the total economic impact™ of ibm mobilefirst platform€¦ · forrester took a multistep...

A Forrester Total Economic

Impact™ Study

Commissioned By

IBM

Project Director:

Henry Huang

February 2015

The Total Economic

Impact™ Of IBM

MobileFirst Platform Cost Savings And Business Benefits Enabled By MobileFirst Platform

Table Of Contents

Executive Summary .................................................................................... 3

Disclosures .................................................................................................. 5

TEI Framework And Methodology ............................................................ 6

Analysis ........................................................................................................ 7

Financial Summary ................................................................................... 22

IBM MobileFirst Platform: Overview ....................................................... 23

Appendix A: Framework Assumptions .................................................. 24

Appendix B: Total Economic Impact™ Overview ................................. 26

Appendix C: Forrester And The Age Of The Customer ....................... 27

Appendix D: Glossary ............................................................................... 28

Appendix E: Supplemental Material ....................................................... 29

Appendix F: Endnotes ............................................................................. 29

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3

Executive Summary

IBM commissioned Forrester Consulting to conduct a Total

Economic Impact™ (TEI) study and examine the potential

return on investment (ROI) enterprises may realize by

deploying MobileFirst Platform. The purpose of this study is to

provide readers with a framework to evaluate the potential

financial impact of MobileFirst Platform on their organizations

and how this mobile enterprise application platform and

associated application deployment and management

capabilities can be leveraged to win, serve, and retain

customers.

To better understand the benefits, costs, and risks associated

with a MobileFirst Platform implementation, Forrester

interviewed two existing customers with extensive experience

using MobileFirst Platform. The IBM mobile application

platform is positioned to make the entire mobile application deployment cycle streamlined through simplified back-end and

front-end integration, more efficient long-term management of mobile applications, and faster testing cycles.

The realities of today’s enterprise and consumer requirements for consumption of data dictate a need for a platform such as

MobileFirst Platform to distribute shared common integrations, security, and application programming interfaces (APIs) in a

scalable manner across an organization’s app landscape, especially with such tasks taking up more than 50% of mobile app

development. Some companies struggle with developing apps and may choose to use MobileFirst Platform’s integrated

development environment (IDE) to gain further savings rather than writing individualized platform-specific code multiple times

across the mobile device variants, but that gain is not represented in the ROI analysis or within the scope of this study.

Further still, the number of updates required by modern-day apps due to regular mobile operating system (OS) changes

amplifies the need to manage and monitor app versions and enable agile dev ops to manage the overall health,

performance, and scalability through an integrated platform. With MobileFirst Platform, customers deployed applications

more rapidly and were able to manage those apps more effectively, enabling them to meet their objectives, generate

business value, and keep costs in check. Said one VP of IT, “MobileFirst has been a huge investment win for us; we’ve

definitely leveraged it to simplify our mobile development.”

The power of the IBM MobileFirst Platform to expedite the entire mobile application development cycle is further evident in

organizations with plans to build more mobile applications. It is clear that using MobileFirst Platform for additional apps on

multiple OS platforms over and above the first as described in this study results in even higher returns on investment. Moving

forward, the increasing pace of mobile OS renditions and widespread adoption of applications will increasingly demand

management capabilities at scale, making the IBM MobileFirst Platform an even more powerful value proposition for both

hybrid and native app environments.

MOBILEFIRST ENABLES A MORE RAPID DEVELOPMENT AND DEPLOYMENT OF APPS ACROSS MULTIPLE

PLATFORMS WHILE SAVING COSTS

Our interviews with two existing customers and subsequent financial analysis found that a composite organization based on

these interviewed organizations experienced the risk-adjusted ROI, benefits, and costs shown in Figure 1.1 With MobileFirst

Platform, the effort to update and maintain apps was improved more than 30%, and the composite organization experienced

substantial savings in ease of integration and faster time-to-value.

IBM MobileFirst Platform is a comprehensive

mobile platform designed to provide secure data

transmission, scalable integration to enterprise

data sources, multifactor authentication,

management of apps, logging of app issues for

troubleshooting, operational analytics, and

centralized notifications and geolocation tracking.

Through the IBM MobileFirst Platform services,

any mobile app can benefit from improved speed

of delivery for mobile apps, simplifying the task of

meeting the expectations of today’s mobile-

oriented end user.

4

FIGURE 1

Financial Summary Showing Five-Year Risk-Adjusted Results

ROI: 107%

NPV: $995,182

Payback: <Eight months

Total app deployment cycle time: ▼ 39%

Source: Forrester Research, Inc.

› Benefits. The composite organization experienced the following risk-adjusted benefits that represent those experienced by

the interviewed companies:

• Cost savings of reduced integration effort, to the amount of $410,401 (PV), with middleware capabilities that

integrated the applications with various systems of record and databases. MobileFirst Platform is a centralized

platform that facilitates a middleware role and provides platform-specific API calls for all apps, native or hybrid, built

within the framework. The capability to integrate once and apply to many applications and platforms significantly

decreased the effort to integrate at scale across the developed apps, agnostic of OS platform or programming

language.

• Lowered application maintenance and upgrade effort, by $1,101,191 (PV), by reducing the effort required to

maintain and upgrade from a central point of control. The singular source of feedback collection and logging

created an efficient means to update content to meet the growing demands of end users. By having a single stream

of feedback collection, the composite organization was able to maintain high ratings from end users by providing

timely updates of content and functionality to meet the end users’ expectations. Apps at the composite organization

required a minimum of 5 updates per app, per platform, on an annual basis to maintain levels of functionality,

security, and data linkages. Better integrity of integration was retained throughout the maintenance lifecycle on the

centralized IBM MobileFirst Platform, leading to significant savings.

• An improved time-to-value delivery of mobile applications, from 12 weeks to 7.3 weeks, due to faster

deployment and testing cycles. Through common integration and app management, MobileFirst Platform enabled

organizations to more quickly deliver applications on multiple platforms. The faster deployment of apps enabled

sooner realization of value with every app iteration.

› Costs. The composite organization experienced the following risk-adjusted costs:

• MobileFirst Platform license costs of $910,251 (PV). These are license fees assessed by IBM for the use of

MobileFirst Platform both on an initial basis and then on a lesser recurring basis. Licensing differs between

business-to-enterprise (B2E) and business-to-consumer (B2C) application scenarios, and readers are encouraged

to read the section on Costs.

• Initial deployment and internal training costs of $10,190. This is a one-time fee incurred by the composite

organization for the purpose of installing, configuring, and then learning the usage characteristics of the IBM

MobileFirst Platform.

• Ongoing hosting costs of the MobileFirst Platform server software totaling $8,182 (PV). These include costs

for ongoing use of cloud-based cluster provisions to run the MobileFirst Platform solution.

5

Disclosures

The reader should be aware of the following:

› The study is commissioned by IBM 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 report to determine the appropriateness of an

investment in IBM/MobileFirst Platform.

› IBM 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.

› IBM provided the customer names for the interviews but did not participate in the interviews.

6

TEI Framework And Methodology

INTRODUCTION

From the information provided in the interviews, Forrester has constructed a Total Economic Impact™ (TEI) framework for

those organizations considering implementing IBM/MobileFirst Platform. The objective of the framework is to identify the

cost, benefit, flexibility, and risk factors that affect the investment decision, to help organizations understand how to take

advantage of specific benefits, reduce costs, and improve the overall business goals of winning, serving, and retaining

customers.

APPROACH AND METHODOLOGY

Forrester took a multistep approach to evaluate the impact that IBM/MobileFirst Platform can have on an organization (see

Figure 2). Specifically, we:

› Interviewed IBM marketing, sales, and/or consulting personnel, along with Forrester analysts, to gather data relative to

MobileFirst Platform and the marketplace for MobileFirst Platform.

› Interviewed two organizations currently using IBM/MobileFirst Platform to obtain data with respect to costs, benefits, and

risks.

› Designed a composite organization based on characteristics of the interviewed organizations (see Appendix A).

› Constructed a financial model representative of the interviews using the TEI methodology. The financial model is

populated with the cost and benefit data obtained from the interviews as applied to the composite organization.

› Risk-adjusted the financial model based on issues and concerns the interviewed organizations highlighted in interviews.

Risk adjustment is a key part of the TEI methodology. While interviewed organizations provided cost and benefit

estimates, some categories included a broad range of responses or had a number of outside forces that might have

affected the results. For that reason, some cost and benefit totals have been risk-adjusted and are detailed in each

relevant section.

Forrester employed four fundamental elements of TEI in modeling IBM/MobileFirst Platform’s service: benefits, costs,

flexibility, and risks.

Given the increasing sophistication that enterprises have regarding ROI analyses related to IT investments, Forrester’s TEI

methodology serves to provide a complete picture of the total economic impact of purchase decisions. Please see Appendix

B for additional information on the TEI methodology.

FIGURE 2

TEI Approach


Perform due diligence

Conduct customer interviews

Design composite

organization

Construct financial

model using TEI framework

Write case study

7

Analysis

COMPOSITE ORGANIZATION

For this study, Forrester conducted two interviews with representatives from the following companies, which are IBM

customers based in the US:

› A large regional nonprofit US health insurer serving over 3 million customers, with a focus on engaging the people it serves

to provide affordable solutions for health and healing.

› A large payment solutions provider that streamlines electronic payments for employees, contractors, end users, and

vendors within a variety of industries.

Based on the interviews, Forrester constructed a TEI framework, a composite company, and an associated ROI analysis that

illustrates the areas financially affected. The composite organization that Forrester synthesized from these results represents

an organization with the following characteristics:

› It is a large US-based B2C consumer goods retailer with both

online and brick-and-mortar sales channels.

› It averages more than $500 million in annual sales.

› It currently has a light mobile application presence with a

consumer-facing shopping app that was largely agency-built

many years ago.

› Its internal mobile development team is sparse, but the

organization possesses web development capabilities as a

strong competency.

› The organization recognizes the shift to mobile and the need to

serve both consumers and internal employees with mobile

applications.

› It has a BYOD policy, with the majority of corporate users using

either iOS- or Android-powered devices.

The composite organization recognizes the mobile mind shift,

where customers have the expectation that they can get what

they want in their immediate context and moments of need .2 In

addressing the needs of its mobile expansion plans, an extensive

request for proposal (RFP) and business case process evaluating multiple vendors took place, and the composite

organization chose IBM MobileFirst Platform:

› Implementation started immediately with the MobileFirst Enterprise Edition, with the MobileFirst Consumer Edition in the

following year.

› The first phases focused on rapidly deploying an application to increase internal productivity by enabling employee self-

service on personal data as well as collaborative team data.

› MobileFirst Platform was deployed to 1,000 users within the organization.

› Subsequent consumer-facing applications were developed later to improve customer satisfaction (and thereby increase

customer lifetime value) as well as improve the customer experience to garner a larger share of the consumer wallet.

“We had a hard time keeping

our application up-to-date.

Responding to all the changing

customer needs was extremely

difficult. We needed a platform

that allowed us to get faster and

more responsive with not only

development, but also fixes and

to meet the needs of customers.

MobileFirst is this platform.”

~ VP of IT, payment solution provider

8

INTERVIEW HIGHLIGHTS

Situation

The composite organization sought to meet the shift in consumer dollar spend from stationary devices to mobile devices. To

do so, the organization needed to leverage existing internal capabilities to keep costs down, but more importantly, it needed

to deploy applications at a faster pace with higher consumer satisfaction. Consumers were not satisfied with its application

only representing products available for purchase; the consumers were savvy shoppers who wanted to get the best deal,

know that the products had been vetted by their peers, check related items, and more importantly, do it all in a snappy

fashion with security to boot. Internally, the organization desired to leverage the power of modern smartphones and

empower employees to be productive in ways that did not require a desktop or laptop. Data source linkages, authentication

and security, protracted development cycles, and maintaining a high level of satisfaction among all users were all concerns

of the composite organization. Specifically, these issues and associated opportunities were identified:

› Rapidly deploy mobile applications in multiple platforms.

› Address the need for integration between various sources of

internal data sources while maintaining a secure environment.

› Maximize the utility of internal programming capabilities and

apply it to mobile development.

› Provide a continual level of quality in mobile apps that builds

ongoing value.

Solution

To address the need to rapidly deploy applications across various

mobile platforms while having limited resources, the composite

organization selected MobileFirst Platform for its ability to provide a

configurable out-of-the-box solution that minimizes the amount of

custom native-level coding required to bring about the functionality

base, security, and back-end integration that builds the positive

user experience demanded by internal end users and external

consumers. Users who find mobile apps not performing to their

expectations will without a doubt find another app that does.3 The

composite organization understands this and has committed to

meeting this demand with MobileFirst Platform. Furthermore, the

analytical and reporting features of the IBM MobileFirst Platform

provide a means for the organization to continually meet the needs

of the user base by assessing the performance and stability of the application base and being able to respond to

discrepancies in an expeditious manner.

Results

The interviews revealed that with MobileFirst Platform, the composite organization experienced:

› Quicker deployment cycles. The single project workspace where commonly used API calls could be interchangeably

applied for the various platform renditions without tedious and repetitive work compressed the entire deployment cycle. By

the same token, testing environments and debugging processes were also consolidated into the IBM MobileFirst Platform

for an all-in-one project space. Further still, integration between various back-end data sources became simplified, without

the usual complexity of linkages required in organizations with multiple data sources feeding a multitude of mobile apps.

“Being able to consolidate all

feedback into the MobileFirst

Platform dashboard and then

working with a single code

base within a single control

center made everything more

manageable. MobileFirst

Platform has sped up and

smoothed out the whole end-

to-end development and

support process.”

~ VP of IT, payment solution provider

9

› Improved end user satisfaction. The ease of testing and feedback aggregation created a constant communication

channel for the developers and the end users of the organization’s mobile apps. Whereas individual native developments

require the use of employee resources to solicit and then gather user sentiment on mobile apps, the IBM MobileFirst

Platform aggregates feedback from users, even down to specific user subsets and utilization times, to provide insight on

user sentiment. Even before the organization reached the user test phase, MobileFirst Platform’s internal debugging

features ensured that a higher quality product was deployed

across the various mobile environments.

› Faster realization of business value. With the quicker

deployment cycles due to common integration, security, and

push capability of critical updates, the composite organization

experienced a tremendous acceleration to the point of value

accrual. The standard app release cycle of 12 weeks was

shortened to 7.3 weeks, and the critical update period was

reduced from an average of one week to nearly immediately.

With consumer-facing mobile applications that increased

customer lifetime value or generated incremental increases to

revenue, the return on the quicker time-to-value was substantial.

Likewise, internal employees gained better access to their

benefits, expense submission, and team project data while on

the go, strengthening their appreciation for the composite

organization from the added flexibility. With MobileFirst Platform,

the composite organization was also able to quickly react to

changing OS renditions, bug fixes, and other instances of

redeployment, ensuring that a constant stream of business value

was generated with its mobile application base portfolio.

“The MobileFirst platform

allowed us to leverage our

current internal skill set and

deploy multiple iterations of

apps on multiple platforms

quickly.”

~ IT director, US health insurer

10

BENEFITS

The composite organization experienced a number of quantified benefits in this case study:

› Cost savings of reduced integration effort.

› Lowered application maintenance and upgrade effort.

› Faster time-to-value.

Another important benefit experienced by the composite organization was the ongoing five-star rating given by end users.

While end user satisfaction depends on a number of factors, some organizations nevertheless regarded the capability to

quickly address, monitor, and make changes to all of their mobiles in a consolidated space a strong driver for implementing

the solution.

While there is an explicit value to developing hybrid apps or native apps packaged in a MobileFirst Platform container and

then deploying at scale with speed on the IBM MobileFirst Platform, we have chosen to omit this benefit category. Instead,

we have focused on the benefits of the back-end for a more conservative projection, as the needs and requirements of

enterprise apps can be highly varied, and apps built in any development tool can benefit from the MobileFirst Platform back-

end.

11

Cost Savings Of Reduced Integration Effort

A key benefit of the IBM MobileFirst Platform is its function as a middleware layer to simplify the integration

between the front end of the various app architectures with disparate back-end data sources. In utilizing the

integration functions of MobileFirst Platform, the composite organization was able to consolidate its

authentication and data linkages between its many differing systems of record. Utilizing the out-of-the-box

security tool set within MobileFirst Platform, the organization integrated the front-end mobile interface with the

back-end at incredible speed and was able to reuse the linkages across its cross-platform deployments rather

than having to code tedious new integrations. The simplification and decrease in complexity of integration tasks

also resulted in the composite organization internalizing a portion of the integration effort, providing further cost

savings.

The total integration-related savings experienced by the composite organization over five years was $477,625, or

$410,401 after adjusting for present value. Readers should note that while the composite organization developed

hybrid apps, organizations developing purely native applications will enjoy the same type of integration savings

on the IBM MobileFirst Platform, with the common integration code extending across all app types.

TABLE 1

Cost Savings Of Reduced Integration Effort

Ref. Metric Calculation Initial Year 1 Year 2 Year 3 Year 4 Year 5

A1 Cost of complex app

integration, native build $44,847

A2

Reduction of effort to

integrate and

authenticate with

MobileFirst Platform as

middleware, initial

iterations

A1*45%*number of

named apps $40,363 $0 $40,363 $40,363 $0 $0

A3 Percent savings, internal

vs. external dev team 45%

A4

Internalization of

integration effort, all

platforms

A1*A3*75%*number

of named apps*app

iterations

$60,544 $0 $60,544 $60,544 $0 $0

A5

Reuse integration and

security code for follow-

on platforms, MobileFirst

65% $58,302 $0 $58,302 $58,302 $0 $0

Atr

Cost savings of

reduced integration

effort

A2+A4+A5 $159,208 $0 $159,208 $159,208 $0 $0


12

Lowered Application Maintenance And Upgrade Effort

The composite organization’s mobile strategy determined

that the rapid deployment of apps to build business value

by itself was insufficient. Apps also needed to be highly

contextualized and deliver a usefulness that end users

have come to expect. To consistently deliver a high-quality

experience, the organization not only exerted a lot of effort

to design the original feature sets of its applications, but

also aggregated metrics and user sentiment within the

MobileFirst Platform environment to constantly improve

upon its apps. By leveraging the feedback consolidation

and analytics dashboards of the IBM MobileFirst Platform,

the composite organization was better able to adjust

content and features of its mobile apps to win, serve, and

retain its customers. Furthermore, mandatory updates with

security or serious functionality changes could be

enforced, ensuring users move to the most current versions quickly. Prior to MobileFirst Platform, the composite

organization addressed consumer needs individually on each architecture in an ad hoc manner. As a result, the

composite organization could not effectively meet the expectations of its users, and thus was not extracting

maximum value from its previous pool of mobile applications prior to MobileFirst Platform.

MobileFirst Platform delivers the same benefits to native apps as were previously mentioned for hybrid apps. In

the instances where applications need a high degree of contextualization using a wider range of functionality to

meet end user expectations, native application development can be, at times, the most suitable choice.

Management and maintenance of such landscapes that contain both native and hybrid apps can also benefit

from the centralized source of visibility and control, with minimal code additions. MobileFirst Platform is designed

with management of complex environments in mind, therefore reducing the effort required to derive insightful

analytics and ultimately keep up with the rapidly evolving OS renditions and user demands. Common native

device calls like camera functions and push notifications can be easily integrate into apps with API calls already

built into MobileFirst Platform for a consolidated, simple approach to maintaining apps at scale. Security and

application back-end connectivity can likewise be updated with functionality updates through the central IBM

MobileFirst Platform, necessitating lower effort and costs on native and hybrid platforms alike.

“When security flaws within

iOS and Android OS arose,

we were able to utilize the

direct update to push our

updated app through to the

users almost immediately,

bypassing the Apple and

Google app stores entirely.”

~ Enterprise architect, US health insurer

13

TABLE 2

Lowered Application Maintenance And Upgrade Effort


B1

Cost of complex app

maintenance and

updating, native build,

per update

$8,554

B2

Decreased effort for

remediation and

updating of

functionality,

MobileFirst Platform

B1*40%*B5*number

of named apps*app

platform iterations

$0 $68,432 $136,864 $205,296 $205,296 $205,296

B3

Percent savings,

internal vs. external dev

team

45%

B4

Internalization of

application

maintenance, all

platforms

75% $0 $57,740 $115,479 $173,219 $173,219 $173,219

B5 Updates per year, per

app 0 5 5 5 5 5

Btr

Lowered application

maintenance and

upgrade effort

B2+B4 $0 $126,172 $252,343 $378,515 $378,515 $378,515


Faster Time-To-Value

A key requirement for the adoption of the MobileFirst Platform was the ability to speed the entire deployment

cycle: integration, testing, analysis, and updating. As outlined in the benefit sections above, the composite

organization experienced acceleration across all phases of the deployment cycle, and as a result, it realized a

significant improvement in time-to-value. Additionally, the composite organization realized the benefit of being

able to push mandatory security or major bug-related updates for internal apps and hybrid content to end users,

rather than using the standard submission process through the Apple or Google app stores. This helped the

composite organization continue to generate value from its apps with minimal interruption.

Prior to MobileFirst Platform, the composite organization experienced development, integration, and testing life

cycles of 12 weeks on average. Post-MobileFirst implementation, the entire deployment cycle has been reduced

by 39%, or the equivalent of a 4.6-week improvement. Using an ROI calculation of 35% on internal B2E

applications, the organization reaped a benefit of $109,536 in its first year from the time-to-value improvement. A

much higher ROI calculation of 70% for B2C resulted in a benefit of $162,049 in Year 2 and $186,164 in Year 3.

14

Readers should note that ROI values depend wholly on specific use cases, but it is very possible for the ROI to

be much greater in B2C apps that generate incremental revenue or increase customer lifetime value.

TABLE 3

Faster Time-to-Value


C1

Original deployment

life-cycle timespan, in

weeks

12 12 12 12 0 0

C2

New deployment life-

cycle timespan, in

weeks

7.3 7.3 7.3 7.3 0.0 0.0

C3

Critical upgrades,

direct update, in

weeks 1 1 1 1 1

C4 App project cost Dev + Int +

Maintainence $177,312 $177,312 $177,312 $177,312 $177,312

C5 Number of apps

2 2 2

C6 Number of platforms

per app 2 2 2

C7 Expected app ROI

35% 70% 70% 70% 70%

Ctr Faster time-to-value

(C1-

C2+C3)*(C4*C5*C6*(

C7+1))/50)

$0 $109,536 $162,049 $186,164 $29,788 $29,788


15

Total Benefits

Table 4 shows the total of all benefits across the four areas listed above, as well as present values (PVs) discounted at 10%.

Over five years, the composite organization expects risk-adjusted total benefits to be a PV of nearly $1.2 million, not

inclusive of ROI generated by the apps themselves.

TABLE 4

Total Benefits (Risk-Adjusted)

Ref.

Benefit

Category

Initial Year 1 Year 2 Year 3 Year 4 Year 5 Total

Present

Value

Atr

Cost savings

of reduced

integration

effort

$159,208 $0 $159,208 $159,208 $0 $0 $477,625 $410,401

Btr

Lowered

application

maintenance

and upgrade

effort

$0 $126,172 $252,343 $378,515 $378,515 $378,515 $1,514,058 $1,101,191

Ctr Faster time-

to-value $0 $109,536 $162,049 $186,164 $29,788 $29,788 $517,326 $412,213

Total

benefits

(risk-

adjusted)

$159,208 $235,708 $573,600 $723,886 $408,303 $408,303 $2,509,009 $1,923,805


16

COSTS

The composite organization experienced a number of costs associated with the MobileFirst Platform solution:

› Software license fees.

› Deployment and internal training costs.

› Ongoing hosting costs

These represent the mix of internal and external costs experienced by the composite organization for initial planning,

implementation, and ongoing maintenance associated with the solution.

Software License Fees

The largest segment of cost incurred by the composite organization was the cost of software license fees for

MobileFirst Platform. Three iterations of the MobileFirst Platform exist and are known as the MobileFirst

Enterprise Edition, MobileFirst Consumer Edition, and MobileFirst Developer Edition. In most respects, the

platforms are similar in functionality but licensed to cater to specific uses: enterprise users, consumer end users,

and sandbox nonpublic release usage.

The composite organization incurred the following costs in the initial phase of implementation: an initial license

fee covering the cost of MobileFirst Enterprise Edition and associated support costs for a 12-month period, plus

an added cost per client application device for B2E usage of $173 per user. License fees are not assessed for

the quantity of applications on the Enterprise Edition of the platform. Following the initial charges, the composite

organization incurred additional license and support costs in subsequent years equivalent to 20% of the initial

device licenses. These costs are reflected in Table 5, reference line D1. The initial assumption for an internal

deployment of 1,000 enterprise users is expected to grow in years 2 through 5 at an annual rate of 5%, and the

cost of the increased licenses is reflective of this.

The MobileFirst Consumer Edition licenses were acquired in Year 2 for the development of consumer-facing

applications. The licensing model for the Consumer Edition had no restrictions on the number of users but

assessed fees based upon the number of named applications, which in this case was two in Year 2. Similar to

with the Enterprise Edition, the composite organization incurred license and support costs of 20% of the original

license fee in subsequent years.

Comprehensively, the licensing and support costs amount to the greatest cost segment, but they are often easily

offset by the return on investment from the applications themselves. Readers should determine metrics for the

ROI on their specific planned applications to maximize the relevance of this study for specific uses.

17

TABLE 5

Software License Fees


D1 MobileFirst Enterprise

Edition $290,100 $0 $27,248 $318,710

$30,040

$31,542

D2 MobileFirst Consumer

Edition

$0 $0 $267,000 $40,050 $40,050 $40,050

D3 User growth 5% 5% 5% 5%

Dtr Software license fees

(risk-adjusted)

D1[*D1*20%*(1+D3)]+D2[

*D2*20%] $290,100 $0 $295,610 $374,695 $71,592 $73,170


Deployment And Internal Training Costs

The installation and deployment of the IBM MobileFirst Platform at the composite organization required the time

of an internal systems administrator to provision a virtual machine cluster and the actual install. Training and a

short ramp-up period ensued for the back-end developers of the organization. Total costs associated with

deployment and internal training were $9,264, all incurred in the initial deployment period.

Implementations of MobileFirst Platform can reside on both bare-metal and virtual instances, and thus can vary

from organization to organization, taking into the consideration the various infrastructures available. We also

noted that the rate of ramp-up varied between interviewed organizations. To compensate, this cost category was

risk-adjusted up by 10%. The risk-adjusted cost of deployment and internal training costs for the initial period was

$10,190.

18

TABLE 6

Deployment And Internal Training Costs


E1 Internal back-end

developer cost per hour $72

E2

Internal back-end

developers to be

trained

3

E3

Training and ramp-up

period, per FTE, in

hours

40

E4

Deployment effort on

virtual server

configuration, in hours

12

E5 System administrator

cost, per hour $52

Et Deployment and

Internal training costs (E1*E2*E3)+(E4*E5) $9,264 $0 $0 $0 $0 $0

Risk adjustment 10%

Etr

Deployment and

internal training costs

(risk-adjusted) $10,190 $0 $0 $0 $0 $0


19

Ongoing Hosting Costs

The hosting the IBM MobileFirst Platform was provisioned virtually on the organization’s cloud cluster. As

hardware utilization was part of an ongoing infrastructure-as-a-service (IaaS) expense, there were no initial

capital outlays, and the composite organization was instead billed on a recurring monthly basis. With modest

requirements for hardware specifications, total yearly infrastructure costs were $1,800, for a total (PV-adjusted)

cost of $8,182 over five years.

TABLE 7

Ongoing Hosting Costs (Risk-Adjusted)


F1 Virtual machine cloud

hosting $1,800 $1,800 $1,800 $1,800 $1,800

F2 Capacity growth

10% 10% 10% 10%

Ftr Ongoing hosting

costs F1*F2 $0 $1,800 $1,980 $2,178 $2,396 $2,635


Total Costs

Table 8 shows the total of all costs as well as associated present values, discounted at 10%. Over years years, the

composite organization expects total costs to total a net present value of a little more than $2.5 million, or $3,862 per user.

TABLE 8

Total Costs (Risk-Adjusted)

Ref.

Cost

Category

Initial Year 1 Year 2 Year 3 Year 4 Year 5 Total

Present

Value

Dtr Software

license fees $290,100 $0 $295,610 $374,695 $71,592 $73,170 $1,105,167 $910,251

Etr

Deployment

and internal

training

costs

$10,190 $0 $0 $0 $0 $0 $10,190 $10,190

Ftr

Ongoing

hosting

costs

$0 $1,800 $1,980 $2,178 $2,396 $2,635 $10,989 $8,182

Total costs

(risk-

adjusted)

$300,290 $1,800 $297,590 $376,873 $73,988 $75,805 $1,126,347 $928,623


20

FLEXIBILITY

Flexibility, as defined by TEI, represents an investment in additional capacity or capability that could be turned into business

benefit for some future additional investment. This provides an organization with the “right” or the ability to engage in future

initiatives but not the obligation to do so. There are multiple scenarios in which a customer might choose to implement

MobileFirst Platform and later realize additional uses and business opportunities. Flexibility would also be quantified when

evaluated as part of a specific project (described in more detail in Appendix B).

The power of the IBM MobileFirst Platform to expedite the entire mobile application development cycle is further evident in

organizations with plans for developing a greater number of mobile applications. It is very clear that using the MobileFirst

Platform for additional apps on multiple platforms over and above the first as described in this study results in even higher

returns on investment. Moving forward, the increasing pace of mobile OS renditions and widespread adoption of applications

will increasingly demand management capabilities at scale, making the IBM MobileFirst Platform an even more powerful

value proposition.

21

RISKS

Forrester defines one type of risk associated with this analysis as “implementation risk.” Implementation risk is the risk that a

proposed investment in MobileFirst Platform may deviate from the original or expected requirements, resulting in higher

costs than anticipated. The greater the uncertainty, the wider the potential range of outcomes for cost and benefit estimates.

TABLE 9

Cost Risk Adjustments

Costs Adjustment

Deployment and internal training costs 10%


Quantitatively capturing implementation risk by directly adjusting the financial estimates results provides more meaningful

and accurate estimates and a more accurate projection of the ROI. In general, risks affect costs by raising the original

estimates, and they affect benefits by reducing the original estimates. The risk-adjusted numbers should be taken as

“realistic” expectations since they represent the expected values considering risk.

The following implementation risk that affects costs is identified as part of this analysis:

› Deployment and internal training costs could potentially be higher for organizations that do not wish to utilize virtual

provision of infrastructure. Various reasons such as the location of data sources and available infrastructure could dictate

the choice of deployment.

IBM offers the MobileFirst Developer Edition, a try-and-buy approach that can help enterprises reduce some of the

aforementioned risks by learning and experimenting prior to investing in the Enterprise and Consumer platforms.

Table 9 shows the values used to adjust for risk and uncertainty in the cost and benefit estimates for the composite

organization. Readers are urged to apply their own risk ranges based on their own degree of confidence in the cost and

benefit estimates.

22

Financial Summary

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 in MobileFirst Platform.

Table 10 below shows the risk-adjusted ROI, NPV, and payback period values. These values are determined by applying the

risk-adjustment values from Table 9 in the Risks section to the unadjusted results in each relevant cost and benefit section.

FIGURE 3

Cash Flow Chart (Risk-Adjusted)


TABLE 10

Cash Flow (Risk-Adjusted)

Summary Initial Year 1 Year 2 Year 3 Year 4 Year 5 Total

Present

Value

Total Costs ($300,290) ($1,800) ($297,590) ($376,873) ($73,988) ($75,805) ($1,126,347) ($928,623)

Total

Benefits $159,208 $235,708 $573,600 $723,886 $408,303 $408,303 $2,509,009 $1,923,805

Total ($141,082) $233,908 $276,011 $347,013 $334,315 $332,498 $1,382,662 $995,182

ROI

107%

Payback 7.2 months


($600,000)

($400,000)

($200,000)

$0

$200,000

$400,000

$600,000

$800,000

$1,000,000

$1,200,000

$1,400,000

$1,600,000

Initial Year 1 Year 2 Year 3 Year 4 Year 5

Cas

h F

low

s

Financial Analysis (risk-adjusted)

Total Costs Total Benefits Cumulative Total

23

IBM MobileFirst Platform: Overview

The following information is provided by IBM. Forrester has not validated any claims and does not endorse IBM or its

offerings.

The IBM MobileFirst Platform makes great mobile apps by helping clients manage, secure and integrate mobile apps into the

enterprise. Available on prem or on the cloud, customers can use tools available in the platform to build mobile apps, or they

can integrate mobile apps built with 3rd party tools. The new version of the IBM MobileFirst Platform helps organizations

effectively manage an increasing number of apps and support successful mobile adoption across the enterprise.

With access to cloud-based or on premise capabilities, organizations using the IBM MobileFirst Platform can more easily

secure, personalize and integrate data from multiple sources to improve decision-making and the user experience. Clients

can use the platform to build and deploy mobile apps, or integrate apps built with third party tools. It is optimized for native,

HTML5 and hybrid development, or any combination of these approaches. IBM also offers a tailored version of the platform,

designed specifically for native iOS development.

Whether just getting started or on track to rapidly increase their number of enterprise mobile apps, organizations can benefit

from multiple IBM MobileFirst Platform capabilities including the ability to:

Continuously Improve – Collect in app usage and feedback for enhanced sentiment analysis and crash analytics; more

easily manage app iterations and release cycles.

Secure – Protect enterprise data from exposure through mobile exploits using advanced user authentication and supporting

app authenticity, encrypting local data and performing app scanning.

Contextualize and Personalize - Develop proximity-aware mobile apps to create relevant, contextual mobile experiences that

connect insights from digital engagement and physical presence.

Enable Data Rich Apps – Provide mobile data through the platform's Cloudant module that allows organizations to store,

sync, scale and connect to data in enterprise systems.

24

Appendix A: Framework Assumptions

Table 11 provides the model assumptions that Forrester used in this analysis.

The discount rate used in the PV and NPV calculations is 10%, and the time horizon used for the financial modeling is five

years. Organizations typically use discount rates between 8% and 16% based on their current environment. Readers are

urged to consult with their respective company’s finance department to determine the most appropriate discount rate to use

within their own organizations.

TABLE 11

Model Assumptions

Ref. Metric Calculation Value

AA1 External front-end


AA2 External back-end

developer cost per hour

$130

AA3 Internal front-end


AA4 Internal back-end

developer cost per hour

$72

AA5

Application front-end

development labor

allocation — per native

app build

30%

AA6

Application back-end

development labor

allocation — per native

app build

70%

AA7

Complex app

development hours,

native build

734

AA8 Complex app integration

hours, native build

367

AA9

Complex app

maintenance and

updating hours, native

build, per update

70

AA10

Cost of complex app

development, native

build

(AA1*AA5*AA7)+(AA2*AA6*AA7) $89,695

25

AA11 Cost of complex app

integration, native build (AA1*AA5*AA8)+(AA2*AA6*AA8) $44,847

AA12

Cost of complex app

maintenance and

updating, native build,

per update

(AA1*AA5*AA9)+(AA2*AA6*AA9) $8,554

AA13 Apps developed 2 2 2

AA14 Platforms per app

2 2 2


26

Appendix B: Total Economic Impact™ Overview

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. TEI assists technology vendors in winning, serving, and retaining

customers.

The TEI methodology consists of four components to evaluate investment value: benefits, costs, flexibility, and risks.

BENEFITS

Benefits represent the value delivered to the user organization — IT and/or business units — by the proposed product or

project. Often, product or project justification exercises focus just on IT cost and cost reduction, leaving little room to analyze

the effect of the technology on the entire organization. The TEI methodology and the resulting financial model place 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. Calculation of benefit estimates involves a clear dialogue with the user organization to understand

the specific value that is created. In addition, Forrester also requires that there be a clear line of accountability established

between the measurement and justification of benefit estimates after the project has been completed. This ensures that

benefit estimates tie back directly to the bottom line.

COSTS

Costs represent the investment necessary to capture the value, or benefits, of the proposed project. IT or the business units

may incur costs in the form of fully burdened labor, subcontractors, or materials. Costs consider all the investments and

expenses necessary to deliver the proposed value. In addition, the cost category within TEI captures any incremental costs

over the existing environment for ongoing costs associated with the solution. All costs must be tied to the benefits that are

created.

FLEXIBILITY

Within the TEI methodology, direct benefits represent one part of the investment value. While direct benefits can typically be

the primary way to justify a project, Forrester believes that organizations should be able to measure the strategic value of an

investment. Flexibility represents the value that can be obtained for some future additional investment building on top of the

initial investment already made. For instance, an investment in an enterprisewide upgrade of an office productivity suite can

potentially increase standardization (to increase efficiency) and reduce licensing costs. However, an embedded collaboration

feature may translate to greater worker productivity if activated. The collaboration can only be used with additional

investment in training at some future point. However, having the ability to capture that benefit has a PV that can be

estimated. The flexibility component of TEI captures that value.

RISKS

Risks measure the uncertainty of benefit and cost estimates contained within the investment. Uncertainty is measured in two

ways: 1) the likelihood that the cost and benefit estimates will meet the original projections, and 2) the likelihood that the

estimates will be measured and tracked over time. TEI risk factors are based on a probability density function known as

“triangular distribution” to the values entered. At a minimum, three values are calculated to estimate the risk factor around

each cost and benefit.

27

Appendix C: Forrester And The Age Of The Customer

Your technology-empowered customers now know more than you do about your products and services, pricing, and

reputation. Your competitors can copy or undermine the moves you take to compete. The only way to win, serve, and retain

customers is to become customer-obsessed.

A customer-obsessed enterprise focuses its strategy, energy, and budget on processes that enhance knowledge of and

engagement with customers and prioritizes these over maintaining traditional competitive barriers.

CMOs and CIOs must work together to create this companywide transformation.

Forrester has a four-part blueprint for strategy in the age of the customer, including the following imperatives to help

establish new competitive advantages:

Transform the customer experience to gain sustainable competitive advantage.

Accelerate your digital business with new technology strategies that fuel business growth.

Embrace the mobile mind shift by giving customers what they want, when they want it.

Turn big data into business insights through innovative analytics.

28

Appendix D: Glossary

Discount rate: The interest rate used in cash flow analysis to take into account the time value of money. Companies set

their own discount rate based on their business and investment environment. Forrester assumes a yearly discount rate of

10% for this analysis. Organizations typically use discount rates between 8% and 16% based on their current environment.

Readers are urged to consult their respective organizations to determine the most appropriate discount rate to use in their

own environment.

Net present value (NPV): The present or current value of (discounted) future net cash flows given an interest rate (the

discount rate). A positive project NPV normally indicates that the investment should be made, unless other projects have

higher NPVs.

Present value (PV): The present or current value of (discounted) cost and benefit estimates given at an interest rate (the

discount rate). The PV of costs and benefits feed into the total NPV of cash flows.

Payback period: The breakeven point for an investment. This is the point in time at which net benefits (benefits minus costs)

equal initial investment or cost.

Return on investment (ROI): A measure of a project’s expected return in percentage terms. ROI is calculated by dividing

net benefits (benefits minus costs) by costs.

A NOTE ON CASH FLOW TABLES

The following is a note on the cash flow tables used in this study (see the example table below). The initial investment

column contains costs incurred at “time 0” or at the beginning of Year 1. Those costs are not discounted. All other cash flows

in years 1 through 3 are discounted using the discount rate (shown in the Framework Assumptions section) at the end of the

year. PV calculations are calculated for each total cost and benefit estimate. NPV calculations are not calculated until 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.

TABLE [EXAMPLE]

Example Table

Ref. Metric Calculation Year 1 Year 2 Year 3


29

Appendix E: Supplemental Material

Related Forrester Research

“Measuring Mobile Apps,” Forrester Research, Inc., November 14, 2014

Appendix F: Endnotes

1 Forrester risk-adjusts the summary financial metrics to take into account the potential uncertainty of the cost and benefit

estimates. For more information, see the section on Risks.

2 Source: Ted Schadler, Josh Bernoff, and Julie Ask, The Mobile Mind Shift: Engineer Your Business to Win in the Mobile

Moment, Groundswell Press, 2014.

3 Source: “Good Apps, Bad Apps: The Cost Of Creating Exceptional Mobile Moments Through Mobile Apps,” Forrester

Consulting report prepared for IBM, IBM website, November 2014 (http://www-01.ibm.com/common/ssi/cgi-bin/ssialias?infotype=SA&subtype=WH&htmlfid=BFL14008USEN).

the total economic impact™ of ibm mobilefirst platform€¦ · forrester took a multistep...

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