Author: Forrester Consulting
A composite organization based on the four interviewed customers estimated a three-year, risk adjusted Net Present Value (NPV) of $10.2 million USD, and a Return on Investment (ROI) of 171%.
Forrester spoke with four customers about their experience with SAP BusinessObjects Analytics across one or more of these processes and analyzed the financial benefit along with the investment and ongoing costs of an on-premises implementation. The resulting analysis and information was published in “The Total Economic Impact of SAP BusinessObjects Analytics,” an October, 2016 commissioned study conducted by Forrester Consulting on behalf of SAP, available for download at: www.sap.com/analytics-tei.
We examined the benefits customers have enabled through improved planning, business intelligence, and predictive analytics processes – and how other organizations can learn from their examples and best practices – across several key areas of impact:
- Using business intelligence to standardize common processes and tasks, significantly saving time and costs.
- Analyzing real-time data to predict errors and accidents before they happen, reducing safety issues as well as improving employee turnover.
- Creating plans, reports, and dashboards more quickly and easily through self-service tools, saving significant report development time and costs.
- Consolidating and normalizing financial and business intelligence data for financial consolidation and reporting, saving significant time in each monthly financial reporting cycle.
We then aggregated data and information from each and created a composite financial model. We defined the composite organization as a global conglomerate focused on cloud, server and application technologies, and 4,000 employees that use SAP BusinessObjects Analytics solutions. To make the scenario more real, we have added several assumptions related to company structure and use of SAP solutions, including: monthly financial reporting processes, 20 main data source connections (including SAP HANA and SAP ERP), 20 to 25 standard dashboard reports, and 200 of the 4,200 users that are report or dashboard creators, managers or developers.
Forrester’s analysis measured significant benefits:
- Cost savings from improved and standardized tasks or processes, by using business intelligence to analyze production process adding up to $2.4 million in risk-adjusted benefits per year for the composite organization. For example, identifying opportunities for improvement, standardization, and cost savings for a manufacturing process in different factories, a medical procedure conducted by different doctors, retail stocking strategies across different stores, or other industry-specific processes. One interviewed organization, a hospital, identified specific medical procedures where different doctor preferences resulted in higher costs (for using a more expensive device or time consuming process) without any addition in quality. The hospital standardized these procedures first to improve patient results, but was still able to significantly save costs on average. Examining process and results data can help identify quality gaps, production differences, and/or sales opportunities. The composite organization identified 500 tasks undertaken per year that cost $10,000 per task; using SAP BusinessObjects Analytics they reviewed each and identified an average of $6,000 in savings per task.
- $3.2 million in risk-adjusted, annual avoided costs by addressing problems or safety issues before they happen. With predictive analytics the composite organization is able to use past results and real-time data to uncover variances that could result in costly or even dangerous situations. One interviewed organization, a transportation company, uses predictive analytics to protect the safety of its drivers and check in when they exhibit risky behavior, such as increased speed or fewer breaks. While this can save costs by reducing accidents, drivers also appreciate the support– they don’t want accidents either. So the benefit also includes reduced turnover from more satisfied and supported employees. The composite organization measured this as the reduction of more than 20 safety issues per year, that would each have cost an average of $100,000 in repairs, remediation and other costs. Additionally, the organization identified a 5% reduction in turnover along with an estimated cost of $10,000 to hire and train each new employee.
- More than $850,000 per year in risk-adjusted benefits from reduced time, effort and costs from report, dashboard and data visualization preparation including data aggregation, data normalization and cleanup, and report or dashboard creation and updating. Planning and business intelligence task such as report and dashboard management and updating are much faster and provide much more up-to-date data, and repeated data aggregation tasks such as financial consolidation are much easier. The composite organization saves significant costs based on reducing report creation time to just one hour per report (down from days or weeks), reducing data management requirements by 200 hours for each monthly financial report, and reallocating two data management full-time-equivalents (FTE) to other roles.
Most of the organizations implemented an on-premises solution, as they are longer-term SAP BusinessObjects Analytics customers. However, all these organizations are investigating SAP BusinessObjects Cloud – providing many of the same features and capabilities, but with a different cost structure (as an ongoing subscription).
The on premises implementation for the composite organization includes costs related to setup and migration resource time plus some additional third-party migration services, SAP BusinessObjects Analytics licensing, and ongoing data report and dashboard developer resource costs.
Readers considering the SAP BusinessObjects Cloud may see different cost estimates, such as:
- Organizations may be able to implement cloud analytics at a lower up-front cost, since services come with pre-defined settings – though for some this may require some additional planning and data preparation time.
- Organizations newer to SAP (or already licensing cloud SAP solutions) may find cloud analytics to be a more flexible and often lower-cost licensing option.
- Organizations may see reduced ongoing resource needs as some management tasks are provided as part of the service.
While it may be rare for one organization to implement all three scenarios at once, the composite organization is useful in that you can identify at least one or two key benefits and, using the case study example, estimate the benefit SAP BusinessObjects Analytics might enable for your organization with these steps:
- Review the full case study document, paying particular attention to the tables with data based on the composite organization.
- Research data for your own organization – for example the number of employees, the number and cost of safety issues, the number and cost of specific tasks (such as a transaction or a medical procedure), and the amount of time spent on creating reports and consolidating data.
- Use those results to prioritize benefits, and/or develop your own business case for organization managers and executives that need to understand the benefits to provide approval for an investment request for SAP BusinessObjects Analytics.
For more information about the analysis, individual benefits, and a glossary of terms, see the full October, 2016, case study, The Total Economic Impact of SAP BusinessObjects Analytics, please reach out to your SAP representative or visit www.sap.com/analytics-tei.