, but primarily it’s the day-to-day support that was lacking.”
  • Modeling and assumptions.

    The composite organization realizes reporting and uptime efficiencies as follows:

    • In the prior environment, six IT resources spent 5 hours a week producing reports.
    • With IFS dashboards and automated reporting, the reporting effort is reduced to one resource spending less than 1 hour a week, which is a 40% reduction in Year 1.
    • As the organization scales the number of business units captured within the IFS single pane of glass, the reporting efficiencies increase to 65% in Year 2 and 80% in Year 3.

    • Manual processes and aging infrastructure in the prior environment leads to further inefficiencies related to ERP downtime:

      • In the past 10 years, the composite organization had one major downtime event lasting eight days. Without improvements, the likelihood of additional events in future years increases. Although the likelihood increases, the ability to remediate the issue may decrease and the severity of incidents may increase. With the legacy environment, the composite was increasingly more susceptible to outages in the future, with an inferred 15% likelihood in Year 1, increasing to a 25% likelihood by Year 3 without IFS deployed in the cloud.
      • Based on past experiences, the composite expects at least eight days of ERP downtime per outage event, affecting 80% of employees at a $285 average daily burdened cost of all employees impacted.
      • Forrester assumes a 50% productivity capture to reflect the reality that some regained hours may not be used productively.

    • As IFS is further deployed to the composite’s full-scale configuration, it mitigates the potential impact for 90% of employees in Year 3.

    • As IFS deployments ultimately impact 50% of the composite’s profit center operations and the avoided business loss due to ERP outage with IFS equals half of daily revenue.

  • Risks.

    Forrester recognizes that these results may not be representative of all experiences and the benefit will vary depending on:

    • The level of manual reporting processes maintained in the organization’s prior environment and the number and wage of resources involved.
    • The number of ERP outages and length of downtime the organization has experienced.
    • The number of profit centers included and the number of people working in affected systems.
    • The scale and complexity to which IFS is deployed in the cloud.
    • The overall cloud environment and integrations of any legacy and upgraded hardware.
  • Results.

    To account for these risks, Forrester adjusted this benefit downward by 20%, yielding a three-year, risk-adjusted total PV of $4.3 million.

icon
Avoided hours of manual reporting:
2,800+

Reporting And Uptime Efficiencies

Ref. Metric Source Year 1 Year 2 Year 3
C1 Hours spent by IT on reporting in legacy environment Interviews 1,560 1,560 1,560
C2 Average hourly burdened cost of IT resources Composite $56 $56 $56
C3 Reduction in reporting efforts with IFS Interviews 40% 65% 80%
C4 Value of reporting time savings C1*C2*C3 $34,944 $56,784 $69,888
C5 Probability of downtime due to ERP outage event in legacy environment Composite 15% 20% 25%
C6 Average number of days of ERP downtime per outage event Interviews 8 8 8
C7 Total number of employees impacted per ERP outage Composite 4,000 4,000 4,000
C8 Average daily burdened cost of all impacted employees impacted per outage $104,000/365 days $285 $285 $285
C9 Productivity recapture rate TEI standard 50% 50% 50%
C10 Impact to employees avoided with IFS Composite 75% 80% 90%
C11 Avoided business loss due to ERP outage with IFS ($1B/365)/2 $1,369,863 $1,369,863 $1,369,863
C12 Subtotal: Cost savings from reduced downtime for internally facing applications (C5*C6*C7*C8*C9*C10)+C11 $1,882,863 $2,099,463 $2,395,863
Ct Reporting and uptime efficiencies C4+C12 $1,917,807 $2,156,247 $2,465,751
Risk adjustment ↓20%
Ctr Reporting and uptime efficiencies (risk-adjusted) $1,534,246 $1,724,998 $1,972,601
Three-year total: $5,231,845 Three-year present value: $4,302,431
“Moving to a smaller data center square footage will reduce our energy consumption.”

CIO, technology

Savings From Decommissioning Legacy On-Prem Environment

  • Evidence and data.

    While the prior environments and cloud journeys of interviewees’ organizations varied, several interviewees detailed people, process, and technology savings related to decommissioning their organizations’ legacy ERP systems. Furthermore, interviewees discussed how moving to an Azure-hosted data center provided opportunities for decreasing their carbon footprint by reducing their legacy data center’s physical sprawl, eliminating their on-premises power and cooling requirements, and increasing reliance on renewable energy.16

    • The CIO in the technology industry welcomed the reduced complexity that the IFS cloud environment provided. They said: “The main savings was that we decommissioned the hardware and the people needed to maintain that, saving those hours and that knowledge. We also saved a bit on pure consulting fees.”
    • The global ERP director in the chemicals industry noted the legacy savings for their organization, saying, “With the semiannual or annual updates from IFS, we can ensure we are always using the latest technology and features, rather than upgrading every five to six years, which will avoid huge costs and risks related to upgrades.”
    • The director of engineering and IT in the manufacturing industry shared, “From a web-hosting standpoint, we’ll be decreasing our costs as we move to IFS.”
    • The IT manager in the manufacturing industry said that even with a hybrid end state, their organization saw significant savings from moving away from its older, fully on-premises environment. They said: “We are consolidating at least 15 systems to one system. We will not be able to take away all of the data centers, but it will be much, much smaller and more cost-efficient. The legacy hardware that we decommission will reduce our carbon footprint.”
    • The maintenance development manager in the manufacturing industry discussed the efficiencies gained with reducing their physical equipment. They said, “IFS Cloud makes it easier to optimize and develop the [equipment] maintenance work and helps us follow the course in a better way.”
  • Modeling and assumptions.

    The composite organization experiences significant savings by moving to an evergreen approach to software with IFS deployed in the cloud and moving the majority of its mission-critical applications to the cloud:

    • With IFS deployed in the cloud, the composite decommissions 70% of its legacy ERP hardware over the course of three years.

    • The composite’s prior ERP environment received updates on a five-year schedule. It would cost $4.625 million to upgrade and maintain over the three-year period broken out over one-time and ongoing capital expenses, including data center leasing, energy consumption, on-prem backup and recovery solutions, etc.

      • The legacy ERP software fees cost the composite organization $925,000 over the course of three years.
      • The annual labor cost to issue software patches for the legacy system, issued twice monthly, incurred an additional $180,000 per year.
      • To ensure interoperability, the composite would have incurred the following upgrade costs: a $50,000 one-time cost of upgrading legacy hardware and $200,000 per year in recurring costs to maintain legacy hardware over three years.
      • The composite organization would need a consultant (IFS or a third party) to guide hardware configuration to software capabilities and business needs. To oversee the upgrades to the legacy ERP environment, the composite organization would need to contract a change management consultant, incurring further fees of $20,000 per year over three years for legacy on-premises environment upgrades and maintenance.
      • Finally, the composite organization would need to continue staffing an internal help desk FTE that dedicates 25% of their time with a fully burdened salary of $184,000 or $46,000 per year over three years for internal help desk FTEs dedicated to maintaining legacy hardware.
  • Risks.

    Forrester recognizes that these results may not be representative of all experiences and the cost will vary depending on:

    • The organization’s cloud journey and the level of hardware decommissioned with IFS deployed in the cloud.
    • The organization’s effort to deploy an evergreen approach to software.
    • The frequency and volume of software releases and patches.
    • Reliance on other emerging technologies, such as AI/ML and virtualization, which can require considerable compute requirements with corresponding power demands.17
    • An organization’s approach to cloud hosting.
    • An organization’s approach to deconstructing, reusing, remanufacturing, and minimizing waste.18
  • Results.

    To account for these risks, Forrester adjusted this benefit downward by 10%, yielding a three-year, risk-adjusted total PV of $1.5 million.

Savings From Decommissioning Legacy On-Prem Environment

Ref. Metric Source Year 1 Year 2 Year 3
D1 Legacy system decommissioning rate Composite 30% 50% 70%
D2 Prorated cost of legacy ERP software updates (five-year schedule) Composite $925,000 $925,000 $925,000
D3 Average annual cost of legacy ERP software patches Interviews $180,000 $180,000 $180,000
D4 Subtotal: Evergreen approach to software updates value D1*(D2+D3) $331,500 $552,500 $773,500
D5 Avoided one-time cost of upgrading legacy hardware (e.g., servers, storage area network, backup solutions) Composite $50,000
D6 Avoided recurring cost of running legacy hardware (e.g., energy usage, backup and recovery, vendor maintenance and help-desk fees, etc.) Composite $200,000 $200,000 $200,000
D7 Avoided consulting fees for legacy on-prem environment upgrade and maintenance 10%*D6 $20,000 $20,000 $20,000
D8 Fully burdened annual salary of internal help desk FTE TEI standard $184,000 $184,000 $184,000
D9 Internal recurring cost of internal help desk FTE dedicated to maintaining legacy hardware 25%*D8 $46,000 $46,000 $46,000
D10 Subtotal: Avoided cost of maintaining legacy on-prem hardware D1*(D5+D6+D7+D9) $94,800 $133,000 $186,200
Dt Savings from decommissioning legacy on-prem environment D4+D10 $426,300 $685,500 $959,700
Risk adjustment ↓10%
Dtr Savings from decommissioning legacy on-prem environment (risk- adjusted) $383,670 $616,950 $863,730
Three-year total: $1,864,350 Three-year present value: $1,507,600

Unquantified Benefits

Additional benefits that customers experienced but were not able to quantify include:

  • A shift to agile systems and processes.

    Two interviewees discussed the benefits of shifting to agile systems to enhance process efficiency, improve employee satisfaction and support, and open new markets.

    • The director of service management in the food packaging industry shared: “With an agile implementation, we’re looking to increase the satisfaction rate of the end users in the regions with our initiatives. We’re focusing more on the user at this moment, because if they are happy with the solution and if they use it correctly, the productivity results will come later. The other idea with agile is that we can go to market quicker and can have better engagement and interest of end users.”
    • The IT manager in the manufacturing industry said: “Our main goal is to be more agile to new customer demands since we are an old company in a quite traditional industry working mostly on products with combustion engines. We are trying to be more agile to be able to enter new markets and invest in new companies, making it easy for mergers and acquisitions going forward.”
  • Improved data security and governance.

    Interviewees noted significant gains in security and governance with IFS compared to their antiquated legacy ERP systems where wide swathes of their organizations were unsupported and vulnerable. With better user controls and evergreen software updates, interviewees said IFS cloud-deployed solutions helped to diminish their organizations’ vulnerability against cyberthreats.

    • The director of engineering and IT in the manufacturing industry said, “Using Azure’s authentication, security will be greatly improved, just with user permissions and user access where some things will be managed better.”
    • The global ERP director in the chemicals industry said, “IFS Cloud is a more modern technology, so it should be even more secure because [IFS] will release security patches.”
  • Mobile enablement.

    For many interviewees’ organizations, mobile enablement was a necessary precursor for many of the automation-related labor efficiencies.

    • The maintenance development manager in the manufacturing industry shared: “With IFS-enabled automation, you don’t need to walk between your assets to your office just to report some work done. You can do it right away in the field when you have done the job and then do some productive work with that time that has been freed up from walking from one place to another.”
    • The IT manager in the manufacturing industry pointed to newfound technical capabilities with IFS solutions deployed to the cloud. They said: “We have the quite aggressive journey with our end users to make them more digital. We have deployed mobile devices to all our employees to be able to use in the production area as well.”

Sustainability-Related Flexibility

Just as each organization’s cloud journey will vary, so too will its sustainability strategy and related reporting. According to Forrester research, the business value of sustainability extends beyond process efficiencies and cost avoidances, to impacting revenue growth from new opportunities, employee retention, attracting new investments, regulatory compliance, and the innovation that sustainability incubates.20

As organizations reimagine the underpinnings of their infrastructure, operations, and resource planning, the Task Force on Climate-Related Disclosures offers a framework for untangling the interrelated risks and opportunities for an enhanced perspective of their total, sustainable economic impacts (see Figure 6 for insight into quantification guidance).

Business tools from the SDG Compass can help organizations quantify their impacts within the SDG goals that relate to their organizations.21 Seven out of 17 UN sustainable development goals adopted in 2015 are directly related to environmental sustainability.

While complying with these nascent reporting requirements will help identify the downstream opportunities for organizations leveraging sustainability-related optimizations, organizations should not expect a quick win. As the return on sustainability-related investments can be difficult to quantify, Forrester advises realizing strong sustainability benefits take time. Important up-front costs in setting up a holistic sustainability approach for organizations include third-party independent assessments and time spent on planning and implementation efforts.

As a first step of many, digital operations platforms can provide a single pane of glass for organizations to understand the full scope and breadth of their operations and related emissions and chart improvements toward the long-term goal of creating a future-generation-safe organization.13

figure

Figure 6. Industrial sustainability addresses products, resources, and operational processes.

Climate action is a critical business initiative impacting the survival of every organization. Accurate and systematic measurement is always the first step, but approaches to climate action depend on industry, vertical, and individual organizational priorities.23

Interviewees pointed to the ability to iterate towards a more sustainable operation with an agile-supported planning framework (see Figure 7 for climate-related opportunities for flexibility).

figure

Figure 7. Depending on an organization’s industry or geography, sustainability-related reporting will soon be a compliance requirement rather than a marketing option. Quantifying environmental impacts with tools from international standards will require far-reaching analysis related to an organization’s enterprise resource planning. The global Task Force on Climate-Related Disclosures (TFCD) provides a holistic framework for surfacing a robust sustainability strategy in organizations. Further guidance from Forrester shows how sustainability considerations can translate into a host of organizations benefits.

Additional Opportunities For Flexibility

The value of flexibility is unique to each customer. There are multiple scenarios in which a customer might implement IFS deployed in the cloud and later realize additional uses and business opportunities, including:

  • Advanced technical capabilities that enable future use cases

    For many interviewees’ organizations, mobile enablement was a necessary precursor for many of the automation-related labor efficiencies.

  • Future interconnected capabilities.

    A maintenance development manager in the manufacturing industry considered internet of things (IoT) devices to facilitate mobile connections, stating, “We are building capabilities in IFS to utilize IoT sensors and measurements.”

  • Introducing lean concepts to improve processes and outputs.

    A director of engineering and IT in the manufacturing industry described focusing future efforts on lean manufacturing concepts to fill operational process gaps. They shared, “Ideally, we would focus more attention on building a foundation so that we could introduce lean concepts and lean manufacturing to dramatically improve our processes and our outputs across all plants.”

Flexibility would also be quantified when evaluated as part of a specific project (described in more detail in Appendix A).24 See Figure 8 for more insight into flexibility opportunities with digital cloud ecosystems.

figure

Figure 8. Enterprises take multiple, simultaneous paths to the cloud to build customer-focused ecosystems and accelerate digital business.

Source: Forrester Research, Inc. Unauthorized reproduction, citation, or distribution prohibited

NEXT SECTION: Analysis Of Costs

IFS Licenses, Maintenance, And Cloud Services

  • Evidence and data.

    Interviewees’ organizations had various configurations of IFS modules and capabilities deployed, impacting their respective costs related to IFS licenses, maintenance, and cloud services, including hosting with Microsoft Azure.

    • Main processes encompassed within the IFS solution deployed to the cloud included finance, procurement, managing customer relationships (CRM) and assets manufacturing, supply chain, field service, and human resources.
    • Within these main processes and depending on the organization’s industry, IFS offered an extensive array of modules, ranging from strategic and administrative, back-of-the-house functions, such as business planning and purchasing, as well as customer-facing modules pertaining to contact centers, customer orders and schedules, and transaction interfaces.
    • Interviewees said their organizations also took advantage of IFS service and consulting offerings. All interviewees’ organizations had enrolled in the IFS Technology Support Package at the Platinum level while half of the interviewees’ organizations had enrolled in the IFS Success service.
    • Interviewees’ organizations paid fees to IFS that were directly correlated to whether the end state would be fully deployed to IFS Cloud or a hybrid approach that included cloud services from IFS.
    • Interviewees’ organizations implemented modules that were priced on a user basis. Some organizations may include pricing elements based on the number of assets contained within the solution.
  • Risks.

    Forrester recognizes that these results may not be representative of all experiences and the cost will vary depending on the following:

    • Cost of licensing, maintenance, and cloud services are dependent on the number and type of IFS modules deployed. Fees may be assessed as a function of the number of users, or, in some cases, the number of assets included in the IFS environment.
    • Fees for IFS deployed in the cloud include cloud hosting on Microsoft Azure. Organizations may choose other cloud options at their own expense.
    • Not all organizations will use IFS to connect every use case modeled in this study and, as a result, they may have lower subscription fees.
    • Vice versa, organizations may choose to have an even more rigorous deployment configuration and incur greater subscription fees.
    • Pricing may vary. Contact IFS for details.

Internal Costs

  • Evidence and data.

    Internal costs for interviewees’ organizations were related to internal implementation efforts and training of power users and end users. The organization’s industry as well as its cloud end state impacted the overall scope of deployment. Depending on use case, unique business requirements, and method of implementation, deployments of IFS cloud services may be completed in three to 12 months.

    • The CIO at the technology organization described a relatively brief deployment period. They said: “It was not a big investment to move to the cloud. The investment was more the 300 hours that we needed to spend internally to prepare the environment [and] to change things before moving to the cloud.”
    • The global ERP director in the chemicals industry described the migration process from their organization’s former IFS environment as extensive. They said: “Our main target is to audit customizations to see to what extent they need to be replaced by IFS core or maintained. If maintained, we needed to determine how to maintain them in an evergreen-friendly structure.”
    • The interviewees from capital-intensive organizations with complex, global organizational footprints reported lengthier implementations.
    • The director of service management for the food packaging company detailed a highly iterative deployment and implementation process across their complex organization, noting that with IFS, their organization worked in an agile capacity for the first time.
    • The IT manager in the manufacturing industry outlined their organization’s deployment, which included a larger initial setup at its biggest physical sites. Following that phase, deployment of additional business units were conducted in parallel with different go-live dates.
  • Risks.

    Forrester recognizes that these results may not be representative of all experiences and the cost will vary depending on the following factors:

    • Cloud-first organizations and those with minimal on-premises infrastructures may experience a more rapid deployment process of less than a year. Such deployments can simplify upgrades to the IFS cloud environment as fewer customizations are required.
    • Organizations may use the IFS deployment and implementation phase as an opportunity to overhaul broader business systems to align with cloud capabilities and today’s industry best practices. While these efforts may extend the deployment and implementation timeline initially, such efforts may reduce the costs of future upgrades and simplify the need for customizations to align with legacy business practices.
    • An organization’s industry-related best practices may also impact the scale of internal deployment costs. Existing IFS customers may experience a shorter migration period from their legacy environments compared to net-new customers, particularly if they are coming to IFS with systems aligning with agile and automation efforts already in place.

Implementation And Technology Costs

  • Evidence and data.

    Deploying IFS to the cloud was a major transformational initiative for the interviewees’ organizations. Interviewees noted additional costs to ensure that their organizations’ considerable investment in technology, overhaul in organizational processes, and change management and end-user adoption success all aligned with their goals for IFS cloud deployment.

    Interviewees cited the need for change management consultants to optimize the transition and adoption phases. Some organizations contracted directly with IFS for consulting services, while others engaged third-party consultants connected to the IFS ecosystem.

    • One interviewee said their organization enlisted a cadre of consultancies to ensure project success. The director of service management in the food packaging industry said: “We have two different sets of consultants. One is specifically dedicated to the actual IFS implementation and another set of consultants is leading our change management workstreams and demonstrating ROI. We also brought within this process experts to help us develop the future state processes. One is focused on building out and implementing IFS, and another one is focused on the change management and helping us to realize the return potential.”
    • Whether interviewees’ organizations were decommissioning legacy hardware and moving to the cloud or upgrading existing cloud-enabled capabilities, many interviewees noted ancillary costs related to enhancing the cloud-supported technology environment. These various technological upgrades included Wi-Fi enablement or enhancement on the shop floor and secure data communications connection to IFS (particularly for those decommissioning data centers). There was a one-time infrastructure upgrade cost and then ongoing costs related to the tech services that the upgrade to IFS deployed in the cloud enabled.
    • The CIO at the technology company discussed the additional costs related to shifting from on-prem to the cloud. They said: “We used to have our own data center and all companies could communicate with the data center. Now, we have to create communication VPN, data connection, and an express route to our web hosting with Azure, which needs to be more secure and stable than a basic internet connection.”
    • The maintenance development manager in the manufacturing industry also cited additional costs to upgrade their organization’s technology environment alongside the IFS cloud deployment, including measurement device calibration, which entailed both one-time and recurring costs.
  • Risks.

    Forrester recognizes that these results may not be representative of all experiences and the cost will vary depending on the following:

    • Change management consultants required to optimize transition and adoption can be a third party or IFS provided. Change management efforts are recommended to aid with adoption and ROI realization.
    • The level of advanced technologies included in the IFS cloud-deployed instance can have a significant impact on the initial and ongoing ancillary costs (e.g., IoT-enabled devices, Wi-Fi enablement, machine learning, and AI integrations in the technical environment, and virtual or augmented reality capabilities).
NEXT SECTION: Appendixes

Appendix A: Total Economic Impact

Total Economic Impact 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.

Total Economic Impact Approach

  • icon

    Benefits represent the value delivered to the business by the product. The TEI methodology places 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.

  • icon

    Costs consider all expenses necessary to deliver the proposed value, or benefits, of the product.

  • icon

    Flexibility represents the strategic value that can be obtained for some future additional investment building on top of the initial investment already made. Having the ability to capture that benefit has a PV that can be estimated.

  • icon

    Risks measure the uncertainty of benefit and cost estimates given: 1) the likelihood that estimates will meet original projections and 2) the likelihood that estimates will be tracked over time. TEI risk factors are based on “triangular distribution.”

  • icon
    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.

  • icon
    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.

  • icon
    DISCOUNT RATE

    The interest rate used in cash flow analysis to take into account the time value of money. Organizations typically use discount rates between 8% and 16%.

  • icon
    SUSTAINABILITY BENEFITS

    The business value, returns, and economic impact of an organization’s sustainability investments.

The initial investment column contains costs incurred at “time 0” or at the beginning of Year 1 that are not discounted. All other cash flows 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 in 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 and Cash Flow tables may not exactly add up, as some rounding may occur.

Appendix B: Endnotes

1 Total Economic Impact 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.

2 At the beginning of 2021, IFS launched IFS Cloud as a platform including ERP, asset management, and service management. Its composable architecture allows customers to select modules that are relevant to their business needs. This replaces IFS’s previous suite of applications that could be deployed on-premises or in the cloud. For this study, Forrester spoke to representatives of organizations that have deployed both IFS Cloud and other IFS solutions in the cloud.

3 Source: “The ROI Of Supply Chain Management,” Forrester Research, Inc., April 6, 2022.

4 Source: “The Forrester Technology Sustainability Framework,” Forrester Research, Inc., July 26, 2021.

5 Source: “The State Of The Cloud In The US, 2022,” Forrester Research, Inc., June 8, 2022; “The State Of Cloud In Europe, 2022,” Forrester Research, Inc., July 14, 2022; “The State Of Cloud In Australia And New Zealand, 2022,” Forrester Research, Inc., August 16, 2022.

6 Source: “The Rise Of Industry Cloud Solutions,” Forrester Research, Inc., June 24, 2021.

7 Source: “The Forrester Guide To Hybrid Cloud,” Forrester Research, Inc., September 16, 2021.

8 Source: “Factors Driving The ROI Of Sustainability,” Forrester Research, Inc., April 22, 2021.

9 Source: Ibid.

10 Source: “Executive Guide 2022: Digital Operations Platforms,” Forrester Research, Inc., January 5, 2022.

11 Base: 95 Fortune Global 200 firms in industrial sectors (61 with a greenhouse gas target, 57 with a named a sustainability lead, and 29 with a set a carbon-neutral target); Data in the figure has been updated for the 2022 report; Source: “The State Of Environmental Sustainability In The Fortune Global 200, 2020,” Forrester Research, Inc., January 15, 2021.

12 Source: “The ROI Of Supply Chain Management,” Forrester Research, Inc., April 6, 2022.

13 Source: “Jekyll And Hyde: The Dual Role Of Emerging Tech In Environmental Sustainability,” Forrester Research, Inc., April 19, 2022.

14 Source: Ibid; Technology decision-makers must assess the potential aggregated negative sustainability impacts on carbon footprint, power use, and heat generation. Diverse, locally distributed edge data centers may create sustainability challenges related to power and cooling.

15 Source: Ibid; Technology decision-makers should consider data center power sources (i.e., those powered by renewable energy vs. fossil fuels) and weigh data storage and computational power requirements to train computational model.

16 Source: “Guide Your Sustainability Program With The Forrester Sustainability Maturity Model,” Forrester Research, Inc., October 27th, 2021; “The Forrester Technology Sustainability Framework,” Forrester Research, Inc., July 26th, 2021; Hyperscale data centers operated by colocation providers and cloud players have grown increasingly efficient and gained much lower power usage effectiveness (PUE) ratings due to a variety of factors like standardization, specialized design, and extreme automation, all of which their massive scale and investment capabilities make possible.

17 Source: Jekyll And Hyde: The Dual Role Of Emerging Tech In Environmental Sustainability,” Forrester Research, Inc., April 19, 2022; Reliance on other emerging technologies, such as AI/ML and virtualization, that can require considerable compute requirements with corresponding power demands. Technology decision-makers should consider data storage and compute power requirements to train computational models for data center thermo-optimization.

18 Source: Ibid; Diverse, locally distributed edge data centers may create sustainability challenges due to inconsistent HVAC systems to power and cool the servers, so organizations that do not use Azure cloud hosting should consider the full range of environmental impacts.

19 Source: Ibid; Replacing and discarding older, incompatible, or dumb devices and old batteries can increase e-waste. Finding the right refresh cycle and e-waste management techniques can help maximize this sustainability benefit.

20 Source: “Factors Driving The ROI Of Sustainability,” Forrester Research, Inc., April 22, 2021.

21 Source: “SDG Compass,” developed by GRI, United Nations Global Compact, and World Business Council for Sustainable Development (WBCSD), 2015.

22 Source: “The State Of Industrial Sustainability In 2022,” Forrester Research, Inc., May 27, 2022.

23 Source: “The ROI Of Sustainability,” Forrester Research, Inc., September 2022.

24 Source: “Cloud Powers The Adaptive Enterprise,” Forrester Research, Inc., January 25, 2022.

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.

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 forrester.com.

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