Alfresco - Forrester TEI Study

Forrester TEI Study
Paul Hampton
Director of Product Marketing

Maidenhead, UK Global Headquarters
Atlanta, US Headquarters
Alfresco is now the largest open source
content management company in the world.
Founded in 2005, with ofﬁces in London & Atlanta
Over 3.5 million community downloads
250+ global channel partners
2,500 customers in 55 countries, including…

The
Alfresco
Platform
Document Management

Records Management

Web Content Services

Enterprise Collaboration

Open Source Platform

Government
Finance
Media & Entertainment
Travel & Logistics
Manufacturing
Software
Retail
Education

© 2011 Forrester Research, Inc. Reproduction Prohibited5 © 2009 Forrester Research, Inc. Reproduction Prohibited
The Total Economic Impact™ of Alfresco
Enterprise Content Management Solution
Stephen Powers – Principal Analyst & Research Director
Sebastian Selhorst –TEI Consultant
1st of February 2012

© 2011 Forrester Research, Inc. Reproduction Prohibited6
Agenda
§  ECM Market Overview
§  What Is Total Economic Impact (TEI)?
§  Study overview
§  Key findings from the case study
–  Costs
–  Benefits
–  Risk adjustments
§  Conclusions and ROI

What is ECM?
Software used by an enterprise to manage, retain,
and put to use unstructured information such as
office documents, document images, Web content,
rich media, corporate records, and computer output

Organizations without ECM

Organizations recognize the importance of ECM, and
continue to invest
Source: Forrester’s October 2011 Global Enterprise Content Management Online Survey
Base: 252 ECM decision-makers
Remain the
same
20%
Be scaled
back
4%
Don't know
5%
Increase
71%
“Over the next 12 months, how will your deployments or usage of
ECM change? Will the number of deployments or usage . . . ?”

ECM can help organize your content throughout it’s
lifecycle
Archive
Approve
Revise
Create
Promote
Version
Publish
Destroy
Workflow
Workflow
Collaboration
Review/
Approve
Content
Repository
(Records
Management)

Drivers for ECM selection
§  Compliance needs
§  Archiving
§  Better content search
§  Policy instrumentation and management across
multiple repositories
§  eDiscovery support, proactive support models
§  Moving employees off of file systems and sharing
documents through email
§  Collaboration and Social

Content comes in three “flavors”
Source: “Plan Your ECM Strategy For Business, Persuasive, Transactional, And Foundational Needs”

ECM technologies support each part of the content
spectrum

ECM suites are still an ideal; multiple systems
support different content types
Two
21%
One
31%
Zero
6%
Three or more
42%
“How many enterprise content management solutions
are currently utilized by your firm?”

Content-centric technologies within the ECM
functionality sets

Content-centric technologies within the ECM
functionality sets (cont.)

What’s changing the ECM market?
§  Proliferation of “SharePoint for the masses” that merges a powerful
collaboration platform with ECM.
§  Application-specific strategies
§  Content-focused solutions offer an alternative to the once highly-touted
ECM suite ideal
§  Cloud deployments
§  Industry-specific solutions

Snapshot of the ECM market
•  End-to-end ECM offerings that manage all four content types on a single
platform.
Traditional ECM suite vendors
•  Open source solutions that tend to focus on a subset of content types.
Open source solutions
•  Focus on specific content technologies instead of trying to be one-size-fits-all
solutions.
Content-focused vendors
•  Cloud-based solutions that tend to reduce initial startup costs and streamline
implementations
Cloud vendors
•  Vendors who focus on ECM for specific verticals (e.g. healthcare, legal, and
higher education).
Industry-specific players
•  Some vendors focus on regional markets.
European vendors

But implementing ECM isn't as it may seem
“What are the biggest challenges facing ECM in your
organization today? Select all that apply.”

Where to start? Define ECM strategy
Do you have an ECM strategy that balances IT, risk, and business needs?
Have you categorized which types of content you will be supporting?
Have you considered all the ECM components that you may or may not
need?
Have you considered how online content fits into the overall customer
experience management ecosystem?

Use best practices to guide ECM implementations
§  Engage stakeholders throughout the project lifecycle
§  Have strong governance policies and establish a governance board
§  Take a multichannel and customer view
§  Empower business users
§  Agility will be the new mantra
§  Build high octane taxonomies
§  Assess metadata concerns at every phase

Agenda
–  Costs
–  Benefits

What is Total Economic Impact?
§  Forrester’s TEI is the “Language of Value”
§  TEI ≠ TCO
–  TEI provides a complete economic picture of tech purchase decisions
§  Captures and quantifies the voice of the customer relative to technology
investments
–  Based on existing customer experience with the product/service
§  Third-party, objective case study
§  The four fundamental elements of TEI:

Agenda
–  Costs
–  Benefits

§  Customers for the interviews were provided by Alfresco:
–  A large financial service organization
–  A large provider of quality information serving with more than 15,000 employees
–  A large US health insurer with more than 8,000 employees
–  A global pharmaceutical and chemical company with around 40,000 employees
§  All of the interviewed organizations have used Alfresco in production
for more than ten months
Study Overview - The TEI Process
Design composite
organization
Construct financial
model using TEI
framework
Write case
study
Perform due
diligence
Conduct
customer
interviews

Study Overview – Interview Highlights
§  All of the interviewed organizations already had experience with ECM
solutions from other vendors
§  Alfresco platform was deployed as part of a new initiative within the company
§  The common business objectives for deploying Alfresco were to:
–  Achieve a well-integrated and flexible document management environment
–  Give access to document management capabilities to a large number of users
–  Contain the software licenses and maintenance costs
§  Overall integration took between 2 to 6 months
§  Number of end users: between 300 and 35,000
§  Number of documents managed by Alfresco: between 100,000 and 3.5 million

Study Overview – Interview Highlights (continued)
§  Alfresco's commercial open source model well accepted
–  Cost-effective and managed solution
–  High degree of innovation
–  Increased developer productivity and control over the ECM
environment
§  Three out of four interviewees were participating in Alfresco’s open
source community.
§  Common integration challenge: efforts for rollouts were often
underestimated. A way to mitigate these implementation risks was
to hire or contract with highly experienced consultants and Java
developers.

Study Overview – The Composite Organization
§  The composite organization that has been created for this study
has following characteristics:
–  A large financial services company based in the US
–  About 10,000 employees in 15 countries
–  Huge volume of unstructured content stored in different point content
management solutions and on local shared drives
–  Objective: create a new knowledge-sharing and collaboration platform
accessible by all employees

Agenda
–  Costs
–  Benefits

Costs: Total costs (non-risk-adjusted)
29%
36%
9%
26%
§  Alfresco subscription
§  Integration costs
§  Hardware investment
§  Training costs
Initial Year 1 Year 2 Year 3 Total PV*
Total costs ($578,000) ($106,000) ($106,000) ($106,000) ($896,000) ($841,606)
* Present Value

Benefits: Avoided Software License Costs
§  Avoid software licenses and maintenance costs for an alternative
commercial ECM solution
§  Assumptions
–  Avoided upfront license fee including first-year maintenance: $800,000
–  Annual software maintenance costs as percentage of upfront license fee: 18%
§  3 -year non-risk adjusted benefit (present value) of $ 954,470
Source: Forrester Research, Inc.
Year 1 Year 2 Year 3 Total PV*
Avoided Software License
Costs
$800,000 $144,000 $144,000 $1,088,000 $954,470
* Present Value

Benefits: IT Maintenance Cost Savings
§  Composite organization gets rid of several point content management
solutions at departmental level and part of their local shared drives
§  Resulting in a reduction of efforts regarding administration, maintenance,
upgrades, and governance
–  Composite organization was able to re-assign the equivalent of 1 full-time
resources to other tasks
–  average annual fully loaded compensation of $100,000
§  3 -year non-risk adjusted benefit (present value) of $248,685
Total IT Maintenance Cost
Savings
$100,000 $100,000 $100,000 $300,000 $248,685
* Present Value

Benefits: Use Of Less Expensive Developer Resources
§  The interviewed organizations reported that it was easier and more cost-
efficient to find and hire skilled Java developers than developers with
special knowledge about a commercial ECM solution
–  Composite organization hires two more Java developers at an average fully
loaded annual salary of $100,000 instead of two specialized ECM developers
at a 40% higher rate.
Use Of Less Expensive
Developer Resources
$80,000 $80,000 $80,000 $240,000 $198,948
* Present Value

Benefits: IT Cost Avoidance Due To Use Of Open
Source Stack
§  The Alfresco platform supports the full open source stack. Some of the
interviewed organizations actually took advantage of it and decided to use
an open source database instead of a commercial database
–  Avoided commercial database license cost: $30,000
–  Avoided annual database maintenance costs: $6,000
IT Cost Avoidance Due To
Use Of Open Source Stack
$36,000 $6,000 $6,000 $48,000 $42,194
* Present Value

Benefits: Integration And Development Efficiencies
§  The interviewed companies that had experience with the integration
between Alfresco and different enterprise tools reported productivity gains
for their IT staff mainly due to the access to the source code, the use of a
common programmer language, and the support of the open source
community
–  Composite organization integrates Alfresco ECM with its CRM system
–  One-time cost savings of $50,000
Integration And Development
Efficiencies
$50,000 $0 $0 $50,000 $45,455
* Present Value

Benefits: Total benefits (non-risk-adjusted)
Avoided software license costs $800,000 $144,000 $144,000 $1,088,000 $954,470
IT maintenance cost savings $100,000 $100,000 $100,000 $300,000 $248,685
Use of less expensive developer
resources
$80,000 $80,000 $80,000 $240,000 $198,948
IT cost avoidance due to use of
open source stack
$36,000 $6,000 $6,000 $48,000 $42,194
Integration and development
efficiencies
$50,000 $0 $0 $50,000 $45,455
Total benefits $1,066,000 $330,000 $330,000 $1,726,000 $1,489,752
64%
17%
13%
3% 3%
Avoided software license costs
IT maintenance cost savings
Use of less expensive developer resources
IT cost avoidance due to use of open source stack
Integration and development efficiencies
* Present Value

Future potential flexibility options
By introducing Alfresco ECM, the composite organization also
created options for realizing more benefits in the future in a variety of
ways:
§  Replacement of other commercial enterprise document management
solutions
§  Integration with other enterprise tools
§  Powering a company intranet

Risk-adjustment factors
Low Original High Mean
Costs
Alfresco subscription 98% 100% 105% 101%
Integration costs 100% 100% 115% 105%
Hardware investment 98% 100% 105% 101%
Training costs 98% 100% 105% 101%
Benefits
Avoided software license costs 50% 100% 100% 83%
IT maintenance cost savings 90% 100% 105% 98%
Use of less expensive developer resources 90% 100% 105% 98%
IT cost avoidance due to use of open source stack 90% 100% 105% 98%
Integration and development efficiencies 90% 100% 105% 98%
The risk component in the TEI methodology is used as a filter to capture the uncertainty
surrounding different cost and benefit estimates.
If a risk-adjusted ROI still demonstrates a compelling business case, it raises
confidence that the investment is likely to succeed.

Agenda
–  Costs
–  Benefits

Financial summary, ROI, and payback period
3 year risk-adjusted estimate
ROI 53%
Payback period (months) 10 months after go live
Total costs (present value) ($862,022)
Total benefits (present value) $1,316,786
Net present value $454,764
Through interviews with 4 Alfresco customers, Forrester found that these
organizations benefit from the deployment of Alfresco’s ECM solution in the
form of:
–  Avoided software license and maintenance fees
–  IT maintenance cost savings
–  Use of less expensive developer resources
–  IT cost avoidance due to use of open source stack
–  Integration and development efficiencies

Factors affecting benefits and costs
§  Technology supported by the company
§  Prior experience with open source products
§  Prior experience with enterprise-wide ECM deployments
§  Scope and functional requirements
§  Control of customizations

Questions?
•  Download the Forrester TEI study
– http://bit.ly/alf-tei
•  Download Alfresco Enterprise
– http://bit.ly/alf-try

Alfresco - Forrester TEI Study

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