The Total Economic Impact™ of IBM i Cost Savings And Business Benefits Enabled By IBM i A FORRESTER TOTAL ECONOMIC IMPACT STUDY COMISSIONED BY IBM MAY 2023
2 IBM i 7.5, the latest release of the IBM i operating system, contains enhancements to many base operating system components and to the licensed program products in the IBM i portfolio. The new capabilities include security enhancements, application development tooling, and system administration features. IBM i is supported on selected IBM Power servers with Power9 and Power10 technology-based processors. Key Findings ROI 191% BENEFITS PV $2.58M NPV $1.69M PAYBACK <6 months Key Metrics $1.1M $470.0K $1.0M Reduced system downtime Increased productivity of technical support team Improved productivity of business users Benefits (Three-Year)
“IBM i is running the whole business. I think that’s pretty incredible that you’re able to run your whole business from one box like that. That’s simply amazing to me.” — Director of information technology, healthcare product manufacturing
4 Methodology FINANCIAL MODEL FRAMEWORK Constructed a financial model representative of the interviews using the TEI methodology and risk-adjusted the financial model based on issues and concerns of the interviewees’ organizations. COMPOSITE ORGANIZATIONS Designed a composite organization based on characteristics of the interviewees’ organizations. CUSTOMER INTERVIEWS Interviewed five decision-makers at organizations with IBM i to obtain data with respect to costs, benefits, and risks. Interviews Industry Role Revenue Size Financial services Software architect $4.4 billion 8,300 employees Healthcare product manufacturing Director of information technology $9 million 70 employees Healthcare provider Director of architecture $135 billion 58,000 employees Sign and display manufacturer Senior programmer/analyst $250 million 850 employees Industrial machinery and equipment Chief digital information officer $7.7 million 150 employees
three-year total benefits PV $2.6 million Reduced system downtime from improved reliability and scalability with sudden demand Improved productivity of business users from the automation of previously manual, rote tasks Increased productivity of technical support team by avoiding the environment maintenance work previously required Total Benefits
Reduced system downtime due to 3.5 system reboots avoided per year, which saves a halfhour per reboot. Interviewed decision-makers shared that their organizations saw significantly reduced downtime since switching to IBM i, leading to cost savings. Since interviewees’ organizations struggled with unplanned systems downtime as often as every week, averting the loss of revenue or operational data was a significant driver for adopting IBM i. Because IBM i could scale and adjust to growth and sudden demand, it avoided the reliability issues of the interviewees’ prior solutions. The software architect for the financial services organization elaborated: “The reliability [of IBM i] is really what lets us run it this hard, right? I can really use my processor, really use the power of our hardware, and it just keeps going.” Total reboot downtime avoided per year 1.75 hours Three-year total benefit PV $1.1 million 41%
“IBM i is always up. In December, we migrated from a Power8 to a Power10 — our downtime was one hour.” — Director of information technology, healthcare product manufacturing
Increased productivity of technical support team due to 1.5 systems and database administrators being reallocated to higher-value tasks. The interviewees reduced the number of high-level administrator FTEs working on technical support due to IBM i, enabling them to focus on higher-value work instead. Prior to IBM i, these administrators were required to keep their prior environments up and running, as siloed systems and applications required additional human effort to run smoothly. The director of information technology for the healthcare product manufacturing organization noted: “I don’t have any full-time employees that are required to run the environment of IBM i.” Total reallocated administrators 1.5 FTEs Three-year total benefit PV $470,015 18%
“The fact that I can manage IBM i with a smaller number of people. That’s great. That’s tangible benefit.” — Software architect, financial services
IBM i’s process and task automation saves 3.75 FTEs. Interviewees told Forrester that they automated manual and repetitive tasks, enabling productivity gains and reallocation of FTEs. These tasks included invoicing, data capture, content management, data backups, imaging, and process workflows. The interviewees’ organizations told Forrester that these tasks took up far too much employee time before IBM i. The senior programmer/analyst for the sign and display manufacturer was impressed with the range of tasks IBM i managed, noting: “With everything IBM is adding to the platform, there really isn’t anything you can’t do anymore. You can do AI, you can run your data warehouse, even rewrite your RGBI applications.” Total productivity gains due to automation 5% Three-year total benefit PV $1.0 million 41%
“Instead of manually converting things to run on your Windows box, you can run everything on i. There are so many things you can do and run on this platform.” — Senior programmer/analyst, sign and display manufacturer
Unquantified Benefits Additional benefits that interviewees’ organizations experienced but were not quantified include: Scalability from integration of IBM software. IBM i allowed for the integration of open-source applications and technologies, making it easier to scale and add apps as needed. Ability to easily integrate in-house developed applications. IBM i easily allowed the integration of in-house applications with the operating environment, making customization simple. Trust in security against malware. The built-in system security is one of the main reasons interviewees’ organizations used IBM i. Peace of mind about uptime. Interviewees trusted in IBM i’s consistency and reliability to run their businesses rather than their operating systems.
“There were a lot of people at IBM waiting and willing to help us with IBM i." — Director of information technology, healthcare product manufacturing
Flexibility Increased agility or future benefits from IBM i’s built-in flexibility may include: Integration of various open-source and in-house applications. IBM i is ported for dozens of open-source applications, enabling a high level of future customization. Scalability of the operating environment. IBM i lets organizations scale as demand surges and integrates with cloud-based systems.
“Our cloud is with IBM i and I never want to go on-prem again.” — Senior programmer/analyst, sign and display manufacturer
Appendix A: Total Economic Impact 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. . Total Economic Impact Approach Benefits represent the value delivered to the business by the product. The TEI methodology places equal weight on the measure of benefits and the measure of costs, allowing for a full examination of the effect of the technology on the entire organization. Costs consider all expenses necessary to deliver the proposed value, or benefits, of the product. The cost category within TEI captures incremental costs over the existing environment for ongoing costs associated with the solution. Flexibilityrepresents the strategic value that can be obtained for some future additional investment building on top of the initial investment already made. Having the ability to capture that benefit has a PV that can be estimated. Risks measure the uncertainty of benefit and cost estimates given 1) the likelihood that estimates will meet original projections and 2) the likelihood that estimates will be tracked over time. TEI risk factors are based on “triangular distribution.” ! 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. 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. Return on investment (ROI) A project’s expected return in percentage terms. ROI is calculated by dividing net benefits (benefits less costs) by costs. Discount rate The interest rate used in cash flow analysis to take into account the time value of money. Organizations typically use discount rates between 8% and 16%. The initial investment column contains costs incurred at “Time 0” or at the beginning of Month 1 that are not discounted. All other cash flows are discounted using the discount rate at the end of the 18-month period. PV calculations are calculated for each total cost and benefit estimate. NPV calculations in the summary tables are the sum of the initial investment and the discounted cash flows in each year. Sums and present value calculations of the Total Benefits, Total Costs, and Cash Flow tables may not exactly add up, as some rounding may occur. 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.
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