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Total Economic Impact
Cost Savings And Business Benefits Enabled By Teamcenter X
A FORRESTER TOTAL ECONOMIC IMPACT STUDY COMMISSIONED BY Seimens, August 2024
Total Economic Impact
A FORRESTER TOTAL ECONOMIC IMPACT STUDY COMMISSIONED BY Seimens, August 2024
Manufacturers face multiple challenges in their business operations, from designing products, managing documentation and compliance information, managing logistics around securing parts. What truly proves taxing is balancing these challenges simultaneously with siloed, nonscalable solutions for information, documentation, process, and project management. Without a flexible, scalable solution not hindered by the inherent limitations of on-premises deployment, organizations often struggle with little to no relief in solving their issues, and costly management and licensing for solutions that don’t solve the root of their problem.
Siemens Teamcenter X is a cloud-based, software-as-a-service (SaaS) deployment of the Siemens Teamcenter Product Lifecycle Management (PLM) solution. Teamcenter X helps customers plan, develop, and deliver innovative products in a scalable and secure cloud platform managed by Siemens.
Siemens commissioned Forrester Consulting to conduct a Total Economic Impact™ (TEI) study and examine the potential return on investment (ROI) enterprises may realize by deploying Teamcenter X.1 The purpose of this study is to provide readers with a framework to evaluate the potential financial impact of Teamcenter X on their organizations.
To better understand the benefits, costs, and risks associated with this investment, Forrester interviewed four representatives with experience using Teamcenter X. For the purposes of this study, Forrester aggregated the interviewees’ experiences and combined the results into a single composite organization that is a mature manufacturing organization with a global reach and a revenue of $1 billion.
Interviewees said that prior to using Teamcenter X, their organizations struggled to manage their product data, compliance documentation, ideation processes, and manufacturing and engineering logistics. Prior attempts to resolve these issues with alternative documentation or PLM systems had limited success and offered only siloed or limited capabilities. These limitations led to additional IT costs as well as maintenance and licenses, without resolving issues around inefficient processes, avoidable spending on parts, and difficulty preparing for audits.
After the investment in Teamcenter X, the interviewees adopted a SaaS-based PLM that is fully managed by Siemens. Key results from the investment include reduced total cost of ownership of any prior on-premises solutions, savings on parts spend through supply chain efficiencies, and accelerated ideation and product development.
Quantified benefits. Three-year, risk-adjusted present value (PV) quantified benefits for the composite organization include:
Reduced product development collaboration time by 90% and supply chain costs by 3.5%. Siemens Teamcenter X’s improves visibility into supply chains, enables the ability to work with specialized or complicated industries (e.g., medical device manufacturing), and offers cloud-based visibility and version control into product documentation. These capabilities allow the composite organization to avoid accidentally spending on unnecessary parts, secure less expensive parts by contacting suppliers at the right time, and reduce the need to perform manual version control during product ideation for 50 new projects annually. By Year 3, the composite organization is able to reduce the time its product teams’ spending on product development and version control work by 90%, saving 3.5% on its parts spending for impacted parts of the business. This leads to a risk-adjusted, three-year total PV of $4.9 million in savings.
Savings of 90% on replacing legacy solutions. The composite organization’s adoption of Teamcenter X eliminates its now-redundant update, upgrade, maintenance and licensing spending on prior disparate on-premises documentation and project management systems, as Siemens provides full management of Teamcenter X on the cloud. By Year 3, 90% of these costs are eliminated, with all costs prospected to be eliminated as adoption continues into the future. Over the course of three years, this saves a risk-adjusted total PV of $1.3 million.
Incremental revenue from faster time to market by 20%. Teamcenter X’s improvements to product development and iteration and avoiding costly or unnecessary parts also reduce the overall time to market for impacted projects. By Year 3, the reduction in manual rework and version control, avoided delays in ordering and reordering parts due to mistakes, and more efficient supply chains enable a 20% improvement in time to market, allowing for improved revenue from additional sales. This is worth a risk-adjusted, three-year total PV of $1.7 million.
Savings of 15% on required audit and compliance effort. The composite organization is audited twice a quarter, and the employees involved with these audits are able to save significant time on gathering relevant documentation due to Teamcenter X providing improved visibility and avoiding siloes with its cloud-based structure. This 15% reduction in effort by Year 3 saves the composite organization a risk-adjusted total PV of $624,000.
Unquantified benefits. Benefits that provide value for the composite organization but are not quantified for this study include:
Improved IP protection. Teamcenter X features the ability to create IP objects and track IP information across all documentation, which keeps their IP secure.
Better employee experience (EX). Reduced need for manual rework, reordering parts after errors, and tedious document collection to prepare for audits create a better EX for the composite organization’s team by either severely streamlining or eliminating these tasks.
Reduced amount of held inventory. Faster time to market and improved efficiency throughout production enables the composite organization to spend less time and pay fewer inventory holding costs.
Costs. Three-year, risk-adjusted PV costs for the composite organization include:
Initial and ongoing implementation effort costs. The composite organization gradually rolls Teamcenter X out across its organization as it adds more use cases and more business units decide to adopt the solution. Twenty business users working at 50% time and two IT users working full time are required for initial implementation. By Year 3, implementation is concluded, requiring only 5% of initial effort from these business users and 25% of initial effort from the IT team. Over three years, this is a total cost of $3.4 million for the composite organization.
Subscription fees for the usage of Teamcenter X. Teamcenter X requires an annual subscription fee although there is no ongoing maintenance as that is handled by Siemens. This fee is dependent on the type and complexity of deployment. For the composite organization, the subscription fee reflects a large size and a high complexity use case. Smaller or less complex use cases may incur lower costs. For the composite organization, the subscription costs start at $250,000 per year and rises to $562,500 per year as more features and business units are enabled, totaling a risk-adjusted, three-year total of $1.1 million.
It is important to note that implementation and ongoing costs will vary based on the organization size and number of use cases. To better understand your organization’s potential costs, please contact Siemens.
The representative interviews and financial analysis found that a composite organization experiences benefits of $8.5 million over three years versus costs of $4.5 million, adding up to a net present value (NPV) of $4 million and an ROI of 90%.
Maintenance effort and licensing fee reduction due to switching to cloud-based delivery for product lifecycle management (PLM)
Return on investment (ROI)
Benefits PV
Net present value (NPV)
Payback
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| Role | Industry | Region | Revenue |
|---|---|---|---|
| Engineering lead and project manager | Electronics | Global | $5 billion |
| Director of IT products | Appliance manufacturer | EMEA | $5.3 billion |
| Director of engineering | Technology manufacturer | North America | $50 million |
| Director of IT | Industrial supplies | North America | $3 billion |
Interviewees told Forrester that before investing in Siemens Teamcenter X, their organizations either completely lacked any significant PLM capabilities, or had limited capabilities based on a hodge-podge of on-premises documentation and planning systems that didn’t operate well together.
The interviewees noted how their organizations struggled with common challenges, including:
Ineffective, expensive legacy solutions. In an attempt to solve the other problems detailed below, several of the interviewees noted that their organizations used many disparate on-premises solutions for managing project documentation and other aspects of PLM. However, these solutions lacked key features and functionality, and required expensive maintenance and management in addition to ongoing license fees. The director of IT for the industrial supplies organization noted, “We had a mishmash of on-premises applications that we put together and struggled with for a long time because we were so tied into a premise-based system.”
Low visibility into product development. The lack of a centralized system for PLM meant that several of the interviewees’ organizations had information trapped in siloes or across various emails and documents. This made it difficult, if not impossible, to gain an accurate look into the development of any project in a short amount of time. The engineering lead and product manager for the electronics organization noted, “[Before working with Siemens,] we were working with [distinct spreadsheets] to be able to track all of our projects; documentation was not centralized.”
Avoidable manual effort around documentation, ideation meetings, product ordering, and product development. The lack of a centralized system for documentation and PLM meant that employees had to compensate with manual effort. Interviewees described having to hold extensive meetings around product development and version control, ordering unnecessary parts due to outdated documents, and putting product development on hold until the correct parts arrived. The director of engineering for the technology manufacturer gave an example: “Before we had [Teamcenter X], we pulled a drawing that was based on an old version. We didn’t have any workflows or release processes, and we couldn’t lock anything. … We had the wrong parts, which cost us money, and there’s a two-week lead time to get new parts.”
Rising supply chain costs, especially for specialized parts and industries. Reordering parts were especially painful for the interviewees’ organizations, as their supply chain costs continued to rise. This particularly impacted parts needed for specialized industry projects, like medical devices. Additionally, a lack of visibility into product development processes had a cumulative effect throughout the supply chain as organizations were unable to order required parts in advance and take advantage of discounted rates. The director of IT for the industrial supplies organization elaborated: “Previously we had a lot of issues because our software didn’t recognize changes on the first try. Things were designed incorrectly, and it caused supply chain issues and manufacturing issues.”
Expensive audits and compliance. Interviewees whose organizations dealt with specialized industries also reported difficulty providing documentation around compliance for relevant product development and part orders. This resulted in a significant manual effort multiple times per quarter in order to avoid fees.
The interviewees’ organizations searched for a solution that could:
Improve project tracking and development time, and thus time to market for products.
Retire legacy on-premises solutions in favor of a scalable cloud solution.
Reduce errors and rework.
Reduce costs of compliance and securing parts.
Based on the interviews, Forrester constructed a TEI framework, a composite company, and an ROI analysis that illustrates the areas financially affected. The composite organization is representative of the four interviewees, and it is used to present the aggregate financial analysis in the next section. The composite organization has the following characteristics:
Description of composite. The composite organization is a billion-dollar manufacturing organization with 11,000 employees. It spends $220 million on manufacturing parts each year. It undergoes heavy regulations related to the specialized industries it develops certain products for, undergoing two audits each fiscal quarter. Its prior licensing costs for its legacy, on-premises documentation systems was $350,000 per year.
Deployment characteristics. As this is the composite organization’s first enterprise-wide PLM system, it undergoes a phased deployment of Teamcenter X, gradually replacing its existing on-premises systems. This enables the organization to undergo change without disrupting its operations while still reaping significant benefits. Note that for organizations transitioning from an on-premises deployment of Teamcenter to Teamcenter X, the deployment process can differ.
$1 billion annual revenue
11,000 employees
$350,000 legacy licensing
8 annual audits
| Ref. | Benefit | Year 1 | Year 2 | Year 3 | Total | Present Value |
|---|---|---|---|---|---|---|
| Atr | Reduced product development and supply chain costs | $1,229,220 | $1,967,580 | $2,827,620 | $6,024,420 | $4,868,005 |
| Btr | Savings on replacing legacy solutions | $360,000 | $540,000 | $648,000 | $1,548,000 | $1,260,406 |
| Ctr | Incremental revenue from faster time to market | $468,000 | $702,000 | $936,000 | $2,106,000 | $1,708,850 |
| Dtr | Savings on audit and compliance effort | $129,600 | $259,200 | $388,800 | $777,600 | $624,144 |
| Total benefits (risk-adjusted) | $2,186,820 | $3,468,780 | $4,800,420 | $10,456,020 | $8,461,405 |
Evidence and data. Interviewees told Forrester that their organizations were able to realize savings around product development, ordering incorrect parts, ordering parts at the right time, and discounts on certain parts for specialized industries.
Siemens Teamcenter X boasts a catalog of external parts, making it easier to identify necessary parts and provide up-to-date product design data throughout the production process. This helped interviewees avoid ordering the wrong parts.
Teamcenter X’s supply chain management extends this improved visibility by sharing information with suppliers, enabling clearer communication with vendors for parts. This further prevents employees from ordering wrong parts, and reduces overall costs.
In addition to savings around parts, Teamcenter X also enabled significant savings on project development. Organizations frequently had to spend valuable time on meetings to perform manual version control and avoid rework later on. With Teamcenter X, this need was significantly reduced, and further reduced as more aspects of their businesses leveraged Teamcenter X. The director of engineering for the technology manufacturer summed up the benefits: “[Teamcenter X] helps with collaboration because with solid version control, you don’t have to worry about people messing up something that someone else is working on.”
Interviewees stressed that the improved visibility afforded by Teamcenter X enabled their teams to better collaborate with each other. The director of engineering for the technology manufacturer told Forrester: “The more that we can do visual communication, the more effective our communication can be. The more we can keep all of that in one place rather than having it in emails and calls, the more we can consolidate the work.”
A key driver behind these savings was Teamcenter X’s cloud-based deployment. By avoiding on-premises information silos, organizations were able to have a more accurate view of their ideation and supply chain processes.
Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite organization:
The composite organization spends $220 million on parts each year, of which, 25% is impacted directly by supply chain and project savings with Teamcenter X.
Teamcenter X reduces spending on associated parts by 1.5% in Year 1, and further reduces an additional 1% each year as more of the platform is implemented.
Fifty projects a year are impacted by Teamcenter X, and each project previously required eight product development FTEs to collaborate for an hour each week on ideation and version control tasks.
The time required for these tasks reduces by 40% in Year 1, 60% in Year 2, and 90% in Year 3.
Risks. Factors that could impact the size of this benefit include the following:
Spending on parts that are impacted by Teamcenter X.
Degree to which organizations can reduce costs of parts due to avoided reordering effort and better supply chain coordination.
Amount of time required for project development and version control tasks before Teamcenter X.
Rates for product development employees.
Results. To account for these risks, Forrester adjusted this benefit downward by 10%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $4.9 million.
Reduction in parts spend by Year 3
| Ref. | Metric | Source | Year 1 | Year 2 | Year 3 | |
|---|---|---|---|---|---|---|
| A1 | Total spending on manufacturing parts | Composite | $220,000,000 | $220,000,000 | $220,000,000 | |
| A2 | Percentage spending impacted by Siemens Teamcenter X on manufacturing parts | Composite | 25% | 25% | 25% | |
| A3 | Savings on parts due to better visibility into design iteration and supply chain | Interviews | 1.5% | 2.5% | 3.5% | |
| A4 | Reduced spending on parts | A1*A2*A3 | $825,000 | $1,375,000 | $1,925,000 | |
| A5 | Total amount of new projects per year impacted by Siemens Teamcenter X | Interviews | 50 | 50 | 50 | |
| A6 | Redundant sync/corrective project development meetings per project a year | Composite | 52 | 52 | 52 | |
| A7 | FTEs needed per meeting before Teamcenter X | Interviews | 8 | 8 | 8 | |
| A8 | Hours spent per meeting before Teamcenter X | Interviews | 1 | 1 | 1 | |
| A9 | Fully-loaded hourly salary of a project development FTE | TEI standard | $65 | $65 | $65 | |
| A10 | Reduction in collaboration time due to Teamcenter X | Interviews | 40% | 60% | 90% | |
| A11 | Reduction in project development rework due to Teamcenter X | A5*A6*A7*A8*A9* A10 | $540,800 | $811,200 | $1,216,800 | |
| At | Reduced product development and supply chain costs | A4+A11 | $1,365,800 | $2,186,200 | $3,141,800 | |
| Risk adjustment | ↓10% | |||||
| Atr | Reduced product development and supply chain costs (risk-adjusted) | $1,229,220 | $1,967,580 | $2,827,620 | ||
| Three-year total: $6,024,420 | Three-year present value: $4,868,005 | |||||
Evidence and data. One of the primary benefits experienced by interviewees was the ability to retire their on-premises systems for documentation and, where applicable, PLM platforms.
Prior to adopting Siemens Teamcenter X, interviewees frequently had to assign valuable IT personnel to performing maintenance and support on their solutions. Siemens provides full management of Teamcenter X, eliminating the need for this labor. The global director of IT for the industrial supplier told Forrester, “We had a lot of work eliminated by SaaS delivery from a cost perspective. … It’s definitely a cost savings.”
Interviewees also reported having to pay licensing fees, maintenance and hosting costs for on-premises solutions, which often fell short of their expectations. Siemens again enabled organizations to avoid these expenses.
For this particular case study, the interviewees either had ad-hoc solutions for product lifecycle management, or other documentation or PLM solutions. Readers should note that moving from Siemens Teamcenter on-premises to Teamcenter X would likely yield greater benefits around total cost of ownership.
Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite organization:
The composite organization has three maintenance FTEs tasked with maintaining their legacy systems.
The composite organization pays $350,000 per year in hardware and software expenditures for their legacy systems.
The composite organization is able to avoid half of the labor and licensing fees by Year 1 of deploying Teamcenter X. This rises to 75% by Year 2, and 90% by Year 3. When implementation is completed after Year 3, all licensing and maintenance effort is avoided.
Risks. Factors that could impact the size of this benefit for organizations include the following:
Prior state to using Teamcenter X.
Amount of licensing and maintenance effort required.
Rate of implementation over time.
Results. To account for these risks, Forrester adjusted this benefit downward by 10%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $1.3 million.
| Ref. | Metric | Source | Year 1 | Year 2 | Year 3 | |
|---|---|---|---|---|---|---|
| B1 | FTEs required to maintain and update legacy solutions around project documentation | Interviews | 3 | 3 | 3 | |
| B2 | Fully-loaded salary of an IT FTE | TEI standard | $150,000 | $150,000 | $150,000 | |
| B3 | Legacy solution hardware and software expenditures | Composite | $350,000 | $350,000 | $350,000 | |
| B4 | Maintenance and licensing fees avoided with Teamcenter X | Composite | 50% | 75% | 90% | |
| Bt | Savings on replacing legacy solutions | (B1*B2*B4)+(B3* B4) | $400,000 | $600,000 | $720,000 | |
| Risk adjustment | ↓10% | |||||
| Btr | Savings on replacing legacy solutions (risk-adjusted) | $360,000 | $540,000 | $648,000 | ||
| Three-year total: $1,548,000 | Three-year present value: $1,260,406 | |||||
Avoided maintenance, support and hardware and software costs by Year 3
Evidence and data. The time savings due to better version control and avoided rework helped organizations acquire additional revenue from getting products to market faster.
Several time savings were realized by avoiding manual work and shortening the amount of time for approvals throughout the development cycle. The engineering lead and product manager for the electronics organization provided an example: “We have templates in Teamcenter X, which means the developer is going to save time because everything is ready to be exported to a presentation model. It's going to be hours, maybe days of saving per project.”
The director of engineering for the technology manufacturer concurred: “The amount of work it takes to do a release has improved with Teamcenter X. It used to be very tedious.”
The director of IT for the industrial supplies organization explained how these time savings also applied to innovating new products: “We’re much more agile than we were before. … [Cloud deployment] allows you to scale up and scale down. … I think it promotes a level of innovation that people aren’t restricted by IT. … If the business has an idea for innovation, they’re able to execute on that idea in a much faster amount of time.”
Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite organization:
The process from conception to ideation in releasing a new manufacturing product takes 52 weeks.
Better version control and avoided rework enabled by Siemens Teamcenter X reduce the amount of time to get a product onto market by 10% in Year 1, 15% in Year 2, and 20% in Year 3, primarily impacting the 50 projects that experience ideation time savings from Benefit A.
Each product brings in $20,000 of revenue per week.
The organization has a 10% operating profit margin.
Risks. Factors that could impact the size of this benefit for organizations include the following:
Number of products impacted.
Time-to-market before Siemens Teamcenter X.
Weekly revenue per product.
Degree to which time savings translate to faster time-to-market.
Operating profit margin.
Results. To account for these risks, Forrester adjusted this benefit downward by 10%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $1.7 million.
Improved time-to-market by Year 3
| Ref. | Metric | Source | Year 1 | Year 2 | Year 3 | |
|---|---|---|---|---|---|---|
| C1 | Time to market before Siemens Teamcenter X (weeks) | Composite | 52 | 52 | 52 | |
| C2 | Improvement to time to market and improved processes due to Siemens Teamcenter X | Interviews | 10% | 15% | 20% | |
| C3 | Additional weeks on market due to Teamcenter X | C1*C2 | 5.2 | 7.8 | 10.4 | |
| C4 | Impacted projects | A5 | 50 | 50 | 50 | |
| C5 | Weekly revenue per product | Composite | $20,000 | $20,000 | $20,000 | |
| C6 | Incremental gross revenue due to faster time to market | C3*C4*C5 | $5,200,000 | $7,800,000 | $10,400,000 | |
| C7 | Operating profit margin | 10% | 10% | 10% | ||
| Ct | Incremental revenue from faster time to market | C6*C7 | $520,000 | $780,000 | $1,040,000 | |
| Risk adjustment | ↓10% | |||||
| Ctr | Incremental revenue from faster time to market (risk-adjusted) | $468,000 | $702,000 | $936,000 | ||
| Three-year total: $2,106,000 | Three-year present value: $1,708,850 | |||||
Evidence and data. Interviewees detailed their organizations’ struggle with preparing for audits before the investment in Teamcenter X, but spoke highly of Siemens’ ability to help them prepare for audits and save time.
The primary area of savings on preparing for audits came from Teamcenter X’s centralized documentation. Unlike prior on-premises solutions or ad-hoc methods like email and spreadsheets, the SaaS deployment of Teamcenter X provides visibility and access to all relevant documentation as they’re needed, reducing the time required to search for documents during audits.
Interviewees also told Forrester that Siemens was able to reduce compliance hurdles because of their expertise with various compliance-heavy industries. The director of IT products for the appliance manufacturer told Forrester, “Siemens Teamcenter X had the best packages for handling medical devices and associated regulations.”
Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite organization:
The composite organization is audited twice per quarter, or eight times annually.
These audits are extensive, requiring a total of 75 FTEs to work for two weeks per audit to prepare.
Siemens Teamcenter X reduces the amount of time required for audit preparation by 5% in Year 1, 10% in Year 2, and 15% in Year 3.
Risks. Factors that could impact the size of this benefit for organizations include:
Type and frequency of audits.
Time required to prepare for audits before Teamcenter X.
Degree to which Teamcenter X is able to reduce audit preparation effort.
Results. To account for these risks, Forrester adjusted this benefit downward by 10%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $624,000.
| Ref. | Metric | Source | Year 1 | Year 2 | Year 3 | |
|---|---|---|---|---|---|---|
| D1 | FTEs required to conduct audit and compliance preparation work | Interviews | 75 | 75 | 75 | |
| D2 | Audits per year | Composite | 8 | 8 | 8 | |
| D3 | Hours of work required per audit per FTE | Interviews | 80 | 80 | 80 | |
| D4 | Blended hourly salary of a business user FTE | TEI standard | $60 | $60 | $60 | |
| D5 | Reduction in effort required due to Teamcenter X | Interviews | 5% | 10% | 15% | |
| Dt | Savings on audit and compliance effort | D1*D2*D3*D4*D5 | $144,000 | $288,000 | $432,000 | |
| Risk adjustment | ↓10% | |||||
| Dtr | Savings on audit and compliance effort (risk-adjusted) | $129,600 | $259,200 | $388,800 | ||
| Three-year total: $777,600 | Three-year present value: $624,144 | |||||
Reduction in audit preparation effort due to Teamcenter X by Year 3
Interviewees mentioned the following additional benefits that their organizations experienced but were not able to quantify:
Improved IP protection. The IP object creation and tracking features of Teamcenter X represented a dramatic improvement from the prior state of the electronics manufacturer: “We have created an IP object in Teamcenter to make sure that we have all IP secure where documented, and can track that IP information. … Teamcenter X is going to make it easier for us to check and track IP.”
Better EX. Less time spent searching for documents, redoing work after version control errors, and better collaboration improved overall EX for many of the interviewees’ organizations. The director of engineering for the technology manufacturer noted for a tedious project: “It streamlined our process. We used to always ask for approval before, and it was a very manual process with someone having a spreadsheet of part numbers.”
Reduced amount of held inventory. Improvements to time to market and overall efficiency enabled the industrial supplies organization to reduce its amount of held inventory, enabling reduced fees and opportunity cost: “We want the inventory out the door. … We would manufacture more product and have the holding cost for it… we’re not doing that now.”
The value of flexibility is unique to each customer. There are multiple scenarios in which a customer might implement Teamcenter X and later realize additional uses and business opportunities, including:
Additional updates and features added to Teamcenter X over time. The interviewees enjoyed several benefits from their initial usage of Teamcenter X, but these benefits continued to improve over time as additional features were added to the solution. Additional benefits could be realized in the future as more features are added.
Improved organizational resilience. By moving from an on-premises system to a SaaS-based delivery, organizations can avoid ongoing maintenance and licensing fees, and also take advantage of the inherent flexibility of the cloud with benefits like improved scalability, less application downtime, improved disaster recovery, and simplified backups.
Flexibility would also be quantified when evaluated as part of a specific project (described in more detail in Appendix A).
| Ref. | Cost | Initial | Year 1 | Year 2 | Year 3 | Total | Present Value |
|---|---|---|---|---|---|---|---|
| Etr | Total ongoing implementation effort costs | $1,625,400 | $1,153,530 | $681,660 | $209,790 | $3,670,380 | $3,395,037 |
| Ftr | Teamcenter X Subscription fees | $0 | $275,000 | $412,500 | $618,750 | $1,306,250 | $1,055,785 |
| Total costs (risk-adjusted) | $1,625,400 | $1,428,530 | $1,094,160 | $828,540 | $4,976,630 | $4,450,822 |
Evidence and data. Interviewees told Forrester that their organizations implemented Siemens Teamcenter X in a phased approach, to avoid disruption while maximizing benefits.
The interviewees described that implementation involved a team of business users and a separate team of IT users.
Both teams were busiest during the initial implementation and setup.
Additional implementation occurred as more parts of the organization adopted Teamcenter X and additional capabilities, but the teams were able to significantly draw down implementation activities over time.
Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite organization:
A team of 20 business users and two IT users are involved in implementation.
The team of business users spends 50% of their time on implementation tasks initially, with a 15% decrease each year.
The IT team spends 100% of its team on implementation tasks initially, with a 25% decrease each year.
Risks. Factors that could impact this cost for organizations include the following:
Size and makeup of implementation teams.
Pay rates of implementation teams.
Amount of time required for implementation tasks.
Length of overall implementation.
Results. To account for these risks, Forrester adjusted this cost upward by 5%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $3.4 million. It is important to note that implementation and ongoing costs will vary based on the organization size and number of use cases; to better understand your organization’s potential costs, please contact Siemens.
| Ref. | Metric | Source | Initial | Year 1 | Year 2 | Year 3 | |
|---|---|---|---|---|---|---|---|
| E1 | Business users involved in ongoing implementation effort | Interviews | 20 | 20 | 20 | 20 | |
| E2 | Percentage of time spent on implementation tasks | Interviews | 50% | 35% | 20% | 5% | |
| E3 | Fully-loaded salary of a business user | TEI standard | $124,800 | $124,800 | $124,800 | $124,800 | |
| E4 | IT users involved in ongoing implementation tasks | Interviews | 2 | 2 | 2 | 2 | |
| E5 | Percentage of IT user time spent on ongoing implementation tasks | Interviews | 100% | 75% | 50% | 25% | |
| E6 | IT user annual salary | B2 | $150,000 | $150,000 | $150,000 | $150,000 | |
| Et | Total ongoing implementation effort costs | (E1*E2*E3)+(E4* E5*E6) | $1,548,000 | $1,098,600 | $649,200 | $199,800 | |
| Risk adjustment | ↑5% | ||||||
| Etr | Total ongoing implementation effort costs (risk-adjusted) | $1,625,400 | $1,153,530 | $681,660 | $209,790 | ||
| Three-year total: $3,670,380 | Three-year present value: $3,395,037 | ||||||
Evidence and data. Interviewees told Forrester that they paid an annual subscription to use Teamcenter X.
Subscription costs varied between organizations based on their specific environments, complexity of their use cases, and speed and cadence of their usage of Teamcenter X.
Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite organization:
The composite organization pays $250,000 for its subscription in Year 1, $375,000 in Year 2, and $562,000 in Year 3.
This amount varies across organizations, and is in this case calculated to fit the complexity and size of the billion-dollar, enterprise-level composite organization. Please contact Siemens for details of exact pricing for your organization.
Risks. Factors that could impact the size of this cost for organizations include the following:
Size of organization.
Complexity of use cases.
Speed of implementation.
Results. To account for these risks, Forrester adjusted this cost upward by 10%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $1.1 million.
| Ref. | Metric | Source | Initial | Year 1 | Year 2 | Year 3 | |
|---|---|---|---|---|---|---|---|
| F1 | Teamcenter X subscription fees | Composite | 0 | $250,000 | $375,000 | $562,500 | |
| Ft | Teamcenter X subscription fees | F1 | $0 | $250,000 | $375,000 | $562,500 | |
| Risk adjustment | ↑10% | ||||||
| Ftr | Teamcenter X subscription fees (risk-adjusted) | $0 | $275,000 | $412,500 | $618,750 | ||
| Three-year total: $1,306,250 | Three-year present value: $1,055,785 | ||||||
| Initial | Year 1 | Year 2 | Year 3 | Total | Present Value | |
|---|---|---|---|---|---|---|
| Total costs | ($1,625,400) | ($1,428,530) | ($1,094,160) | ($828,540) | ($4,976,630) | ($4,450,822) |
| Total benefits | $0 | $2,186,820 | $3,468,780 | $4,800,420 | $10,456,020 | $8,461,405 |
| Net benefits | ($1,625,400) | $758,290 | $2,374,620 | $3,971,880 | $5,479,390 | $4,010,583 |
| ROI | 90% | |||||
| Payback period | 17 months |
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. Forrester assumes a yearly discount rate of 10% for this analysis.
These risk-adjusted ROI, NPV, and payback period values are determined by applying risk-adjustment factors to the unadjusted results in each Benefit and Cost section.
The initial investment column contains costs incurred at “time 0” or at the beginning of Year 1 that are not discounted. All other cash flows are discounted using the discount rate at the end of the year. 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.
From the information provided in the interviews, Forrester constructed a Total Economic Impact™ framework for those organizations considering an investment in Teamcenter X.
The objective of the framework is to identify the cost, benefit, flexibility, and risk factors that affect the investment decision. Forrester took a multistep approach to evaluate the impact that Teamcenter X can have on an organization.
Interviewed Seimens stakeholders and Forrester analysts to gather data relative to Teamcenter X.
Interviewed [x] decision-makers at organizations using Teamcenter X to obtain data about costs, benefits, and risks.
Designed a composite organization based on characteristics of the interviewees’ organizations.
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.
Employed four fundamental elements of TEI in modeling the investment impact: benefits, costs, flexibility, and risks. Given the increasing sophistication of ROI analyses related to IT investments, Forrester’s TEI methodology provides a complete picture of the total economic impact of purchase decisions. Please see Appendix A for additional information on the TEI methodology.
Benefits represent the value the solution delivers to the business. The TEI methodology places equal weight on the measure of benefits and costs, allowing for a full examination of the solution’s effect on the entire organization.
Costs comprise all expenses necessary to deliver the proposed value, or benefits, of the solution. The methodology captures implementation and ongoing costs associated with the solution.
Flexibility represents the strategic value that can be obtained for some future additional investment building on top of the initial investment already made. 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.”
The present or current value of (discounted) cost and benefit estimates given at an interest rate (the discount rate). The PVs of costs and benefits feed into the total NPV of cash flows.
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.
A project’s expected return in percentage terms. ROI is calculated by dividing net benefits (benefits less costs) by costs.
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 breakeven point for an investment. This is the point in time at which net benefits (benefits minus costs) equal initial investment or cost.
Total Economic Impact is a methodology developed by Forrester Research that enhances a company’s technology decision-making processes and assists solution providers in communicating their value proposition to clients. The TEI methodology helps companies demonstrate, justify, and realize the tangible value of business and technology initiatives to both senior management and other key stakeholders.
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.
Readers should be aware of the following:
This study is commissioned by Seimens 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 Teamcenter X. For any interactive functionality, the intent is for the questions to solicit inputs specific to a prospect's business. Forrester believes that this analysis is representative of what companies may achieve with Teamcenter X based on the inputs provided and any assumptions made. Forrester does not endorse Seimens or its offerings. Although great care has been taken to ensure the accuracy and completeness of this model, Seimens and Forrester Research are unable to accept any legal responsibility for any actions taken on the basis of the information contained herein. The interactive tool is provided ‘AS IS,’ and Forrester and Seimens make no warranties of any kind.
Seimens 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.
Seimens provided the customer names for the interviews but did not participate in the interviews.
Sam Sexton
August 2024
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© Forrester Research, Inc. All rights reserved. Unauthorized reproduction is strictly prohibited. Information is based on best available resources. Opinions reflect judgment at the time and are subject to change. Forrester®, Technographics®, Forrester Wave, and Total Economic Impact are trademarks of Forrester Research, Inc. All other trademarks are the property of their respective companies.
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