The Total Economic Impact™ Of Red Hat Technical Account Managers
Executive Summary
A Forrester Total Economic Impact™ Study Commissioned By Red Hat, March 2023
A Red Hat Technical Account Manager provides a single point of contact to help organizations plan and deploy Red Hat software more successfully. Technical Account Managers (TAMs) specialize in a particular Red Hat software product (e.g., Enterprise Linux, OpenShift, Ansible) and work side by side with customer teams to guide technology strategy, enhance security, and mobilize other Red Hat resources on their behalf.
Red Hat commissioned Forrester Consulting to conduct a Total Economic Impact™ (TEI) study and examine the potential return on investment (ROI) enterprises may realize by deploying Technical Account Managers.1 The purpose of this study is to provide readers with a framework to evaluate the potential financial impact of Red Hat TAMs on their organizations.
To better understand the benefits, costs, and risks associated with this investment, Forrester interviewed four representatives with experience using TAMs. For the purposes of this study, Forrester aggregated the interviewees’ experiences and combined the results into a single composite organization, which is a global financial services company with $5 billion in annual revenue and 20,000 employees.
Return on investment (ROI):
379%
Benefits PV:
$4.99M
Net present value (NPV):
$3.95M
Payback:
<6 months
Prior to using TAMs, these interviewees noted how their organizations wasted time and resources when they failed to use their Red Hat software most efficiently. This could lead to loss of productivity, nonfunctioning applications, security vulnerabilities, and system outages that could impact customers.
After the investment in TAMs, the interviewees agreed that they were using their Red Hat software more effectively and efficiently. Key results from the investment included faster time to market, reduced outages, and lowered risk of breach.
Quantified benefits. Three-year, risk-adjusted present value (PV) quantified benefits for the composite organization include:
- Improved developer and IT productivity adds $3.3 million to profitability. TAMs give the organization’s developers a much clearer line of sight into upcoming changes in Red Hat products that could affect the feasibility or security of the applications they are creating, and they can connect quickly with engineering and other teams at Red Hat when they run into issues.
- Reduced system outage costs amount to $1.1 million. The same guidance that keeps developers from wasting time on solutions that won’t work on Red Hat also protects the organization from the resulting system outages. Enlisting its TAMs in cases where an outage does occur greatly reduces the time to resolution.
- Lowered technology fees save the organization $433,000. As the TAMs become more familiar with how customers use Red Hat products, they monitor inefficiencies and suggest alternative working processes and styles that allow the organization to work more efficiently and consolidate subscriptions, reducing its overall spend with Red Hat.
- Enhanced security/compliance deliver over $167,000 in value. TAMs provide immediate notice of new security threats, help the organization troubleshoot issues on third-party software, and collaborate on protecting the organization from internal and external threats.
Unquantified benefits. Benefits that provide value for the composite organization but are not quantified for this study include:
- Accelerated knowledge transfer to team. The TAMs’ depth of knowledge about Red Hat products not only saves the team time working on specific projects, but then also becomes institutional knowledge for the organization.
- Better solutions from collaborative thinking. The organization’s TAMs are always thinking about ways they can use the technology more successfully.
Costs. Three-year, risk-adjusted PV costs for the composite organization include:
- Red Hat fees for the TAMs’ services amount to $940,000. The composite organization pays Red Hat for the services of three TAMs, one to focus on each of the products for which it has a subscription.
- Ongoing management involves internal team members’ time worth just over $102,000. Team members spend time meeting with each of the TAMs once a week to keep projects on track and stay on top of emerging Red Hat technology.
The representative interviews and financial analysis found that a composite organization experiences benefits of $4.99 million over three years versus costs of $1.04 million, adding up to a net present value (NPV) of $3.95 million and an ROI of $379%.
Benefits (Three-Year)
Improved developer/IT productivity Reduced system outage costs Lowered technology fees Enchanced security/complianceDisclosures
Readers should be aware of the following:
This study is commissioned by Red Hat 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 study to determine the appropriateness of an investment in Red Hat Technical Account Managers.
Red Hat 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.
Red Hat provided the customer names for the interviews but did not participate in the interviews.
Appendix A: Endnotes
1 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.
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