The Total Economic ImpactTM Of IBM Cloud Pak For Integration Cost Savings And Business Benefits Enabled By Cloud Pak For Integration SEPTEMBER 2021 A FORRESTER TOTAL ECONOMIC IMPACT STUDY COMMISSIONED BY IBM, SEPTEMBER 2021
“We were on seven different technology stacks with seven customized integration teams. Now, everything’s on one technology stack, one integration framework, one integration platform, and one development language. There’s only one way of doing things.” —CTO, professional services
4 IBM Cloud Pak® for Integration is a hybrid integration platform that supports multiple styles of integration within a single, unified experience. IBM Cloud Pak for Integration unlocks business data and assets as APIs, connects cloud and on-premises applications, delivers messaging and events reliably and in realtime, and transfers data at high speed across any cloud, all with enterprise-grade security, scalability, and reliability. Key Findings ROI 151% BENEFITS PV $6.8M million NPV $4.1 million PAYBACK <6 months Key Metrics $1.9M $1.1M $1.2M $1.7M $335.7K $567.9K Improved reliability Incremental income increase Integration developer labor and onboarding cost savings IT operation labor savings Improved application security labor savings Technology cost savings Benefits (Three-Year)
TOTAL BENEFITS Ref Benefit Year 1 Year 2 Year 3 Total Present Value Atr Improved reliability $612,000 $765,000 $918,000 $2,295,000 $1,878,302 Btr Incremental income increase $225,000 $450,000 $675,000 $1,350,000 $1,083,584 Ctr Integration developer labor and onboarding cost savings $412,399 $503,524 $594,649 $1,510,572 $1,237,812 Dtr IT operation labor savings $540,000 $675,000 $810,000 $2,025,000 $1,657,325 Etr Improved application security labor savings $135,000 $135,000 $135,000 $405,000 $335,725 Ftr Technology cost savings $102,000 $204,000 $408,000 $714,000 $567,859 Total benefits (risk-adjusted) $2,026,399 $2,732,524 $3,540,649 $8,299,572 $6,760,607 Analysis of Benefits QUANTIFIED BENEFIT DATAAS APPLIED TO THE COMPOSITE
Total Benefits Improved reliability Incremental income increase $6.8 million three-year total benefits PV Integration developer labor and onboarding cost savings IT operation labor savings Improved application security labor savings Technology cost savings
Technology cost savings of nearly $568,000. Consolidating application integration, API management, message queue (MQ), and event streaming into one platform minimized technology sprawl, allowing organizations to decommission legacy integration and security technologies. This saves $568,000 in legacy licensing, infrastructure, and support over three years. Technology Cost Savings TECHNOLOGY COST SAVINGS CALCULATION Ref. Metric Source Year 1 Year 2 Year 3 F1 Legacy infrastructure costs Interviews $400,000 $400,000 $400,000 F2 On-premise support costs F1*20% $80,000 $80,000 $80,000 F3 Percent of legacy technology decomissioned Composite 25% 50% 100% Ft Technology cost savings (F1+F2)*F3 $120,000 $240,000 $480,000 Risk adjustment ↓15% Ftr Technology cost savings (risk-adjusted) $102,000 $204,000 $408,000 Three-year total $714,000 Three-year present value $567,859
“By utilizing IBM Cloud Pak for Integration, we can sync information from on-prem solutions to cloud solutions to give much more real-time information than what we had in our previous environment.” Director of IT, healthcare TECHNOLOGY COST SAVINGS 8% three-year benefit PV $567,859
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. Flexibilityrepresents 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%. 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. 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.
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