The Total Economic Impact™ Of Microsoft Power BI

Margin Increase From Direct Sales And E-commerce Revenue Improvements

• Evidence and data.

  Interviewees’ organizations used Power BI to improve sales and supply chain processes; identify product and service sales opportunities; improve customer satisfaction and retention; and provide Power BI in offerings increase sales.

  • Interviewees described using Power BI to improve their e-commerce sales processes as well as their retail sales processes. Very detailed interaction data was available for e-commerce activity and was used to optimize the customer experience and drive new sales. For instance, a frontline worker created Power BI model that was used to identify an improvement opportunity for the point-of-sale system that improved customer experience.
  • Interviewees’ organizations used Power BI to analyze product and service sales more easily, from more perspectives, and with more depth than previously available. The BI analyst manager in manufacturing and retail noted the organization better handled backorders during recent supply chain challenges that increased sales and customer satisfaction.
  • The interviewees have found that using Power BI to optimize customer success drove additional revenue and preserved revenue through customer retention improvements.
  • Power BI was used as a tool to optimize customers’ use of products or services that the interviewees’ organizations provide. Power BI is sold as an add-on service. The manufacturing automation analytics architect said, “We are currently building out Power BI solutions as part of our product solutions, driving additional revenue and providing a service to our customers.”
  • The BI analyst manager at a manufacturing and retail organization noted their organization used Power BI to identify that delivering products to stores with one or two components missing was advantageous to waiting until the components became available and assembling at the manufacturing facility. This allowed manufacturing and assembly to continue and enabled sales to occur as soon as necessary components became available.

• Modeling and assumptions.

  Forrester assumes the following for the composite organization:

  • The composite organization’s revenue is $10 billion per year with an 80%:20% split between direct sales and e-commerce.
  • Direct sales improvement due to Power BI supplied reporting and analysis is 1.2% in Year 1, 1.8% in Year 2, and 2.0% in Year 3.
  • E-commerce sales improvement due to Power BI supplied reporting and analysis is 2.0% in Year 1, 2.8% in Year 2, and 3.0% in Year 3.
  • The composite organization’s net margin is 8%.

• Risks.

  Risks that could impact the realization of this benefit include the following:

  • The maturity of retail and e-commerce processes.
  • The level of empowerment and democratization of data that an organization will allow.
  • The organization’s net margin.

• 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 $32.7 million.

Finance, HR, And Other Business Analyst Labor Productivies

• Evidence and data.

  Power BI was used to consolidate many reports into a few dashboards, retire analyses and reporting done in spreadsheets, automate analyses, and support self-service BI. Finance, HR, and business analysts were more productive and worked on more value-add activities.

  • Prior to Power BI, analysts would frequently have to review tens to hundreds of legacy reports to perform both regular and initiative-based analyses. With Power BI reporting, they looked at integrated dashboards that connect data in single views while allowing drilling and pivoting to fully understand the facts behind the reporting.
  • Analysts were historically heads-down in entering data from reports into spreadsheets. This manual effort was time-consuming, error prone, and frequently repeated by other analysts across the organization. Power BI facilitated the automation of such reporting, enabling a single version of the truth in addition to providing significant labor savings.
  • There were major tasks that finance, HR, and business analysts did that were worth the effort to automate with proper data sourcing and Power BI reporting. Monthly and quarterly reporting, such as sales performance and reorganizations, were automated while providing more timely and thorough insights. The telecommunications industry head of workforce analytics provided an automation example: “We have a love affair with re-organizations. There were nine people managing the HR re-organization activities, producing a monthly report. Now, you can see who came in and who left the next day.”
  • In addition to the delivery of Power BI dashboards to the analysts, analysts were empowered to self-serve using Power BI. Analysts automated their own work with Power BI while frequently contributing to improvements to published Power BI dashboards.

• Modeling and assumptions.

  Forrester assumes the following for the composite organization:

  • The composite organization has 40,000 employees, 1,000 of whom are finance, HR, or business analysts (2.5% of employees).
  • The analyst adoption of Power BI grows over time from 75% in Year 1 to 100% in Year 3.
  • Average time savings per analyst grows over time from 4 hours per week in Year 1 to 6 hours per week by Year 3.
  • The productivity recapture rate, the percentage of time saved applied to additional work, is 50%.
  • The average fully loaded hourly labor cost is $55 per hour.

• Risks.

  Risks that could impact the realization of this benefit include the following:

  • Consolidation of legacy reporting into Power BI will be based upon corporate and divisional initiatives.
  • Retirement of spreadsheet practices requires a cultural change and typically a collaborative effort.
  • The adoption of Power BI for self-service will vary based upon cultural factors as well as training, best practices sharing, and data availability.

• Results.

  To account for these risks, Forrester adjusted this benefit downward by 10%, yielding a three-year, risk-adjusted total PV of $14.1 million

Operational Cost Savings Due To Improvement In Fact-Based Decision-Making And Self-Serve Projects

• Evidence and data.

  Interviewees described use cases throughout their organizations where Power BI improved upon standard processes, such as inventory management, to new initiatives, such as pandemic-related projects. Common themes provided were democratization, empowerment, manager accountability, device agnostic delivery, and self-service BI.

  • Power BI was used to provide process improvements as well as address operational problems. Interviewees spoke of their ability to get a clearer picture on their current operational state, which helped them determine how to improve processes as well as their ability to perform more advanced analyses than they could do previously. The manufacturing automation analytics architect said: “We developed a call center assistant solution that utilizes Power BI with AI features inside. It has improved our help desk agents’ ability to provide more meaningful responses to customers needing help.”
  • Interviewees spoke of the ability of delivery Power BI reports to desktops, laptops, tablets, and smartphones. This expanded Power BI’s usefulness by allowing Power BI to be used wherever their people were.
  • Interviewees described how they were able to quickly apply Power BI in their work on new initiatives. Interviewees felt that Power BI’s use helped them maximize results and, sometimes, saved initiatives. The healthcare director of BI described one such project: “We had a major humanitarian initiative during COVID-19 to provide food to seniors isolated in their homes. We built a Power App solution from scratch to manage third-party deliveries and there were major errors in deliveries. The team started using Power BI to analyze the data and reduced the error rate from a high of 70% to below 5%. Millions of meals have been successfully delivered to seniors as a result.”

• Modeling and assumptions.

  Forrester assumes the following for the composite organization:

  • Cost of goods sold is 30% of the $10 billion in corporate revenue.
  • Operational cost savings is 0.03% in Year 1 and 0.05% in subsequent years attributed to Power BI use cases.

• Risks.

  Risks that could impact the realization of this benefit include the following:

  • The relation of cost of goods sold to revenue may vary.
  • The level of empowerment and democratization of data that an organization will allow.
  • The adoption of Power BI may vary.

• Results.

  To account for these risks, Forrester adjusted this benefit downward by 10%, yielding a three-year, risk-adjusted total PV of $2.9 million.

Legacy Report Writer Replacement Cost Reductions

• Evidence and data.

  Interviewees noted that their legacy reporting solutions were a burden to their central IT and BI organizations for some time. Licensing costs were very high, labor to develop and maintain reports was high, and the resulting reports were not meeting current integration, dynamics, and timeliness expectations.

  • Interviewees agreed that legacy licenses costs have not remained competitive, and they saw a net reduction in licensing costs even with the expansion in overall reporting.
  • Infrastructure costs were also relatively high and infrastructure was mostly internally managed because it was on-premises, so transitioning to Power BI provided further cost reductions.
  • Interviewees shared that the labor to create legacy reports that parallel Power BI reports was greater, and the legacy maintenance cost was higher. Finally, they called out that there was greater risk because legacy report writers were getting harder to come by over time.

• Modeling and assumptions.

  Forrester assumes the following for the composite organization:

  • Legacy licensing costs, which are $1 million per year, are halved in Year 1, reduced by 90% in Year 2, and eliminated in Year 3.
  • Legacy infrastructure costs, which are $500,000 per year, are reduced by 25% in Year 1 and eliminated by Year 3.
  • The legacy reporting team, which consists of 20 report developers, is reduced by 25% in Year 1, 80% in Year 2, and is fully transitioned by Year 3.
  • The fully loaded cost of report writing developers is $120,000 per year.

• Risks.

  Risks that could impact the realization of this benefit include the following:

  • The number and size of the existing legacy implementations may vary.
  • The maturity of the IT infrastructure, data, and applications will affect resource related cost reduction.
  • The speed of the transition from legacy reporting to Power BI reporting will be affected by both business and IT culture changes.
  • Labor costs may vary.

• Results.

  To account for these risks, Forrester adjusted this benefit downward by 20%, yielding a three-year, risk-adjusted total PV of $5.5 million.

Savings Due To Reduction In Use Other BI Platforms

• Evidence and data.

  Interviewees’ organizations saw an elimination or dramatic reduction in the use of other BI tools and have saved them a significant amount of money. They noted that there were licensing cost savings due to Power BI’s low cost. They also noted that there were savings in training, cloud resources, collaboration, and best practices sharing.

  • Interviewees noted that Power BI licensing was less expensive than other BI tools, especially considering E5 licensing rates.
  • Interviewees spoke of numerous benefits of having one BI platform from a user perspective. First, end users only had to learn how to use one user interface style. Users were more likely to develop their own dashboards if they didn’t have to learn multiple tools or fear that they were learning to use a tool that may go away someday.
  • An area called out for major savings was with central infrastructure, report development, and maintenance activities and resources. Having one BI platform supported simplified architecture and governance, lower training and collaboration costs, and better best practice development and sharing.

• Modeling and assumptions.

  Forrester assumes the following for the composite organization:

  • The annual licensing cost of multiple BI tools (non-Power BI) is $300,000 and reduces to $150,000 in Year 1 and is eliminated by Year 2.
  • The annual end-user training and collaboration cost reduction associated with eliminating other BI tools is $50,000, and reduces to $25,000 in Year 1 and is eliminated by Year 2.
  • The annual self-service labor productivities associated with eliminating the other BI tools is $45,000, and reduces to $25,000 in Year 1 and is eliminated by Year 3.
  • IT and BI team labor productivities for training, planning, development, collaboration, and maintenance is $600,000, and reduces to $400,000 in Year 1 and is eliminated by Year 2.

• Risks.

  Risks that could impact the realization of this benefit include the following:

  • The number and size of other vendor BI implementations may vary.
  • The corporate culture supporting standardization, or independence, may vary considerably.

• Results.

  To account for these risks, Forrester adjusted this benefit downward by 20%, yielding a three-year, risk-adjusted total PV of $1.7 million.

Unquantified Benefits

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

• Empowerment through self-service.

  Interviewees told numerous stories of how frontline workers embraced Power BI and created new solutions on their own initiative. Interviewees saw greater employee engagement and better business outcomes. The manufacturing and retail BI analyst manager shared: “Frontline workers in retail have caught inventory stuff and even fraud. They have even found things using Power BI that have led to improvements to our point-of-sale software.”

• Accountability through democratization.

  Interviewees described how their Power BI deployment provided dashboards to managers at all levels with the ability to drill and pivot. There was a growing expectation and understanding that the managers were responsible for understanding their organization better and owning their decisions.

• Single version of the truth.

  With Power BI as their organizations’ BI delivery tool and with effective data governance, interviewees delivered corporate dashboards and associated data sources as the source for key data metrics.

• Gen2 and Power BI continuous enhancements.

  Interviewees spoke of Power BI Premium’s Gen2 and the steady release of Power BI enhancements as both game changers and confidence builders on the continued competitiveness of the Power BI platform. The manufacturing and retail BI analyst manager said, “Microsoft realized the power of the tool and really dedicated resources to keep improving it.”

• Data governance, ease-of-use, and E5 licensing supporting significant user adoption.

  The interviewees’ organizations accomplished broad adoption through a combination of factors. IT applied effective data governance, allowing for broad distribution of Power BI. Power BI’s ease-of-use in developing and viewing dashboards led to end-user-driven demand. The low per-user cost of Power BI eliminated cost as a factor for most of the interviewees’ organizations.

• Synapse Analytics, Microsoft Office, and Power Apps integration synergies.

  Interviewees spoke of the value of having numerous other Microsoft products working effectively with Power BI, most notably Synapse Analytics and Power Apps. Synapse Analytics was a source for data with built-in analytics, while Power Apps, Microsoft’s low-code tool, utilized Power BI for delivering results. The retail BI resource manager shared, “Having the data warehouse in Synapse helped make us successful sooner.” The manufacturing automation analytics architect described the value of having both Synapse and Gen2: “There is a synergy in having Synapse and Gen2, giving us a massive increase in performance. We have migrated most of our enterprise models into Gen2. This has enabled us to run in both dual mode with cache data in Power BI and direct query against Synapse. This means that we are getting snappy super-fast responsive times and are able to drill into the details within Synapse without us having to be running these super expensive, really large premium capacities.”

• Data-informed decsion-making.

  Interviewees described a gradual culture change going on, from frontline workers to managers to leadership, where there is great exposure to business data, more trust in data provided, and a means through Power BI dashboards to understand the data and to make better decisions. The BI analyst manager at the manufacturing and retail company said: “Retail outlets are looking at their labor, looking at their inventory, looking at their sales. All those sorts of metrics that help drive their store’s success.”

Flexibility

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

• Flexibility in device use and end-user organization.

  Interviewees shared that the Power BI platform allowed dashboard and report sharing across different devices, to internal users and external users, and within dashboards as well as integrated in applications.

• The ability to make rapid changes to a changing world.

  The ease-of-use of Power BI, the empowerment that it provided to frontline workers, and the ability to build solutions quickly was of great value due to the COVID-19 pandemic, the “Great Resignation,” and the worldwide supply-chain issues. The telecommunications head of workforce analytics shared: “We were able to create a COVID-19 dashboard covering the 130 countries where we have employees. It supports leadership and individual employees. It supports local closure information, travel information, and even counselling services. We know who is on a business trip, where they are going, and how long that they will be traveling — all in Power BI.”