May 2021

The Total Economic Impact™ of LexisNexis® InterAction®

Cost Savings And Business Benefits Enabled By InterAction

LexisNexis logo InterAction logo

A Forrester Total Economic Impact™ Study Commissioned By LexisNexis, May 2021

Table Of Contents

LexisNexis® InterAction® is a legal and professional services firm-specific Customer Relationship Management (CRM) solution that automates and improves client engagement and business development practices. Customers that deployed InterAction saw a 62% efficiency improvement in their marketing and business development staff, a 34% efficiency improvement for lawyers and professionals, and a 2% improvement to revenues that is directly attributable to InterAction.

LexisNexis® InterAction® is a CRM solution built for the legal and professional services industries. InterAction improves client engagement, automates contact information capture and updates, and provides analytics on client engagement and client business. Firms utilize InterAction to gain a better understanding of their businesses and turn these insights into cost savings and additional revenue.

LexisNexis commissioned Forrester Consulting to conduct a Total Economic Impact™ (TEI) study and examine the potential return on investment (ROI) enterprises may realize by deploying InterAction.1 The purpose of this study is to provide readers with a framework to evaluate the potential financial impact of InterAction on their organizations.

To better understand the benefits, costs, and risks associated with this investment, Forrester interviewed five customers with experience using InterAction. For the purposes of this study, Forrester aggregated the experiences of the interviewed customers and combined the results into a single composite organization.

Prior to using InterAction, interviewees typically used manual processes for tracking and updating client information and business-relevant statistics. One interviewee’s organization utilized a legacy CRM as a contact tracker, while the other interviewees’ organizations utilized spreadsheets to periodically capture and update client information and data, which incurred high time costs to staff, lawyers, and professionals. Additionally, manual methods had their own challenges, including regularly outdated information, human error, and compliance risk. Interviewees also lacked insight into client touchpoints and firm relationships.

Total benefits

$2.4 million

After investing in InterAction, companies reduced the time employees spent on administrative tasks associated with marketing and business development work, allowing professionals to focus on higher value tasks. With automation and trust in their CRM data, InterAction enabled firms to focus on keeping clients satisfied while growing the firm and adding new business.

Consulting Team:
  • Nick Mayberry

COOKIE ACCEPTANCE IS REQUIRED TO REGISTER FOR ACCESS TO DIGITAL ASSET

Key Financial Findings

  • ROI
    220%
  • Benefits PV
    $2.38M
  • NPV
    $1.63M
  • Payback
    14 months

Quantified benefits. Risk-adjusted present value (PV) quantified benefits include:

  • Improved marketing and business development staff efficiencies of 62%.

    Depending on the workstream, InterAction saved marketing and business development 50% or more of the time spent on said workstream. It saved 97% of the time spent on list generation and management; 50% of the time spent on practice group reporting; and 40% of the time previously spent on pipeline tracking.

  • Improved lawyers and professionals’ efficiencies of 34%.

    InterAction also reduced the amount of time lawyers and professionals spent on analyzing potential new business by 67% and saved around $120,000 annually from no longer needing to respond to certain marketing and business development team email requests.

  • Improved revenues of 2%.

    Utilizing InterAction in conjunction with targeted business development processes improved firms’ revenues by as much as 18% in a single year. Interviewees reported that InterAction alone was responsible for 15% of these added revenues or an additional $1.3 million in income for the composite.

“Until InterAction, we never really had a full and true picture of anything. We lacked one single version of the truth.”

Marketing director, legal

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

  • More effective marketing.

    By removing the grunt work related to manual data tracking, InterAction improved interviewees’ marketing effectiveness with consistently accurate data and additional time to focus on marketing strategy.

  • Improved compliance.

    InterAction’s automated contact tracking allowed firms to confidently remove clients who opted out of communications, better maintaining compliance with privacy regulations like General Data Protection Regulation (GDPR).

  • Improved deployment and adoption.

    LexisNexis support reduced customers’ internal costs to train and improved the adoption of InterAction internally, further strengthening the benefits of the solution.

  • Better client service.

    InterAction’s accurate client data and simplified contact management enabled customers to efficiently respond to the changing business environment to maintain and improve their client services levels through effective, relevant communications.

Costs. Risk-adjusted PV costs include:

  • External costs of implementation, training, and subscription fees.

    Customers incurred an upfront implementation and training fee from InterAction as well as ongoing subscription costs based on the number of InterAction users and their subscription types. Professional services helped reduce the burden of implementation on customers while training positively impacting firm adoption of InterAction.

  • Internal costs of implementation, training, and ongoing management.

    Customers also incurred internal costs, such as the time cost of internal teams to work alongside LexisNexis for implementation and training, the cost of additional infrastructure to run InterAction, and the ongoing internal cost to manage the solution.

The customer interviews and financial analysis found that a composite organization experiences benefits of $2.38M over three years versus costs of $744,468, adding up to a net present value (NPV) of $1.64M and an ROI of 220%.

Benefits (Three-Year)

Financial Summary

TEI Framework And Methodology

From the information provided in the interviews, Forrester constructed a Total Economic Impact™ framework for those organizations considering an investment in InterAction.

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

  • DUE DILIGENCE

    Interviewed LexisNexis stakeholders and Forrester analysts to gather data relative to InterAction.

  • CUSTOMER INTERVIEWS

    Interviewed five decision-makers at organizations using InterAction to obtain data with respect to costs, benefits, and risks.

  • COMPOSITE ORGANIZATION

    Designed a composite organization based on characteristics of the interviewed organizations.

  • 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 interviewed organizations.

  • CASE STUDY

    Employed four fundamental elements of TEI in modeling the investment impact: benefits, costs, flexibility, and risks. Given the increasing sophistication of ROI analyses related to IT investments, Forrester’s TEI methodology provides a complete picture of the total economic 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 LexisNexis 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 study to determine the appropriateness of an investment in InterAction.

LexisNexis 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.

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

NEXT SECTION: The LexisNexis InterAction Customer Journey

DRIVERS LEADING TO THE INTERACTION INVESTMENT

Interviewed Organizations

Industry Region Interviewee FTEs And Use Cases
Legal US Marketing manager 200 FTEs
Marketing and business development
Legal US Marketing coordinator 220 FTEs
Marketing and business development
Legal EMEA Marketing director 1,300 FTEs
Marketing and business development
Legal US Director of marketing 1,400 FTEs
Marketing and business development
Consulting Global Director of technology and services 90,000 FTEs
Business development
“Our biggest challenge was having to send three emails a day asking the entire firm if we knew anyone at a potential client. It was a waste of time.”

Director of marketing, legal

Key Challenges

Prior to investing in InterAction, all but one of the interviewees’ organizations had not invested in a CRM solution of any kind. Those organizations without CRM used manual and time-intensive methods to track and update firm contacts; build, manage, and update emails lists; and engage with current and potential clients for marketing and business development purposes. The interviewee whose firm had invested in a CRM solution before transitioning to InterAction noted that the firm’s legacy solution was “more like a giant [contact list] than a CRM” and that the firm had “outgrown [the solution] years before migrating to InterAction.”

The interviewees’ organizations struggled with common challenges, including:

  • Time-intensive client engagement processes.

    Without a CRM, interviewees’ firms suffered from high-effort client engagement processes. Many firms were tracking contacts in spreadsheets. This placed a large time burden on the marketing and business development staff to update, maintain, and utilize these spreadsheets effectively for communications. Furthermore, these processes incurred a high time cost to lawyers and professional staff who were constantly fielding requests about their contacts.

  • Lack of visibility into client engagement.

    The highly manual nature of client engagement processes engendered limited visibility into the many client engagement efforts not shared directly with marketing and business development staff. Without this visibility, firms could not make effective use of employees’ relationships, engaged in sometimes duplicative client contact, and suffered the occasional embarrassment in front of clients. One interviewee shared: “One time, I met a new banking contact on a plane. We eventually went to pitch them, only to find out other people at our firm had been pitching to them for five years. We looked pretty foolish.”

  • Limited adoption.

    Whether they had previously invested in a CRM solution or not, firms experienced difficulty getting lawyers to either adopt the CRM solution or participate in manual client engagement efforts. Interviewees noted that one of the main drivers of their deployment of InterAction was the passive nature of contact capture thanks to InterAction’s email integration. This meant that lawyer and professional contacts and contact updates were captured passively without express input or direct updates to the information in InterAction. One interviewee stated, “The great thing about InterAction is, whether our lawyers adopt it or not, we’re still getting that client information captured.”

“Some lawyers were wary that the firm was trying to steal ‘their’ clients, but they quickly realized that InterAction helped them maintain their relationships, rather than having another lawyer at the firm accidentally pitch and potentially steal a client they’ve been working on for months.”

Director of marketing, legal

Key assumptions
  • 500 FTEs
  • $250 million in revenue
  • On-premises deployment
  • Marketing and business development use cases
  • Cross-selling and upselling after Year 1

Composite Organization

Based on the interviews, Forrester constructed a TEI framework, a composite company, and a ROI analysis that illustrates the areas financially affected. The composite organization is representative of the five companies that Forrester interviewed and is used to present the aggregate financial analysis in the next section. The composite organization has the following characteristics:

  • Description of composite.

    The composite organization is an expanding legal and professional services firm. The majority of its presence is in the US, but it recently opened an office in the EMEA region in an effort to grow there. The firm employs a total of 500 employees, 300 of whom are lawyers and professionals, while the remaining 200 hold various staff positions including marketing and business development. The composite organization generates approximately $250 million in revenue annually.

  • Deployment characteristics.

    In an effort to gain more understanding of its business, including the effectiveness of its marketing and business development and the strength of client relationships, the firm invests in LexisNexis InterAction as its first CRM. The firm conservatively decides to deploy InterAction in its own data center but is studying a future cloud deployment for added flexibility and potential savings to operating costs. At deployment, the firm uses InterAction to save lawyers, professionals, and staff time on marketing and business development activities. After one year, the firm launches a strategic effort to explore its client relationships for cross-selling and upselling in the hopes of growing revenues.

NEXT SECTION: Analysis Of Benefits

QUANTIFIED BENEFIT DATA AS APPLIED TO THE COMPOSITE

Total Benefits

Ref. Benefit Year 1 Year 2 Year 3 Total Present Value
Atr Improved efficiency of marketing and business development staff $106,560 $159,840 $213,120 $479,520 $389,092
Btr Improved efficiency of lawyers and professionals $189,540 $284,310 $379,080 $852,930 $692,084
Ctr Improved income from cross-selling and upselling $0 $1,050,000 $577,500 $1,627,500 $1,301,653
Total benefits (risk-adjusted) $296,100 $1,494,150 $1,169,700 $2,959,950 $2,382,829
“We’re sending 4,000 emails to clients every other day. If we had to do this manually, it just would not work. InterAction’s automation saves our marketing department hours a week each year.”

Director of marketing, legal

Improved Efficiency Of Marketing And Business Development Staff

  • Evidence and data.

    After deploying InterAction, the interviewees’ organizations described improving the efficiency of numerous processes for their marketing and business development teams. Workflows made more efficient by InterAction include:

    • Generating contact lists.
    • Updating contact information.
    • Deduplicating contacts.
    • Investigating bounce backs.
    • Ensuring removal of contacts that have opted out of communications.
    • Practice group reporting.
    • Identifying employees with connections to a contact as well as the employee with the best connection.

Customers consistently mentioned the value InterAction provides from its integrations with common productivity applications. The marketing manager described the ease with which InterAction identified contacts already in the firm’s legacy CRM in a spreadsheet they had received: “InterAction’s integration with our spreadsheet application lets us know immediately if someone is in the CRM. We’re saving at least 30 seconds per contact each time we’re updating a list, sometimes with thousands of contacts, just with this one feature.” The marketing manager also described InterAction’s integration with email systems: “If someone emails and they have a new email address in their email signature, InterAction automatically picks that up. So, it’s helping us get the best data into our system without having to actually do much other than just accepting it.”

In other cases, InterAction automates processes entirely. The director of marketing from the US law firm stated: “InterAction expedites my newsletter mailing list significantly. Sometimes it would take up to four weeks for my lean team to process an opt out from our mailing list. Well, now it’s automatic in InterAction.”

Interviewees reported time savings to marketing-related work and described improving efficiency among business development teams. The marketing coordinator shared that InterAction saved several hours of work monthly for their practice-group reporting operations. The interviewee relayed that every month, her team puts together a report for each practice group that details the clients in that group and the business being generated: “Now, these reports are streamlined. If a client changes roles or employers, it is caught by InterAction and automatically changed. We no longer have to go and do this manually.”

  • Modeling and assumptions.

    For the composite organization, Forrester estimates:

    • A total of 200 contact lists being managed annually.
    • InterAction is adopted and optimized over time, to an effectiveness of 50% in Year 1, 75% in Year 2, and 100% in Year 3.
    • An average fully burdened hourly rate of $40 for marketing and business development professionals.
    Risks.

    The impact to marketing and business development staff efficiency will vary with:

    • The number of contact lists being managed.
    • The adoption and optimization of InterAction use over time.
    • The fully burdened hourly rate of client engagement staff.
  • Results.

    To account for these risks, Forrester adjusted this benefit downward by 10%, yielding a three-year, risk-adjusted total PV (discounted at 10%) for $389,092.

“InterAction has minimized the admin work undertaken by our business development team. Now they spend their time having conversations with partners about how we’re going to take business opportunities forward.”

Marketing director, legal

“In terms of efficiency, my people have said they’re saving 30 minutes to 45 minutes a day in InterAction because of the automated connectivity.”

Director of technology and services, consulting

Improved Efficiency Of Marketing And Business Development Staff

Ref. Benefit Source Year 1 Year 2 Year 3
A1 Number of lists needing work (annual) Interviews 200 200 200
A2 Hours saved to list generation and editing per list Interviews 16 16 16
A3 Hours saved to list opt-out compliance per list Interviews 1 1 1
A4 Subtotal: Hours saved from reduced list management A1*(A2+A3) 3,400 3,400 3,400
A5 Hours saved to practice group reporting Interviews 120 120 120
A6 Hours saved to pipeline tracking Interviews 2,400 2,400 2,400
A7 Adoption of InterAction and optimization of use Composite 50% 75% 100%
A8 Fully burdened hourly rate per marketing and business development professional Composite $40 $40 $40
At Benefit (A4+A5+A6)*A7*A8 $118,400 $177,600 $236,800
Risk adjustment ↓10%
Atr Improved efficiency of marketing and business development staff (risk-adjusted) $106,560 $159,840 $213,120
Three-year total: $479,520 Three-year present value: $389,092
“We’re saving at least a couple of hours a year for each lawyer simply from them not having to open our emails asking about client connections.”

Director of marketing, legal

Improved Efficiency Of Lawyers And Professionals

  • Evidence and data.

    InterAction saved time for lawyers and professionals participating in marketing and business development activities. According to interviewees, InterAction reduced lawyer and professional time related to:

    • Reading and responding to internal emails asking for connections to current or prospective clients.
    • Sending duplicative emails or going to duplicative meetings with clients.
    • Determining whether a prospective client would be a good opportunity to pursue.

The first of these time savings provides additional evidence of the impact of InterAction’s integrations. The director of marketing from the US law firm described a prior practice of sending three to four emails a day to all lawyers at the firm asking about connections to current or prospective clients. This proved ineffective for two reasons: 1) They were inefficiently leveraging relatively expensive lawyer time, making the process rather expensive and 2) Less than half the lawyers would even open the emails, which meant the staff was not getting the full picture of the firm’s relationships.

InterAction also avoided duplicative communications and meetings. As mentioned earlier, the director of marketing met a potential client on a plane and ended up traveling to pitch that client, only to learn that other members of the firm had also been previously pitching the client. With InterAction, it is easier to keep informed of lawyer-client relationships, and duplicative meetings become less likely to occur. The marketing manager said: “With InterAction, if a lawyer wants to reach out to a new or past client, they check InterAction first to see if anyone else has a relationship. It keeps us from stepping on each other’s toes.”

Lastly, InterAction also saved lawyer and professional time on business development processes. The marketing director from the EMEA law firm shared: “Before investing in InterAction, some potential clients would hang around for six or nine months without anyone understanding if there was anything ‘real’ there. Now, this would never happen.” The same customer said that their firm is saving so much time analyzing prospects with InterAction that it can devote this extra time to additional opportunities, potentially impacting its win rate.

  • Modeling and assumptions.

    For the composite organization, Forrester estimates:

    • Lawyer time is actively sought by marketing and business development staff to update client contacts and manage engagement.
    • A total of 12 lawyers and professionals are regularly involved in the analysis of prospective new client engagements.
    • An average fully burdened hourly rate of lawyers and professionals of $300.
  • Risks.

    The impact to lawyer and professional efficiency will vary with:

    • The current time burden placed on lawyers and professionals to engage in contact updates and client engagement.
    • The current time burden and size of lawyer and professional teams involved in prospecting.
    • The adoption and optimization of InterAction use over time.
    • The fully burdened hourly rate of lawyers and professionals.
  • Results.

    To account for these risks, Forrester adjusted this benefit downward by 10%, yielding a three-year, risk-adjusted total PV of $692,084.

“We’re now confident that within a month, we know whether it’s a good sales opportunity or not, and there’s another three or five opportunities that we might be able to work on in the time that we were previously only doing one.

Marketing director, legal

Improved Efficiency Of Lawyers And Professional

Ref. Benefit Source Year 1 Year 2 Year 3
B1 Total number of lawyers and professionals Composite 300 300 300
B2 Annual hours saved per lawyer and professional from automated contact capture Interviews 2 2 2
B3 Subtotal: Total time saved from automated contact capture B1*B2 600 600 600
B4 Lawyers and professional involved in prospect analysis Interviews 12 12 12
B5 Hours spent analyzing prospects (annual) Interviews; 2 hours per week 100 100 100
B6 Reduced time to analyze prospects Interviews 67% 67% 67%
B7 Subtotal: Time saved for lawyers and professional analyzing prospective clients B4*B5*B6 804 804 804
B8 Average hourly rate per lawyer and professional Composite $300 $300 $300
B9 Adoption of InterAction and optimization of use Composite 50% 75% 100%
Bt Improved efficiency of lawyers and professional (B3+B7)*B8*B9 $210,600 $315,900 $421,200
Risk adjustment ↓10%
Btr Improved efficiency of lawyers and professionals (risk-adjusted) $189,540 $284,310 $379,080
Three-year total: $852,930 Three-year present value: $692,084
“InterAction makes information more available for everyone without having to try. It gives us a true understanding of the firm’s relationships.”

Marketing coordinator, legal

Improved Income From Cross-Selling And Upselling

  • Evidence and data.

    InterAction provided additional knowledge regarding clients and client relationships, allowing firms to better retain clients and target both existing and prospective clients for new business. This impacted revenue.

    The marketing coordinator described InterAction’s impact on client relationships: “We’re no longer spending time in practice group meetings asking who knows who. We pull up InterAction and immediately know who we know at a client and who at the firm knows them the best. We can form the best team of lawyers to go after an opportunity based on what we see in InterAction. I’d say it’s about 25 to 30% responsible for our new revenues.”

The director of technology and services at the consulting firm described how his firm successfully leveraged InterAction’s knowledge of client relationships to improve revenues during a recent economic downturn: “When we saw that revenues would fall by 25% during this downturn, we made a concerted effort to leverage our relationships to upsell and cross-sell. InterAction enabled us to make the connections, generating our own demand when there was none on the market. We made up a good 15% of the expected drop, and only ended down 10% for the year.”

Additionally, some interviewees found that InterAction made their organization more competitive in attracting new clients. The director of marketing from the US legal firm stated: “When a client changes jobs, we know, and often if they’re a general counsel we’ll want to try to take our business with them. The ability to respond quickly, as InterAction lets us, has made a difference in keeping a client.”

  • Modeling and assumptions.

    For the composite organization, Forrester estimates:

    • The composite waits until Year 2 to begin a strategic client engagement process aimed at cross-selling and upselling current clients.
    • A profit margin of 35%.
    • InterAction is responsible for 15% of new revenues generated from the effort, while the remainder is attributable to employee contact development, strategic teamwork around the unique approach to each client, and human effort and skill in managing the process.
  • Risks.

    The improvement to income from cross-selling and upselling will vary with:

    • Average annual revenue.
    • The year in which the cross-selling and upselling effort begins.
    • The profit margin.
    • The percent responsibility of InterAction to new revenue.
  • Results.

    To account for these risks, Forrester adjusted this benefit downward by 20%, yielding a three-year, risk-adjusted total PV of $1.3 million.

“InterAction has helped us win more business and track new client income. It’s difficult to directly attribute to InterAction, but it has definitely helped and definitely improved processes.”

Marketing director, legal

“We were able to use it to upsell and cross-sell significantly, even during the pandemic.”

Director of technology and services, consulting

“When we ask for a rate increase, we can look at activities in InterAction and provide the data behind why we deserve the increase.”

Marketing manager, legal

Improved Income From Cross-Selling And Upselling

Ref. Benefit Source Year 1 Year 2 Year 3
C1 Average firm revenues Composite $250,000,000 $250,000,000 $275,000,000
C2 Percentage improvement to revenue from cross-selling and upselling Interviews 0% 10% 5%
C3 Profit margin Composite 35% 35% 35%
C4 Percentage responsibility of InterAction Interviews 15% 15% 15%
Ct Improved income from cross-selling and upselling C1*C2*C3*C4 $0 $1,312,500 $721,875
Risk adjustment ↓20%
Ctr Improved income from cross-selling and upselling (risk-adjusted) $0 $1,050,000 $577,500
Three-year total: $1,627,500 Three-year present value: $1,301,653
“It is astronomical how much less at risk of non-compliance we are. Before, our only saving grace was our lack of contacts outside the US. However, as part of the deployment, we discovered we had more non-US contacts than we thought, but we’re now a hundred times safer.”

Director of marketing, legal

Unquantified Benefits.

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

  • More effective marketing.

    Customers expressed that InterAction positively impacted the effectiveness of their marketing efforts. The marketing director from the EMEA law firm stated: “Our data is more accurate than with our prior manual methods. This allows our team to focus on marketing strategy rather than simply be an admin team that was chasing around data and filling up spreadsheets.”

  • Improved compliance.

    The director of marketing from the US law firm shared: “Before InterAction, we were looking at just removing anyone from the EU from our lists because we could not be sure of GDPR compliance. Now, we feel very confident that we can stay in compliance because if anybody opts out, it’s done automatically.”

  • Improved deployment and adoption.

    Customers shared that the level of support they receive from LexisNexis regarding InterAction has reduced the burden on the marketing team to train new employees on the tool. Importantly, it also has helped improve adoption internally, which was a challenge in many firms’ prior environments.

“I love the people I work with from LexisNexis. Our dedicated representative is always accessible. It’s phenomenal.”

Director of marketing, legal

“When we established our COVID-related newsletter effort, we did not have to spend a whole lot of time determining who to send these to as we already had the contacts set up in InterAction.”

Marketing coordinator, legal

Flexibility

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

  • Better client service.

    Customers noted that InterAction provided them with the flexibility to provide better client service when the changing business environment required it or simply to make their firms more competitive. When COVID-19 forced the cancellation of in-person events, the customers could quickly spin up virtual events and an increased number of newsletters regarding how COVID-19 impacted the specific industries of their clientele. InterAction saved teams time creating and managing the appropriate lists for these communications and generally made these efforts more effective with its consistently accurate contact data.

Flexibility would also be quantified when evaluated as part of a specific project (described in more detail in Appendix A).

“We had a partner in one office that was having a meeting with new contact. They were able to look on InterAction and see that somebody in another office already knew them. They caught up before the meeting and the partner was better prepared because of it.”

Marketing director, legal

NEXT SECTION: Analysis Of Costs

QUANTIFIED COST DATA AS APPLIED TO THE COMPOSITE

Total Costs

Ref. Cost Initial Year 1 Year 2 Year 3 Total Present Value
Dtr InterAction implementation, training, and subscription fees $44,440 $125,070 $128,822 $132,687 $431,019 $364,294
Etr Internal costs of implementation, training, and ongoing management $165,025 $86,515 $86,515 $86,515 $424,569 $380,174
Total costs (risk-adjusted) $209,465 $211,585 $215,337 $219,201 $855,587 $744,468

Interaction Implementation, Training, And Subscription Fees

  • Evidence and data.

    Interviewees described two main external costs associated with InterAction deployment:

    • Implementation and training fees
    • Subscription fees

For implementation, the composite uses LexisNexis InterAction’s Ready implementation, which includes training. There are other implementation models available.

For subscription fees, the composite uses a consistent 475 user subscriptions over the three years at the typical mix of subscription levels with the cost of total subscriptions increasing by 3% annually.

  • Modeling and assumptions.

    For the composite organization, Forresters estimates:

    • InterAction implementation and training fees of $40,400.
    • 475 InterAction users annually.
    • A total cost of $113,700 in Year 1 for subscriptions, increasing by 3% annually.
  • Risks.

    The cost of InterAction implementation, training, and subscription fees.

    • The number of InterAction users.
    • The complexity of implementation.
  • Results.

    To account for these risks, Forrester adjusted this cost upward by 10%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $364,294.

InterAction Implementation, Training, And Subscription Fees

Ref. Metric Source Initial Year 1 Year 2 Year 3
D1 InterAction implementation and training fees LexisNexis $40,400
D2 Number of licenses Composite 475 475 475
D3 InterAction subscription fees LexisNexis $113,700 $117,111 $120,624
Dt InterAction implementation, training, and subscription fees D1+D3 $40,400 $113,700 $117,111 $120,624
Risk adjustment ↑10%
Dtr InterAction implementation, training, and subscription fees (risk-adjusted) $44,440 $125,070 $128,822 $132,687
Three-year total: $431,019 Three-year present value: $364,294

Internal Costs Of Implementation, Training, And Ongoing Management

  • Evidence and data.

    Interviewees also experienced internal costs associated with their InterAction deployment, including:

    • The time cost of implementation.
    • Infrastructure costs to run InterAction.
    • The time cost of training.
    • The time cost of ongoing management.

Every implementation of InterAction is different and depends on the level of experience with and maturity in CRM. Typical implementation timeframes range from twelve to fourteen weeks. The number of internal employees and their dedicated time also varies, but the average implementation needs six to eight internal employees and 500 hours of their time.

As the composite deploys InterAction on-premises, it incurs a $65,000 initial infrastructure investment with 10% maintenance fees annually. The composite also trains each user for 30 minutes with an average 18% turnover rate requiring the training of new employees each year. Lastly, one FTE spends 50% of their time managing InterAction on an ongoing basis.

  • Modeling and assumptions.

    For the composite organization, Forrester estimates:

    • Multiple FTEs are required for five hundred total hours at a fully burdened rate of $60 per hour to implement InterAction.
    • The composite invests in additional infrastructure for its on-premises deployment of InterAction at a licensing cost of $65,000 for a three-to-five-year term and 10% annual maintenance fees.
    • The composite needs to train users for 30 minutes each, and trains new FTEs at a rate of 18% of total FTEs on an ongoing basis.
    • The equivalent of one FTE at a fully burdened annual rate of $120,000 is needed at 50% time to manage InterAction on an ongoing basis.
  • Risks.

    The total internal costs of InterAction will vary with:

    • The number of FTEs and time required to implement.
    • The cost of additional infrastructure.
    • The number of employees and time required for training.
    • The amount of time needed to manage InterAction on an ongoing basis.
  • Results.

    To account for these risks, Forrester adjusted this cost upward by 15%, yielding a three-year, risk-adjusted total PV of $380,174.

Internal Costs Of Implementation, Training, And Ongoing Management

Ref. Metric Source Initial Year 1 Year 2 Year 3
E1 Internal implementation effort 500 hours at $60/hour $30,000
E2 Cost of infrastructure to run InterAction Composite $65,000 $6,500 $6,500 $6,500
E3 Internal time cost of training Composite $48,500 $8,730 $8,730 $8,730
E4 Internal cost of ongoing management 1 FTE at 50% time at $120,000 $60,000 $60,000 $60,000
Et Internal costs of implementation, training, and ongoing management E1+E2+E3+E4 $143,500 $75,230 $75,230 $75,230
Risk adjustment ↑15%
Etr Internal costs of implementation, training, and ongoing management (risk-adjusted) $165,025 $86,515 $86,515 $86,515
Three-year total: $424,569 Three-year present value: $380,174
NEXT SECTION: Financial Summary

CONSOLIDATED THREE-YEAR RISK-ADJUSTED METRICS

  • These risk-adjusted ROI, NPV, and payback period values are determined by applying risk-adjustment factors to the unadjusted results in each Benefit and Cost section.

Cash Flow Chart (Risk-Adjusted)

Cash Flow Table (Risk-Adjusted Estimates)

Initial Year 1 Year 2 Year 3 Total Present Value
Total costs ($209,465) ($211,585) ($215,337) ($219,201) ($855,587) ($744,468)
Total benefits $0 $296,100 $1,494,150 $1,169,700 $2,959,950 $2,382,829
Net benefits ($209,465) $84,516 $1,278,813 $950,499 $2,104,363 $1,638,361
ROI 220%
Payback period (months) 14

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, Total Costs, and Cash Flow tables may not exactly add up, as some rounding may occur.

NEXT SECTION: Appendix

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

  • 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.

  • Costs consider all expenses necessary to deliver the proposed value, or benefits, of the product. The cost category within TEI captures incremental costs over the existing environment for ongoing costs associated with the solution.

  • 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.

  • 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.”

  • 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.

  • 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.

  • RETURN ON INVESTMENT (ROI)

    A project’s expected return in percentage terms. ROI is calculated by dividing net benefits (benefits less costs) by costs.

  • 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%.

  • PAYBACK PERIOD

    The breakeven point for an investment. This is the point in time at which net benefits (benefits minus costs) equal initial investment or cost.


Appendix B: Endnotes

1Total 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
About Forrester Consulting

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