OCTOBER 2021
The Neo4j Graph Data Platform enables organizations to harness the inherent relationships in their data to reveal new insights, add greater depth to data analysis, and increase prediction accuracy. Neo4j is particularly well suited to handle large volumes of data with intricate relationships that need to evolve over time. The Graph Data Platform, built on Neo4j’s native graph database, provides a broad range of development, data science, and integration tools and services that enable organizations to quickly create graph-powered applications and data pipelines.
Neo4j commissioned Forrester Consulting to conduct a Total Economic Impact™ (TEI) study and examine the potential return on investment (ROI) enterprises may realize by deploying the Neo4j Graph Data Platform.1 The purpose of this study is to provide readers with a framework to evaluate the potential financial impact of Neo4j on their organizations.
To better understand the benefits, costs, and risks associated with this investment, Forrester interviewed five decision-makers with experience using Neo4j. For the purposes of this study, Forrester aggregated the interviewees’ experiences and combined the results into a single composite organization.
Prior to using Neo4j, interviewees attempted to develop applications that tested the limits of traditional data structures, resulting in several issues:
Interviewees reported that new data sources could not be incorporated into existing data schemas.
Existing solutions were resource-intensive, proving too expensive to operate and maintain.
Interviewees abandoned innovation because complex analytical models had unacceptable latency levels.
After the investment in Neo4j, interviewed customers realized desired business benefits, accelerated time-to-value (TTV) in on-premises and cloud environments, and reduced hardware and maintenance costs. Additionally, interviewees reported that they had flexibility to add new data and advanced capabilities for application development that were previously impossible.
Key results from the investment include reducing the time to develop new applications through efficiencies in software development by 60%; improved business results of the model of an average of 20%; and more than $1.8 million in savings on hardware and maintenance.
Consulting Team : Mary Barton
Quantified projected benefits. Risk-adjusted present value (PV) quantified benefits include:
Faster development cycles not only allowed the application to get to market faster but also resulted in better-performing applications. The composite organization achieved a 20% improvement on applications that targeted revenues of $5 million, yielding a benefit of more than $2.2 million over three years.
Using Neo4j, the composite organization was able to reduce the average development time from 12 months to four. For the development team of six, with an average annual fully burdened cost to the organization of $140,000, that represents a savings of more than $1.1 million over three years.
Neo4j allowed the composite organization to retire hardware and reduce the workload to manage those systems, saving the organization more than $1.8 million over three years.
Unquantified benefits. Benefits that are not quantified for this study include:
Faster development cycles alongside better data visualization in the form of graphs led to better collaboration between developers and business stakeholders.
Faster development cycles allow developers to bring innovation to market faster, helping business leaders to rapidly respond to market forces.
Organizations can continue to discover and add relevant data to the graph without the need to fit it to the original model.
Interviewees reported that they had used Neo4j’s Graph Data Platform to build a model of their organization, including traditional assets, to gain understanding that enabled them to move quickly on new strategies and initiatives.
Costs. Risk-adjusted PV costs include:
The composite organization incurred costs for the Neo4j license and fees of $330,000 per year, for a total present value of just over $800,000 in three years.
The composite organization allocated 50% of an FTE’s time for maintenance of Neo4j.
The decision-maker interviews and financial analysis found that a composite organization experiences benefits of $5.19 million over three years versus costs of $1.00 million, adding up to a net present value (NPV) of $4.18 million and an ROI of 417%.
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 Neo4j can have on an organization.
Interviewed Neo4j stakeholders and Forrester analysts to gather data relative to Neo4j.
Interviewed five decision-makers at organizations using Neo4j to obtain data with respect to costs, benefits, and risks.
Designed a composite organization based on characteristics of the interviewees’ organizations.
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 decision-makers.
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.
Readers should be aware of the following:
This study is commissioned by Neo4j 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 Neo4j.
Neo4j 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.
Neo4j provided the customer names for the interviews but did not participate in the interviews.
Interviewee | Industry | Region |
---|---|---|
Data architect | Banking | Canada |
Senior software engineer | Software | United States |
Chief architect Enterprise innovation architect | Not-for-profit | United States |
Principal architect | Financial services | United States |
Prior to the adoption of Neo4j’s graph platform, interviewee’s organizations attempted to solve complex data interrelation problems with highly skilled research teams using expensive processors. Adding new data was difficult. The interviewees noted how their organizations struggled with common challenges, including:
Due to inflexible data structures and systems, adding new data to models was slow and siloed. This prevented development teams from creating new digital solutions for internal customers.
Transformational solutions were not achievable with the currently available relational database technology. Complex queries running on previous solutions often took too long to execute to be feasible in production.
The senior software engineer, running a recommendation engine, said: “It was taking a lot of computing power to actually power this feed. We were using 48 [data servers] to power this experience, and that was a very expensive solution.”
Maintenance of those systems was also costly, the senior software engineer continued: “It was the human hour savings, and it’s crazy. We would kind of joke with this DevOps guy we had that [the previous solution] was pretty much dictating his life.”
Based on the interviews, Forrester constructed a TEI framework, a composite company, and an ROI analysis that illustrates the areas financially affected. The composite organization is representative of the five decision-makers that Forrester interviewed and is used to present the aggregate financial analysis in the next section. The composite organization has the following characteristics:
The organization develops both customer-facing and internal business applications using Neo4j. There are six full-time developers working on applications using Neo4j.
The composite organization deploys Neo4j Enterprise Edition as a self-hosted solution with a cluster of three to five medium-sized production machines operating on a major cloud provider and spanning one to three data centers, with corresponding test and development environments.
Ref. | Benefit | Year 1 | Year 2 | Year 3 | Total | Present Value |
---|---|---|---|---|---|---|
Atr | Improved business results | $900,000 | $900,000 | $900,000 | $2,700,000 | $2,238,167 |
Btr | Increased time-to-value in the software development lifecycle | $453,600 | $453,600 | $453,600 | $1,360,800 | $1,128,036 |
Ctr | Digital transformation savings achieved | $731,500 | $731,500 0 | $731,500 | $2,194,500 | $1,819,132 |
Total benefits (risk-adjusted) | $2,085,100 | $2,085,100 | $2,085,100 | $6,255,300 | $5,185,335 |
Decision-makers reported that they were able to achieve better results through better, faster data queries, better collaboration with business stakeholders, and increased ability to source additional data. One of the interviewees reported a significant uptick in customer engagement through an improved recommendation engine. In banking and financial services, both interviewees related examples of improved fraud detection models. In that case, one interviewee described how the Neo4j model not only allowed them to source more data to support the effort but detect suspicious accounts so that fraud was predicted and prevented.
“It was so easy for us to run the design workshops with the business stakeholders. We both immediately were on the same page and understood what we were talking about. The technology team was able to translate the business into a graph model as they spoke. It was very simple, easy to contemplate.”
“The first thing we did was try to replicate what they had done manually or with other tools and we were able to do that and more because it was faster, it had more reach. I would say it was two months from the day we decided to start the project loading the data to having the first test where we identified the first fraud ring.”
For the composite organization, Forrester assumes:
Savings from improved model performance may vary due to:
To account for these risks, Forrester adjusted this benefit downward by 10%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of more than $2.2 million.
Ref. | Metric | Source | Year 1 | Year 2 | Year 3 | ||
---|---|---|---|---|---|---|---|
A1 | Total revenue targeted | Interviews | $5,000,000 | $5,000,000 | $5,000,000 0 | ||
A2 | Improved model | Interviews | 20% | 20% | 20% | ||
At | Improved business results | A1*A2 | $1,000,000 | $1,000,000 | $1,000,000 | ||
Risk adjustment | ↓10% | ||||||
Atr | Improved business results (risk-adjusted) | $900,000 | $900,000 | $900,000 | |||
Three-year total: $2,700,000 | Three-year present value: $2,238,167 | ||||||
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Interviewed decision-makers reported that they were able to achieve efficiencies across the software development lifecycle. From the initial meetings with business stakeholders and data incorporation through to deployment of a production application, less time and effort was expended.
The composite organization:
Savings due to increased efficiency in software development may vary due to:
To account for these risks, Forrester adjusted this benefit downward by 10%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of more than $1.1 million.
Ref. | Metric | Source | Year 1 | Year 2 | Year 3 | ||
---|---|---|---|---|---|---|---|
B1 | Average data engineer fully burdened annual salary | Payscale.com | $140,000 | $140,000 | $140,000 | ||
B2 | Size of development team | Composite | 6 | 6 | 6 | ||
B3 | Model development time saved | Composite | 60% | 60% | 60% | ||
Bt | Increased time-to-value in the software development lifecycle | B1*B2*B3 | $504,000 | $504,000 | $504,000 | ||
Risk adjustment | ↓10% | ||||||
Btr | Increased time-to-value in the software development lifecycle (risk-adjusted) | $453,600 | $453,600 | $453,600 | |||
Three-year total: $1,360,800 | Three-year present value: $1,128,036 | ||||||
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The Neo4j graph data platform allowed interviewees to retire large, costly systems.
The chief architect, not for profit said, “If we tried to do a ‘square peg in a round hole with a sledgehammer’ and had been using proprietary in-memory structures or a relational database (or some other NoSQL database) in order to do this, we would probably be using significantly more horsepower, CPU, memory, storage, cache, you name it, to accomplish the same work.”
The senior software engineer said: “We had an algorithm running, and we were powering it with [a previous solution]. It was using a ton of resources, and it was also costing a ton of money. About a year ago, we started moving those recommendations to Neo4j. And we A/B tested them against the expensive research team generator recommendations. Our graph-based recommendations perform better, and we cut out about $300,000 a year. That was in addition to the 48 [data servers].”
The composite organization was able to:
Retire legacy hardware with a cost of $700,000 per year.
Redirect 50% of a FTE’s time to more productive activities.
Savings from retired hardware services may vary due to:
The size and cost of the legacy system.
The complexity of the legacy system and its management.
To account for these risks, Forrester adjusted this benefit downward by 5%, yielding a three-year, risk-adjusted total PV of $1.8 million.
Ref. | Metric | Source | Year 1 | Year 2 | Year 3 | |||
---|---|---|---|---|---|---|---|---|
C1 | Value of retired hardware | Interviews | $700,000 | $700,000 | $700,000 | |||
C2 | FTE per year to maintain | Interviews | 0.5 | 0.5 | 0.5 | |||
C3 | Total fully burdened annual salary per FTE | Assumption | $140,000 | $140,000 | $140,000 | |||
Ct | Digital transformation savings achieved | C1+(C2*C3) | $770,000 | $770,000 | $770,000 | |||
Risk adjustment | ↓5% | |||||||
Ctr | Digital transformation savings achieved (risk-adjusted) | $731,500 | $731,500 | $731,500 | ||||
Three-year total: $2,194,500 | Three-year present value: $1,819,132 | |||||||
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Additional benefits that customers experienced but were not able to quantify include:
In addition to the measurable benefits of improved model performance and better collaboration between developers and business stakeholders, Neo4j keeps business stakeholders engaged throughout the development cycle. Additionally, one interviewee reported that developers had a better understanding of the problem presented. With that insight, developers were able to experiment with previously unidentified data to improve results.
Faster time-to-market not only has tangible benefits measured in the quantified benefits listed above but also allows businesses to more quickly respond to market forces.
The schemaless database allows business stakeholders and developers to add additional data as the discovery process continues. The data architect at a banking organization said: “Because this is a schemaless database, we can import data from anywhere we want, and it doesn’t matter if it fits in the model or not. We just bring it in, we create the relationships to where they need to go, and it takes a day to integrate a new data source.”
In addition to external-facing models, interviewees reported that they also used Neo4j to provide insight into the organization itself. The principal architect, financial services, explained: “You can create an inventory of various systems that you have in the organization and how are they aligned with business goals and capabilities that the enterprise needs to have. And then you can build a graph where you have business goals and objectives, then you have nodes that are representing the systems that you have, and then you have a relationship. And imagine, when you have a new business initiative, you look for and immediately see the systems; you immediately know who to talk to.”
The value of flexibility is unique to each customer. There are multiple scenarios in which a customer might implement Neo4j and later realize additional uses and business opportunities. All the interviewees reported that once they and their business stakeholders saw the power of working with Neo4j, they continued to discover new applications that deliver value to the organization.
Ref. | Cost | Year 1 | Year 2 | Year 3 | Total | Present Value |
---|---|---|---|---|---|---|
Dtr | Neo4j license and fees | $330,000 | $330,000 | $330,000 | $990,000 | $820,661 |
Etr | Neo4j administration | $73,500 | $73,500 | $73,500 | $220,500 | $182,784 |
Total costs (risk-adjusted) | $403,500 | $403,500 | $403,500 | $1,210,500 | $1,003,445 |
Neo4j Graph Data Platform is provided by Neo4j on an annual subscription basis. Neo4j license and fees are based on:
The size and type of deployment.
Support tier.
Length of contract.
Forrester estimates the following for the composite organization:
Subscription fees include license, support, and maintenance fees, which typically represent 85% to 90% of total investment.
Professional services, which typically represent 10% to15% of total investment.
Because Neo4j fees are contractually agreed upon, Forrester did not apply a risk adjustment to costs, yielding a three-year total PV (discounted at 10%) of $821,000.
Ref | Metric | Source | Year 1 | Year 2 | Year 3 |
---|---|---|---|---|---|
D1 | License and fees | Neo4j | $330,000 | $330,000 | $330,000 |
Dt | Neo4j license and fees | D1 | $330,000 | $330,000 | $330,000 |
Risk adjustment | 0% | ||||
Dtr | Neo4j license and fees (risk-adjusted) | $330,000 | $330,000 | $330,000 | |
Three-year total: $990,000 | Three-year present value: $820,661 | ||||
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The interviewees all reported that the maintenance of New4j is less onerous than the previous solution. The chief architect for a not-for-profit said, “On the operational side, I would say that we dedicate half an FTE to backups, version control, maintenance, patching, that kind of stuff.”
The composite organization allocates 50% of an FTE’s time to maintaining Neo4j.
Costs of Neo4j administration may vary due to:
The annual cost of a data engineer.
The frequency of updates, leading to more or less time spent by the data engineer.
To account for these risks, Forrester adjusted this cost upward by 5%, yielding a three-year, risk-adjusted total PV of $183,000.
Ref. | Metric | Source | Year 1 | Year 2 | Year 3 | |
---|---|---|---|---|---|---|
E1 | FTE required to maintain Neo4j | Interviews | 0.5 | 0.5 | 0.5 | |
E2 | Annual fully burdened salary of data engineer | Assumption | $140,000 | $140,000 | $140,000 | |
Et | Neo4j administration | E1*E2 | $70,000 | $70,000 | $70,000 | |
Risk adjustment | ↑5% | |||||
Etr | Neo4j administration (risk-adjusted) | $73,500 | $73,500 | $73,500 | ||
Three-year total: $220,500 | Three-year present value: $182,784 | |||||
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The financial results calculated in the Benefits and Costs sections can be used to determine the ROI, NPV, and payback period for the composite organization’s investment. Forrester assumes a yearly discount rate of 10% for this analysis.
Initial | Year 1 | Year 2 | Year 3 | Total | Present Value | |
---|---|---|---|---|---|---|
Total costs | $0 | ($403,500) | ($403,500) | ($403,500) | ($1,210,500) | ($1,003,445) |
Total benefts | $0 | $2,085,100 | $2,085,100 | $2,085,100 | $6,255,300 | $5,185,335 |
Net benefits | $0 | $1,681,600 | $1,681,600 | $1,681,600 | $5,044,800 | $4,181,890 |
ROI | 417% | |||||
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These risk-adjusted ROI and NPV values are determined by applying risk-adjustment factors to the unadjusted results in each Benefit and Cost section.
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.
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.”
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.
Related Forrester Research
“The Forrester Wave™: Graph Data Platforms, Q4 2020,” Forrester Research, Inc., November 16, 2020.
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.
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