The Total Economic Impact™

Of IBM Cognos Analytics

Cost Savings And Business Benefits
Enabled By Cognos Analytics

December 2020

A FORRESTER TOTAL ECONOMIC IMPACT™ STUDY COMMISSIONED BY IBM

Table Of Contents Consulting Team: David Park

Executive Summary .............................................. 1

The IBM Cognos Analytics Customer Journey.... 6
Key Challenges ................................................... 6
Composite Organization ...................................... 7
Analysis Of Benefits ............................................. 8
Optimized staffing and inventory management ..... 8
Incremental gross profit uplift ..............................10
Self-service reporting ..........................................11
Flexibility ............................................................12
Analysis Of Costs ................................................13
IBM Licensing and professional services.............13
Onboarding and migration ..................................14
Report development ...........................................15
Financial Summary ..............................................17
Appendix A: Total Economic Impact...................18

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THE TOTAL ECONOMIC IMPACT™ OF IBM COGNOS ANALYTICS

Executive Summary
Data management is a key challenge for today’s organizations that are seeking digital
transformation. And as such, the reasons for this challenge are consistent across
organizations: Data is often contained in organizational siloes and delivered in batches
rather than in real time. This makes it difficult to mine, manipulate, and analyze. While
several business intelligence solutions help to facilitate data consumption, few solutions
can provide the governance capabilities required to create a data culture that allows data
to be seamlessly accessed by the right people at the right time and place.

IBM commissioned Forrester Consulting to conduct a

Total Economic Impact™ (TEI) study and examine KEY STATISTICS
the potential return on investment (ROI) enterprises
may realize by deploying Cognos Analytics. The
purpose of this study is to provide readers with a
framework to evaluate the potential financial impact
of Cognos Analytics on their organizations. Cognos
Analytics is an enterprise-class business intelligence Return on investment (ROI) Net present value (NPV)
suite of solutions that provides reporting, analytics, 204% $4.3M
scorecarding, and monitoring capabilities across use
cases for an organization’s knowledge workers and KEY FINDINGS
frontline workers.
Quantified benefits. Risk-adjusted present value
To better understand the benefits, costs, and risks (PV) quantified benefits include:
associated with this investment, Forrester interviewed
four customers with experience using Cognos
Increased staffing
Analytics. For the purposes of this study, Forrester
efficiency
aggregated the experiences of the interviewed
customers and combined the results into a single
composite organization. 10%
Prior to using Cognos Analytics, customers had been
leveraging legacy reporting systems or spreadsheets • Optimized frontline operations, including
for the production and consumption of everything increased staffing efficiency and reduced
from line-of-business dashboards to sales inventory shrinkage. Real-time reporting
performance reports. However, as organizations through Cognos Analytics gave frontline
continued to grow in size and complexity, these managers the data they needed to discern how
methods failed to provide the speed, transparency, many employees they would need at any given
and governance needed to support an increasingly moment to meet customer demand, thereby
cross-functional enterprise. After the investment in allowing these managers to staff their branches
Cognos Analytics, customers were able to align and with 10% more efficiency. Frontline managers
empower both frontline and knowledge workers also had better insight into their inventory levels
under a single, centralized business intelligence and and were able to reduce annual inventory
analytics platform. shrinkage by up to 80%. Over three years, these

THE TOTAL ECONOMIC IMPACT™ OF IBM COGNOS ANALYTICS 1

 EXECUTIVE SUMMARY

operational benefits accumulated a present value • Democratization of data. Using legacy systems,
of $3.5M. the ability to access and manipulate data to
gather insights was typically reserved to specific
roles, such as business analysts, as this required
Sales uplift some knowledge of the platform as well as
experience in analysis and visualization. With
IBM Cognos Analytics, and features such as
0.5% natural language processing (NLP), the ability to
pull specific data points and create visualizations
from them was expanded to all users with
• Increased topline revenue. With improved sales minimum training required.
benchmarking and reporting, organizations can
set more accurate sales targets, monitor and • Faster time-to-insight and decision-making.
measure the performance of individual Because organizations could give users self-
associates, and develop action plans or incentive service access to Cognos Analytics, users at all
structures around specific levels of performance. levels could consume data and execute reports
This increased visibility resulted in a sales uplift as-needed without waiting for batch reporting or
equal to 0.5% of the organization’s total gross requesting custom reports from different
revenues. From a subsequent gross profit departments. These users could then leverage
perspective, the composite organization any insights from the data to expedite the time-to-
experienced present value net cash flows of execute on business decisions.
$2.1M. • Consolidation of point solutions. By deploying
Cognos Analytics across the enterprise,
organizations could replace any number of
Streamlined existing legacy business intelligence and
reporting analytics solutions with redundant functionality
such as dashboarding and visualization or
93% reporting tools. Benefits would include saving on
the costs of any on-premises software, hardware,
• Self-service reporting and analytics.
maintenance, and administration costs.
Knowledge workers across departments and
functions could access Cognos Analytics on a Costs. Risk-adjusted PV costs include:
self-serve basis instead of requesting reports • Licensing and professional services. Fees
from an analyst. For each report generated paid to IBM include annual software licensing and
through self-service, organizations saved 1 hour professional services for deployment.
of time, on average, while also enabling more Organizations incurred annual IBM fees to cover
rapid and accurate decision-making. Benefits unlimited user software-as-a-service (SaaS)
from self-service reporting amounted to a three- licensing for Cognos Analytics. Additionally,
year present value of $744K. several organizations leveraged IBM or other
Unquantified benefits. Benefits that are not third-party professional services to help deploy
quantified for this study include: Cognos Analytics, facilitate any migration (from
legacy systems), and provide onboarding and

THE TOTAL ECONOMIC IMPACT™ OF IBM COGNOS ANALYTICS 2

 EXECUTIVE SUMMARY

change management services. Over three years,

these fees totaled a present value of $997K.

• Onboarding and migration. Onboarding and

migration took place over two distinct phases.
First, organizations worked with either IBM or
third-party systems integrators to implement
Cognos Analytics and connect it to the
organization’s various data sources. After the
initial implementation, internal resources worked
over the span of six months to migrate legacy
data files into Cognos Analytics. Over three
years, the investment in completing the
onboarding and migration process resulted in a
present value of $1M.

• Report development. While the vast majority of

Cognos Analytics users were those consuming
reports and data, organizations still needed to
dedicate a number of people to building and
modifying the source models. The cost of these
resources totaled a three-year present value of
$56K.

The customer interviews and financial analysis found

that a composite organization experiences benefits of
$6.3M over three years versus costs of $2.1M,
adding up to a net present value (NPV) of $4.3M and
an ROI of 204%.

THE TOTAL ECONOMIC IMPACT™ OF IBM COGNOS ANALYTICS 3

 EXECUTIVE SUMMARY

ROI BENEFITS PV NPV PAYBACK

204% $6.3M $4.3M 13 months

Benefits (Three-Year)

Optimized staffing and inventory management $3.5M

Incremental gross profit uplift $2.1M

Self-service reporting $744.2K

The above benefits of Cognos Analytics are

applied to both frontline workers and
knowledge workers across the enterprise.

THE TOTAL ECONOMIC IMPACT™ OF IBM COGNOS ANALYTICS 4

 EXECUTIVE SUMMARY

TEI FRAMEWORK AND METHODOLOGY

From the information provided in the interviews, DUE DILIGENCE
Interviewed IBM stakeholders and Forrester
Forrester constructed a Total Economic Impact™
analysts to gather data relative to the Cognos
framework for those organizations considering an
investment in Cognos Analytics. Analytics.

The objective of the framework is to identify the cost,

CUSTOMER INTERVIEWS
benefit, flexibility, and risk factors that affect the Interviewed four decision-makers at
investment decision. Forrester took a multistep organizations using the Cognos Analytics to
approach to evaluate the impact that the Cognos
obtain data with respect to costs, benefits, and
Analytics can have on an organization.
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
DISCLOSURES risk-adjusted the financial model based on
Readers should be aware of the following: issues and concerns of the interviewed
This study is commissioned by IBM and delivered by organizations.
Forrester Consulting. It is not meant to be used as a
competitive analysis. CASE STUDY
Employed four fundamental elements of TEI in
Forrester makes no assumptions as to the potential ROI
that other organizations will receive. Forrester strongly modeling the investment impact: benefits, costs,
advises that readers use their own estimates within the
flexibility, and risks. Given the increasing
framework provided in the report to determine the
appropriateness of an investment in the Cognos sophistication of ROI analyses related to IT
Analytics. investments, Forrester’s TEI methodology
IBM reviewed and provided feedback to Forrester, but provides a complete picture of the total
Forrester maintains editorial control over the study and its economic impact of purchase decisions. Please
findings and does not accept changes to the study that
contradict Forrester’s findings or obscure the meaning of
see Appendix A for additional information on the
the study. TEI methodology.
IBM provided the customer names for the interviews but
did not participate in the interviews.

THE TOTAL ECONOMIC IMPACT™ OF IBM COGNOS ANALYTICS 5

The IBM Cognos Analytics Customer Journey
Drivers leading to the Cognos Analytics investment

Interviewed Organizations

Revenue/budget Industry Deployment model Interviewee

$100M to $500M Nonprofit/research SaaS Business analyst

$500M to $1B Retail SaaS Managing director

$1B to $5B Manufacturing SaaS Technical development manager

$5B to $10B Government On-premises Director of data and analytics

relative to their targets, and managers did not

KEY CHALLENGES
have the insights needed to accurately forecast
Prior to engaging IBM for Cognos Analytics,
performance and create action plans.
organizations struggled to make data an integral part
of their internal and customer-facing operations, even
as they continued to embark on their digital “A lot of our tools were built in-
transformation journeys. house and relied on legacy
spreadsheets that took half an hour
The interviewed organizations struggled with
to open because they were linked
common challenges, including:
to other spreadsheets. We got rid
• Inflexible legacy solutions. Organizations of all those dependencies and now
typically used a combination of point solutions, everything is on Cognos
such as spreadsheets and basic visualization Analytics.”
tools, to pull data and package it into insights.
Technical development manager,
However, these solutions were often distinct,
manufacturing
non-integrated, and required significant overhead
to properly leverage. Consequently, even
seemingly simple and repeatable tasks such as • Lack of a data-driven culture. Without real-time
producing monthly or quarterly reports took, on data driving the organization, preparing for the
average, over 1 hour to execute when including future came second to reconciling and making
the time needed to package, review, and deliver sense of what happened in the past. For
the data and insights. example, without knowing day-to-day customer
foot traffic in branch locations, managers would
• Obsolete data and insights. Even when data
struggle to optimize their staffing and inventory
was made easy to consume and visually
levels. Then, by the time branch performance
appealing, it would often be obsolete by the time
data came back to corporate departments such
it was delivered. This is because organizations
as human resources, compensation and bonus
often compiled data in batch reports, such as a
plans would be created based on historical data,
monthly sales report. As a result, frontline
workers had little visibility into their performance

THE TOTAL ECONOMIC IMPACT™ OF IBM COGNOS ANALYTICS 6

 THE IBM COGNOS ANALYTICS CUSTOMER JOURNEY

rather than on the latest figures, resulting in

inaccurate targeting and forecasting.

Key assumptions
“Before, there was no way to set, • Retail organization
monitor, and drive targets. Now, if • $900M USD revenue
we see an associate lagging their
targets, we can focus on retraining
• 1,200 users
and performance improvement.” • Enterprise license
• SaaS deployment
Managing director, retail

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
four companies that Forrester interviewed and is
used to present the aggregate financial analysis in
the next section. The composite organization has the
following characteristics:

• Retail organization that operates across 30 retail

branches in North America and Western Europe
with $900 million USD in gross annual revenues.

• One thousand two hundred active Cognos

Analytics users.

• The Enterprise version of Cognos Analytics

Version 11 is leveraged as a SaaS and web-
based product deployed on IBM Cloud.

THE TOTAL ECONOMIC IMPACT™ OF IBM COGNOS ANALYTICS 7

Analysis Of Benefits
Quantified benefit data as applied to the composite

Total Benefits
Present
Ref. Benefit Year 1 Year 2 Year 3 Total
Value
Optimized staffing and
Atr $620,400 $1,263,840 $2,576,064 $4,460,304 $3,543,931
inventory management
Incremental gross profit
Btr $344,250 $722,925 $1,518,143 $2,585,318 $2,051,016
uplift

Ctr Self-service reporting $299,250 $299,250 $299,250 $897,750 $744,190

Total benefits
$1,263,900 $2,286,015 $4,393,457 $7,943,372 $6,339,137
(risk-adjusted)

OPTIMIZED STAFFING AND INVENTORY

MANAGEMENT
“We used to lose millions of dollars
Interviewed organizations praised Cognos Analytics on product shrinkage because
for its applicability to a diverse range of use cases. inventory would just disappear,
For example, organizations with frontline operations and we’d only count it once a year.
used Cognos Analytics to tightly manage and monitor We’ve now eliminated the majority
their supply chains, staffing models, and inventory of that because we are keeping
levels. In doing so, branch managers prevented track weekly, and the data is
overstaffing and overstocking of their branches and aggregated and reported to our
operations team.”
instead achieved visibility and transparency into their
day-to-day operations. One organization was able to
Managing director, retail
reduce its average staffing levels by between 10%
and 20% just by being able to more accurately
predict foot traffic in real time using Cognos
Modeling and assumptions. For the composite
Analytics. As this organization said: “You want to organization, Forrester makes the following
have enough staff to serve everyone that walks in,
assumptions:
but you don’t want to have five extra people in the
stores with nobody to serve or sell to. Cognos • IBM Cognos Analytics is deployed across 6, 12,
Analytics helps us achieve that staffing balance.” and 24 retail branches in Years 1, 2, and 3,
Similarly, branch managers leveraged Cognos respectively.
Analytics to keep track of inventory levels, ensuring • Each retail branch is staffed with an average of
that each item was properly accounted for at the end 10 sales FTEs.
of each business day. This additional visibility
• The average level of inventory shrinkage prior to
encouraged both managers and associates to keep
themselves accountable and ensure that there was Cognos Analytics was 0.2% of total annual sales.
no accidental product loss or shrinkage.

THE TOTAL ECONOMIC IMPACT™ OF IBM COGNOS ANALYTICS 8

 ANALYSIS OF BENEFITS

• The annual salary per sales associate is $81,250. To account for these risks, Forrester adjusted this
This assumes a 25% overhead burden rate. benefit downward by 20%, yielding a three-year, risk-
adjusted total PV (discounted at 10%) of $3,543,931.
Risks. Optimized staffing and inventory management
benefits experienced by other organizations may vary
based on the following factors.

• Number and growth of Cognos Analytics

deployments.

• Excess levels of staff and inventory under legacy

environment.

Optimized Staffing And Inventory Management

Ref. Metric Calculation Year 1 Year 2 Year 3

A1 Total retail branches 30 30 30

Percentage of branches leveraging

A2 20% 40% 80%
IBM Cognos Analytics
Number of retail branches leveraging
A3 A1*A2 6 12 24
IBM Cognos Analytics
Average store associates staffed per
A4 retail branch, before IBM Cognos 10 10 10
Analytics
Average store associates staffed per
A5 retail branch, after IBM Cognos 9 9 9
Analytics
Fully burdened sales associate
A6 $81,250 $81,250 $81,250
salary
Staffing optimization using IBM
A7 A3*(A4-A5)*A6 $487,500 $975,000 $1,950,000
Cognos Analytics
Average inventory shrinkage per
A8 retail branch, before IBM Cognos B2*0.2% $60,000 $63,000 $66,150
Analytics
Average inventory shrinkage per
A9 retail branch, after IBM Cognos $12,000 $12,600 $13,230
Analytics
Improved inventory management
A10 A3*(A8-A9) $288,000 $604,800 $1,270,080
using Cognos Analytics
Optimized staffing and inventory
At A7+A10 $775,500 $1,579,800 $3,220,080
management

Risk adjustment ↓20%

Optimized staffing and inventory

Atr $620,400 $1,263,840 $2,576,064
management (risk-adjusted)
Three-year total: $4,460,304 Three-year present value: $3,543,931

THE TOTAL ECONOMIC IMPACT™ OF IBM COGNOS ANALYTICS 9

 ANALYSIS OF BENEFITS

INCREMENTAL GROSS PROFIT UPLIFT Modeling and assumptions. For the composite
organization, Forrester makes the following
In addition to using Cognos Analytics to promote
assumptions:
operational excellence at the branch level,
organizations also leveraged Cognos Analytics to • IBM Cognos Analytics is deployed across 6, 12,
directly drive sales. Before Cognos Analytics, and 24 retail branches in Years 1, 2, and 3,
individual sales associates did not have real-time respectively.
access to their current performance levels, and
• Annual sales per branch grows at 5% each year.
managers did not have the data to set realistic sales
and growth targets for their associates. Managers • Average gross margins are 45%.
would instead set targets based on historical
Risks. The incremental gross profit uplift experienced
performance, rather than on real-time data, in order
by other organizations may vary based on the
to proactively drive incremental growth.
following factors:
Using Cognos Analytics, associates could monitor
• Number and growth of Cognos Analytics
their daily sales performance against established
deployments.
targets and understand when they needed to push
harder or utilize different tactics to increase success • Individual gross margins.
rates. Similarly, managers could perform A/B testing
To account for these risks, Forrester adjusted this
with different sales strategies and provide coaching
benefit downward by 15%, yielding a three-year, risk-
and retraining at the individual level as needed. As
adjusted total PV of $2,051,016.
one organization said, “Cognos Analytics gave us the
data we needed to build an entire sales program,
impacting everything from hiring, to training, and
eventually compensation.”

Incremental Gross Profit Uplift

Ref. Metric Calculation Year 1 Year 2 Year 3
Number of retail branches leveraging
B1 A3 6 12 24
IBM Cognos Analytics

B2 Annual sales per retail branch $30,000,000 $31,500,000 $33,075,000

Average percentage sales uplift

B3 0.5% 0.5% 0.5%
using IBM Cognos Analytics
Incremental sales uplift using IBM
B4 B1*B2*B3 $900,000 $1,890,000 $3,969,000
Cognos Analytics

B5 Average gross margin 45% 45% 45%

Bt Incremental gross profit uplift B4*B5 $405,000 $850,500 $1,786,050

Risk adjustment ↓15%

Incremental gross profit uplift

Btr $344,250 $722,925 $1,518,143
(risk-adjusted)
Three-year total: $2,585,318 Three-year present value: $2,051,016

THE TOTAL ECONOMIC IMPACT™ OF IBM COGNOS ANALYTICS 10

 ANALYSIS OF BENEFITS

SELF-SERVICE REPORTING
By integrating data from multiple sources and
“We had one report that ran on a
departments under Cognos Analytics, users could
spreadsheet, and by the time we
easily access cross-functional data without needing
pulled the numbers, extracted the
to make requests to specific individuals and
data, and did some analysis on it, a
departments. Self-service capabilities had several week would have already elapsed.
important benefits: First, access to data and reporting That same task is now done within
was democratized, meaning it could be easily minutes with Cognos Analytics.”
accessed by any user in accordance with the user’s
access rights as preconfigured through Cognos Business analyst, nonprofit/research
Analytics. Next, the reporting and data gathering
process was streamlined by removing or reducing the
need for steps such as communication between
departments and functions, manual modification of
reports and spreadsheets, and data validation and
review. Finally, business decision-makers could more
quickly leverage the insights from data to reinforce or
expedite a critical decision. Given these factors,
organizations were able to reduce the total time to
perform a distinct reporting task by 93%.

Modeling and assumptions. For the composite

organization, Forrester makes the following
assumptions:

• Cognos Analytics is deployed across five

corporate departments, each running an average
of 1,000 reports per year.

• The hourly salary per business analyst is $45.

This assumes a 25% overhead burden rate.

Risks. Self-service reporting benefits experienced by

other organizations may vary based on the following
factors:

• Number of Cognos Analytics deployments

• Effectiveness of legacy reporting and analytics

tools.

To account for these risks, Forrester adjusted this

benefit downward by 5%, yielding a three-year, risk-
adjusted total PV of $744,190.

THE TOTAL ECONOMIC IMPACT™ OF IBM COGNOS ANALYTICS 11

 ANALYSIS OF BENEFITS

Self-Service Reporting
Ref. Metric Calculation Year 1 Year 2 Year 3
Number of corporate departments
C1 5 5 5
leveraging IBM Cognos Analytics
Average number of custom reports
C2 1,000 1,000 1,000
run annually, per department
Time needed to manually build and
C3 1.5 1.5 1.5
validate custom reports, in hours
Time needed to self-service custom
C4 reports using Cognos Analytics, in 0.1 0.1 0.1
hours
Fully burdened hourly salary per
C5 $45 $45 $45
business analyst
C1*C2*(C3-
Ct Self-service reporting $315,000 $315,000 $315,000
C4)*C5

Risk adjustment ↓5%

Ctr Self-service reporting (risk-adjusted) $299,250 $299,250 $299,250

Three-year total: $897,750 Three-year present value: $744,190

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

• Custom analysis and visualization. While

interviewed organizations primarily leveraged
Cognos Analytics for managed and production
reporting purposes, these organizations
mentioned testing the idea of using Cognos
Analytics as a tool for conducting and visualizing
ad hoc analysis. Because Cognos Analytics
brings together data sources across the
organization, interviewees saw this is an
opportunity to gather cross-functional insights
while gradually upskilling read-only users on the
more sophisticated features of Cognos Analytics.

Flexibility would also be quantified when evaluated as

part of a specific project (described in more detail in
Appendix A).

THE TOTAL ECONOMIC IMPACT™ OF IBM COGNOS ANALYTICS 12

Analysis Of Costs
Quantified cost data as applied to the composite

Total Costs
Present
Ref. Cost Initial Year 1 Year 2 Year 3 Total
Value
IBM licensing
Dtr and professional $500,000 $200,000 $200,000 $200,000 $1,100,000 $997,370
services
Onboarding and
Etr $309,063 $282,109 $564,219 $0 $1,155,391 $1,031,822
migration
Report
Ftr $34,375 $8,594 $8,594 $8,594 $60,156 $55,746
development
Total costs
$843,438 $490,703 $772,813 $208,594 $2,315,547 $2,084,938
(risk-adjusted)

• IBM professional services consist of one

IBM LICENSING AND PROFESSIONAL SERVICES
consultant engaged over the course of the initial
Organizations that deployed Cognos Analytics on the
deployment year.
cloud paid yearly SaaS subscription fees to IBM
based on their subscription tier and specific contract Risks. IBM licensing and professional services costs
terms. Furthermore, those on an enterprise SaaS are reflective of actual fees, and thus, no risk
license enjoyed unlimited user licensing with a fixed adjustment was made. Over three years, licensing
yearly cost, encouraging organizations to add users and professional services yield a total PV (discounted
and deployments over time without the need for a at 10%) of $997,370.
lengthy budgeting and approval process. Most
organizations also worked closely with an IBM or
third-party consultant who helped deploy Cognos
Analytics. While the specific scope of engagement for “We engaged professional services
these professional services differed by organization, to help train a team of between 40
to 50 people as we transitioned
external consultants were engaged on everything
from Cognos Analytics Version 10
from the creation of data migration roadmaps and
to Version 11.”
strategy exercises, to executing the technical
implementation (including assisting with any Director of data and analytics,
integrations and configurations), to facilitating training government
and change management.

Modeling and assumptions. For the composite

organization, Forrester makes the following
assumptions:

• The composite organization can scale Cognos

Analytics to as many users as needed under the
enterprise licensing agreement.

THE TOTAL ECONOMIC IMPACT™ OF IBM COGNOS ANALYTICS 13

 ANALYSIS OF COSTS

IBM Licensing And Professional Services

Ref. Metric Calculation Initial Year 1 Year 2 Year 3

D1 IBM Cognos Analytics licensing $200,000 $200,000 $200,000

D2 IBM professional services $500,000

IBM licensing and professional
Dt D1+D2 $500,000 $200,000 $200,000 $200,000
services
Risk adjustment 0%

IBM licensing and professional

Dtr $500,000 $200,000 $200,000 $200,000
services (risk-adjusted)

Three-year total: $1,100,000 Three-year present value: $997,370

ONBOARDING AND MIGRATION Modeling and assumptions. For the composite

organization, Forrester makes the following
Deploying Cognos Analytics on the cloud took place
assumptions:
in two distinct steps. The first involved simply
procuring the solution, configuring security and • The initial onboarding process is managed by a
firewall rules, and setting up single sign-on. This single architect over a period of 1.5 months.
process took roughly one to two months, on average.
• The legacy data migration process is managed
Next, organizations rewrote and migrated their legacy
by a team of five migration experts over the span
data sources to Cognos Analytics over the course of
of six months.
six to 12 months, depending on the number and
complexity of legacy files being migrated. • The annual salaries per enterprise architect and
Organizations typically deployed Cognos Analytics in data migration expert are $187,500 and $98,125,
phases, often migrating all necessary files relevant to respectively. These salaries assume a 25%
one department or branch first before moving to overhead burden rate.
another.
Risks. Onboarding and migration costs incurred by
other organizations may vary based on the following
factors:
“The initial implementation on the • Number and complexity of data sources
cloud was quick because we didn’t
migrated.
have to provision the environment.
Pretty much all we had to do was • Expertise of the migration team.
enable single sign-on, and enable
• Any professional services support.
our data sources.”
To account for these risks, Forrester adjusted this
Managing director, retail cost upward by 15%, yielding a three-year, risk-
adjusted total PV of $1,031,822.

THE TOTAL ECONOMIC IMPACT™ OF IBM COGNOS ANALYTICS 14

 ANALYSIS OF COSTS

Onboarding And Migration

Ref. Metric Calculation Initial Year 1 Year 2 Year 3
Number of architects facilitating
E1 1
onboarding process
Time allocated to initial onboarding,
E2 0.125
in years
Fully burdened annual salary per
E3 $187,500
enterprise architect
E4 Onboarding costs E1*E2*E3 $23,438
Number of FTEs in data migration
E5 5 5 10
team
Time allocated to legacy data
E6 0.5 0.5 0.5
migration, in years
Fully burdened annual salary per
E7 $98,125.00 $98,125.00 $98,125.00
data migration FTE
E8 Legacy data migration costs E5*E6*E7 $245,312.50 $245,312.50 $490,625.00

Et Onboarding and migration E4+E8 $268,750.50 $245,312.50 $490,625.00

Risk adjustment ↑15%

Etr Legacy data migration (risk-adjusted) $309,063.07 $282,109.38 $564,218.75 $0

Three-year total: $1,155,390.62 Three-year present value: $1,031,822.00

REPORT DEVELOPMENT business requirements. These ongoing report

modifications typically demanded only a fraction of
To facilitate consumption of reports for read-only
the time of the initial build.
users, organizations typically dedicated several
business analysts to the creation of report templates Modeling and assumptions. For the composite
for both production and managed reporting use organization, Forrester makes the following
cases. While the amount of time needed to produce assumptions:
these templates differed by organization,
• The time required for the initial report build is two
interviewees found that the actual build process was
months. In each subsequent year after launching,
as simple and intuitive as using a spreadsheet; the
business analysts spend an average of two
addition of tools such as NLP further abstracted out
weeks modifying reports based on user needs.
the need for manual work. Therefore, report
development time was mostly driven by reviewing • The monthly salary per business analyst is
and validating internal business needs, rather than on $7,812.50. This assumes a 25% overhead
the actual build itself. Additionally, in subsequent burden rate.
years after the development of an initial report,
Risks. Report development costs incurred by other
business analysts would continue to tweak and
organizations may vary based on the following factor:
modify report templates to accommodate any new

THE TOTAL ECONOMIC IMPACT™ OF IBM COGNOS ANALYTICS 15

 ANALYSIS OF COSTS

• Number and complexity of reporting use cases.

To account for these risks, Forrester adjusted this

cost upward by 10%, yielding a three-year, risk-
adjusted total PV of $55,746.

Report Development
Ref. Metric Calculation Initial Year 1 Year 2 Year 3
Number of business analysts
F1 2 2 2 2
building and modifying reports
Time allocated to building or
F2 2.0 0.5 0.5 0.5
modifying reports, in months
Fully burdened monthly salary per
F3 $7,812.50 $7,812.50 $7,812.50 $7,812.50
business analyst

Ft Report development F1*F2*F3 $31,250.00 $7,812.50 $7,812.50 $7,812.50

Risk adjustment ↑10%

Ftr Report development (risk-adjusted) $34,375.00 $8,593.75 $8,593.75 $8,593.75

Three-year total: $60,156.25 Three-year present value: $55,746.00

THE TOTAL ECONOMIC IMPACT™ OF IBM COGNOS ANALYTICS 16

Financial Summary

CONSOLIDATED THREE-YEAR RISK-ADJUSTED METRICS

Cash Flow Chart (Risk-Adjusted)

Total costs Total benefits Cumulative net benefits The financial results calculated in the
Benefits and Costs sections can be
used to determine the ROI, NPV, and
$6.0 M
Cash
flows

payback period for the composite

organization’s investment. Forrester
$5.0 M assumes a yearly discount rate of 10%
for this analysis.
$4.0 M

$3.0 M

$2.0 M These risk-adjusted ROI,

NPV, and payback period
values are determined by
$1.0 M
applying risk-adjustment
factors to the unadjusted
results in each Benefit and
Cost section.
-$1.0 M

-$2.0 M
Initial Year 1 Year 2 Year 3

Cash Flow Analysis (Risk-Adjusted Estimates)

Present
Initial Year 1 Year 2 Year 3 Total
Value
Total costs ($843,438) ($490,703) ($772,813) ($208,594) ($2,315,547) ($2,084,938)

Total benefits $0 $1,263,900 $2,286,015 $4,393,457 $7,943,372 $6,339,137

Net benefits ($843,438) $773,197 $1,513,203 $4,184,863 $5,627,825 $4,254,199

ROI 204%

Payback 13.0

THE TOTAL ECONOMIC IMPACT™ OF IBM COGNOS ANALYTICS 17

Appendix A: Total Economic
Impact
PRESENT VALUE (PV)
Total Economic Impact is a methodology developed
by Forrester Research that enhances a company’s The present or current value of
technology decision-making processes and assists (discounted) cost and benefit estimates
vendors in communicating the value proposition of given at an interest rate (the discount
their products and services to clients. The TEI rate). The PV of costs and benefits feed
methodology helps companies demonstrate, justify, into the total NPV of cash flows.
and realize the tangible value of IT initiatives to both
senior management and other key business
stakeholders. NET PRESENT VALUE (NPV)

TOTAL ECONOMIC IMPACT APPROACH The present or current value of

Benefits represent the value delivered to the (discounted) future net cash flows given
business by the product. The TEI methodology an interest rate (the discount rate). A
places equal weight on the measure of benefits and positive project NPV normally indicates
the measure of costs, allowing for a full examination that the investment should be made,
of the effect of the technology on the entire unless other projects have higher NPVs.
organization.

Costs consider all expenses necessary to deliver the RETURN ON INVESTMENT (ROI)
proposed value, or benefits, of the product. The cost
category within TEI captures incremental costs over A project’s expected return in
the existing environment for ongoing costs percentage terms. ROI is calculated by
associated with the solution. dividing net benefits (benefits less costs)
by costs.
Flexibility represents the strategic value that can be
obtained for some future additional investment
building on top of the initial investment already made. DISCOUNT RATE
Having the ability to capture that benefit has a PV
that can be estimated. The interest rate used in cash flow
analysis to take into account the
Risks measure the uncertainty of benefit and cost time value of money. Organizations
estimates given: 1) the likelihood that estimates will typically use discount rates between
meet original projections and 2) the likelihood that 8% and 16%.
estimates will be tracked over time. TEI risk factors
are based on “triangular distribution.”
PAYBACK PERIOD
The initial investment column contains costs incurred at “time
The breakeven point for an investment.
0” or at the beginning of Year 1 that are not discounted. All
other cash flows are discounted using the discount rate at the This is the point in time at which net
end of the year. PV calculations are calculated for each total benefits (benefits minus costs) equal
cost and benefit estimate. NPV calculations in the summary initial investment or cost.
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.

THE TOTAL ECONOMIC IMPACT™ OF IBM COGNOS ANALYTICS 18

THE TOTAL ECONOMIC IMPACT™ OF IBM COGNOS ANALYTICS 19