The Total Economic Impact™ Of Accolade
Cost Savings And Business Benefits Enabled By Accolade
A Forrester Total Economic Impact™ Study Commissioned By Sopheon, August 2024
Organizations that seek to stay ahead of advancements in their industry need data visibility, efficient project management, and centralized cross-team collaboration to innovate quickly and launch new products within the optimal window of opportunity. However, managing innovation and increasing portfolio value across the enterprise involves aligning strategy, resources, processes, and outcomes. To overcome these challenges, organizations need a solution that can help them streamline and optimize their innovation operations from ideation through development, launch, and postlaunch.
Accolade provides a centralized platform for innovation management, product development, roadmapping, portfolio planning and management, and process governance and automation.
Sopheon commissioned Forrester Consulting to conduct a Total Economic Impact™ (TEI) study and examine the potential return on investment (ROI) enterprises may realize by deploying Accolade.1 The purpose of this study is to provide readers with a framework to evaluate the potential financial impact of Accolade on their organizations.
Return on investment (ROI)
321%
Net present value (NPV)
$65.86M
To better understand the benefits, costs, and risks associated with this investment, Forrester interviewed six representatives with experience using Accolade. For the purposes of this study, Forrester aggregated the interviewees’ experiences and combined the results into a single composite organization that is a globally operating manufacturer with $25 billion in annual revenue.
Interviewees said that prior to using Accolade, their organizations struggled with inefficiencies in business processes due to a lack of real-time visibility into portfolio management, project performance and status, and resource allocation. However, prior attempts to resolve these issues yielded limited success, leaving interviewees with disparate tools, low transparency and collaboration, and incomplete data. These limitations led to uninformed decision-making, missed delivery and revenue targets, costly process inefficiencies and flawed products, and inhibition of process and product innovation.
After the investment in Accolade, the interviewees established and tracked performance metrics with better visibility, created innovative processes, aligned project spend with company strategy, and operated on data-backed decision-making. Key results from the investment include innovation-focused throughput and success, increased portfolio value from strategic spend, increased profit margin from product improvements, business growth from a new top-performing product launch, incremental profit from accelerated time to market, and project cost and labor optimization.
Key Findings
Quantified benefits. Five-year, risk-adjusted present value (PV) quantified benefits for the composite organization include:
- Increased revenue from innovative products by 25% from higher innovation throughput and success rate. With Accolade, the composite organization establishes processes to track new ideas, work collaboratively, manage launches, and measure product performance in its innovation pipeline, leading to improved innovation throughput as well as increased sales of products in its innovation portfolio. Over the course of five years, increased revenue from higher throughput and innovative product success rate is worth $9.1 million to the composite organization.
- Increased portfolio value from strategic spend. Correcting the course of inefficiently managed projects and discontinuing projects with negative returns frees the project budget to fund more projects, yielding higher revenue and increasing portfolio value. As the composite organization accelerates recognition of performance trends and makes data-supported decisions that align with company strategy through Accolade, the composite is more equipped to course-correct or discontinue projects in ideation versus execution, conserving more of its budget for reinvestment. Over five years and a cumulative total of 607 projects, the strategic reinvestment in higher-value projects is worth $20.9 million to the composite organization.
- Increased profit margin by 1 percentage point from product improvements. Accolade enhances the composite’s profitability by pinpointing products that do not meet performance standards and identifying areas for improvement. The composite organization defines and tracks performance metrics such as the market’s demand for a product, reflected in high sales, against its projected revenue targets. Over the course of five years, the increased profit margin from product improvements is worth $8.2 million to the composite organization.
- Achieved business growth from a new top-performing product launch. With improved processes, centralized data, enhanced project management, and better visibility and governance, the composite successfully introduces a new core product worth $21.7 million to the composite organization over the course of five years.
- Accelerated time to market by 15%. With optimized project management, the composite organization experiences faster time to market. Over the course of five years, the additional weeks that impacted products are on the market are worth $9.7 million to the composite organization.
- Saved 10% of project budget and avoided 20 project manager FTEs. The composite organization experiences product development efficiencies and supply chain optimization savings, a portion of which it can reinvest in other projects. It also avoids hiring additional project managers as a result of its investment in Accolade. Over the course of five years, project cost and labor optimization are worth $16.8 million to the composite organization.
Unquantified benefits. Benefits that provide value for the composite organization but are not quantified for this study include:
- Increased customer lifetime value and retention. Using Accolade with a focus on innovation increased customer satisfaction, leading to extended client contracts, as customers expressed interest in collaborating with interviewees’ organizations to create more innovative solutions.
- Retired legacy system and annual maintenance. Prior to Accolade, interviewees used point solutions and homegrown tools. Accolade’s centralized solution replaced a homegrown legacy system that required annual maintenance.
- Improved auditing through traceability. Increased traceability with Accolade facilitated the auditing process and promoted accountability in compliance with company policy in the highly regulated pharmaceuticals industry.
Costs. Five-year, risk-adjusted PV costs for the composite organization include:
- Subscription, configuration, and professional services costs of $5.1 million. The composite organization incurs subscription costs for use of Accolade as well as costs for configuration, service contracts, change requests, and process workshops. It also hires professional services in the first years to support change management.
- Implementation and ongoing management costs of $4.9 million. In each wave of the Accolade implementation, key stakeholders and users assist with migration. Users also lead initiatives for new processes, creativity, management of ideas, organization of decision-makers, and acquisitions. Additional FTEs offer ongoing management support.
- Training and process adaptation costs of $10.6 million. The composite organization provides initial onboarding to introduce users to Accolade, as well as ongoing training to update and refresh users’ understanding of company processes.
The representative interviews and financial analysis found that a composite organization experiences benefits of $86.38 million over five years versus costs of $20.52 million, adding up to a net present value (NPV) of $65.86 million and an ROI of 321%.
Key Statistics
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Return on investment (ROI)
321%
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Benefits PV
$86.38M
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Net present value (NPV)
$65.86M
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Payback
23 months
Benefits (Five-Year)
Innovation-focused throughput and success Increased portfolio value from strategic spend Increased profit margin from product improvements Business growth from a new top-performing product launch Incremental profit from faster time to market Project cost and labor optimizationTEI Framework And Methodology
From the information provided in the interviews, Forrester constructed a Total Economic Impact™ framework for those organizations considering an investment Accolade.
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 Accolade can have on an organization.
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Due Diligence
Interviewed Sopheon stakeholders and Forrester analysts to gather data relative to Accolade.
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Interviews
Interviewed six representatives at organizations using Accolade to obtain data about costs, benefits, and risks.
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Composite Organization
Designed a composite organization based on characteristics of the interviewees’ organizations.
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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.
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Case Study
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.
Disclosures
Readers should be aware of the following:
This study is commissioned by Sopheon 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 Accolade.
Sopheon 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.
Sopheon provided the customer names for the interviews but did not participate in the interviews.
Consulting Team:
Nahida S. Nisa
Chengcheng Dong
Drivers leading to the Accolade investment
Interviews
| Role | Industry | Region | Revenue | Projects In Accolade | Accolade Users |
|---|---|---|---|---|---|
| Head of Accolade program, electronics | Manufacturing and pharmaceuticals | Global | $60 billion | 700 | 1,000 |
| Head of project management | Manufacturing | Global | $3.2 billion | 1,800 | 100 |
| Director of portfolio management | Manufacturing | Global | $18.5 billion | 2,499 | 600 to 799 |
| Innovation applications administrator | Manufacturing | Global | $3.5 billion | 11,281 | 2,100 |
| Global commercialization lead | Consumer packaged goods | Global | $36 billion | 6,500 | 4,300 |
| Programming and process manager | Manufacturing | Global | $1.7 billion | 1,200 | 204 |
Key Challenges
The interviewees noted how prior to Accolade their organizations struggled with common challenges, including the following:
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Inefficient processes inhibited strategic product innovation. The absence of structured processes led to some projects never approaching completion and all projects treated as a high priority. This resulted in frustration, demotivation, resource inefficiencies, and a disproportionately large amount of reporting documentation, all of which thwarted product innovation.
The programming and process manager in the manufacturing industry said: “Before Accolade, we didn’t have a good idea of how to launch processes, and therefore, we had no clear strategy for innovation in place. There was only an old-fashioned R&D and product development process. Projects, for example, were never stopped. All projects had a high priority and resulted in complete overload of the organization. It was very ineffective and inefficient.”
Interviewees also described that prior to Accolade, their organizations found it challenging to generate, communicate, and evaluate new ideas from various levels and departments of the organization. The innovation applications administrator in the manufacturing industry described that there was no avenue to generate ideas for process or product improvements without talking to a salesperson on the ground floor. -
Disconnected view of data resulted in ineffective project management. Problems due to disconnected views of data included missed deadlines, challenges with completing work, and inaccurate timing and pricing estimates. Prior to Accolade, interviewees used point solutions and spreadsheets, which created a lack of transparency across departments and a siloed view of data, processes, and workflow. This led to inefficiencies and a need for a single source of truth to manage projects effectively. The head of Accolade program, electronics, in the manufacturing and pharmaceuticals industry said: “Transparency is of course one thing, but the most important is the single source of truth, so we have everything in one tool. Having the project in one central database is a single source of truth and gives you more information on more possibilities to handle it properly.”
The innovation applications administrator in the manufacturing industry said: “We don’t have a lot of project managers. We have a lot of R&D folks that are running projects without project management experience. Their planning before Accolade was a little bit shaky. Due dates were missed, and timing was rather poorly estimated. They really thought they would get things done much quicker than they were able to do, and at a considerably lower price. So pricing was off, timing was off, when to expect revenue was off, and there were a lot of challenges around completion of work.” -
Lack of visibility led to poor resource allocation and decision-making processes. Before Accolade, interviewees experienced difficulty in prioritizing projects and allocating resources effectively due to the absence of a clear view of the project portfolio.
The head of Accolade program, electronics, in the manufacturing and pharmaceuticals industry shared insight into the cultural environment that led to wasted resources from an unwillingness to reallocate efforts to more strategic decision-making: “What we have realized is that if you do not do portfolio management well, you could see a project that is running for 10 years, and this project also continuously spits out no new products. And in the past, this was highly profitable. Maybe there’s a very strong customer relationship with a very important big customer. The business rationale in the past has always been to do whatever this customer asks because the margin and the business and the growth with this customer is always great. And now, over 10 years later, the business reality, competition, and factors have changed. Yet still, in the heads of the managers in this organization is this same mindset: If you do whatever this customer says, you will be fine, even though the numbers tell you a different story. The margins have gone down. The probability of your projects has gone down. If those factors slightly change, then that old paradigm, ‘Do whatever this customer tells you,’ doesn’t hold anymore.” -
Challenges in measuring success impacted relationships with customers and shareholders. Interviewees described a lack of baseline metrics for comparison of performance, making it difficult to measure the success of projects and the impact of new processes.
The innovation applications administrator in the manufacturing industry said: “How we measured success is a tough one because before we had Accolade, we didn’t know what success metrics meant. We had Accolade for a few years, and our quality group wanted to measure what makes a successful project. What is success? In the end, it’s delivery within the window we promised, in time for the customer, at the revenue that was proposed. We uncovered when we first started using Accolade that we were 18 months off. Our projects take three to five years to finish. The revenue ramps in a five-year bell curve, and that ramp was happening 18 months later than we had estimated to Wall Street. The consequence was that we didn’t make our revenue targets at that time. It was brutal, actually. And we discovered we had always been off before Accolade.”
Solution Requirements
The interviewees’ organizations searched for a solution that could:
- Fuel and manage innovation.
- Consolidate project information.
- Retire legacy tools.
- Improve measurement of deliverables.
- Enhance strategic planning.
- Optimize business processes.
- Shift portfolios to higher-value products.
- Achieve sustainability goals.
Why Accolade?
During implementation, Accolade provided interviewees with templates, metrics, and processes. For executives, this enhanced the alignment of innovation execution with business strategy. Product managers and developers similarly realized alignment gains within their respective areas of responsibility.
Interviewees also commented on the partnership that Sopheon offers as key to their decision to choose Accolade. The director of portfolio management in the manufacturing industry said: “There were two things that really tipped the scale toward Accolade. One was their performance in the evaluation. They came in and were incredibly impressive, not just on what the software could do but also how well they listened to what we needed, how well they internalized and reflected a highly configurable solution for us. … That was probably one of the biggest proof points that led us to choose Accolade. The second was that I interviewed a couple of their clients, and those interviews turned out to be also incredibly impactful because they emphasized the partnership level that Sopheon takes.”
Composite Organization
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 six 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 global manufacturer has an annual revenue of $25 billion and a 10% profit margin. A majority (roughly 70% or greater) of the organization’s revenue is driven by top-performing products, with ancillary revenue streams (product extensions, niche products, professional service offerings) driving a fluctuating 17% of revenue. Roughly 3% of revenue in Year 1 and 5% of revenue by Year 5 is attributable to its emerging innovative product portfolio. Over the course of five years, the composite organization has 2,200 users of Accolade and 5,009 projects in Accolade across five business units. About 70% of its projects relate to process improvements, 15% relate to supply chain and logistics, 10% relate to product improvements, and 5% relate to emerging, innovative products.
Deployment characteristics. The composite organization in the manufacturing sector first introduces Accolade for new product development and innovation. After viewing results in a test environment, the composite expands its use of Accolade to other departments, implementing the solution in waves across five business units over the course of five years, with major implementations in Years 1 and 3. In Year 3, the organization sees growth in FTEs and projects as a result of a new core product launch.
Quantified benefit data as applied to the composite
Total Benefits
| Ref. | Benefit | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | Total | Present Value |
|---|---|---|---|---|---|---|---|---|
| Atr | Innovation-focused throughput and success | $450,000 | $2.4M | $2.4M | $3.8M | $3.8M | $12.8M | $9.1M |
| Btr | Increased portfolio value from strategic spend | $0 | $1.3M | $5.1M | $10M | $14.8M | $31.2M | $20.9M |
| Ctr | Increased profit margin from product improvements | $0 | $956,250 | $2.4M | $3.8M | $4.8M | $12M | $8.2M |
| Dtr | Business growth from a new top-performing product launch | $0 | $0 | $7M | $11.3M | $14.1M | $32.3M | $21.7M |
| Etr | Incremental profit from faster time to market | $932,885 | $2.1M | $3.3M | $3.6M | $3.6M | $13.5M | $9.7M |
| Ftr | Project cost and labor optimization | $1.6M | $2.9M | $5.1M | $6.7M | $7.3M | $23.6M | $16.8M |
| Total benefits (risk-adjusted) | $2.3M | $9.6M | $25.3M | $39.1M | $48.3M | $125.3M | $86.4M | |
Innovation-Focused Throughput And Success
Evidence and data. Innovation drives emerging products and business units, yet larger, multifaceted organizations often struggle to successfully oversee innovation processes. This effect resonated particularly for interviewees, whose environments prior to Accolade comprised disparate tools and muddled data, which inhibited transparency, collaboration, and data-informed decision-making across the organization. Interviewees described that before Accolade, their teams often made decisions based on personal sentiment rather than on data, resulting in wasted resources and failed launches. Accolade provided interviewees’ organizations with structured processes for efficient research and development, which is key for emergent ventures but becomes particularly crucial for organizations of size and complexity. The head of Accolade program, electronics, at the manufacturing and pharmaceuticals company said, “For large-scale companies that are very centralized, with a headquarters with certain central functions — a patent department, an analytical department, etc. — Accolade is great because it enforces harmonized process.”
Interviewees defined success rate in the context of product innovation with two facets: 1) Emerging ideas, initiatives, and products are data-supported and better aligned to the company’s strategic direction; and 2) product launches within the past five years drive more revenue to the business with higher cost efficiency and velocity.
- The head of Accolade program, electronics, at the manufacturing and pharmaceuticals company shared that one notable example of successful product innovation at the company involved overseeing a cutting-edge venture within the company’s electronics division. Accolade played a key role in tracking the progress of the venture and managing confidentiality by ensuring that sensitive information remained at the central office while making other relevant data available across different locations. Governance and oversight using Accolade was crucial during the high-demand peak period of the product’s monopoly status.
- The programming and process manager at the manufacturing organization described how Accolade enhanced cross-functional collaboration, enabling teams to work together more effectively on innovation projects. Accolade facilitated communication and information sharing. By breaking down silos and fostering a culture of collaboration, Accolade helped the interviewee’s organization accelerate the development of new products. The programming and process manager described a 30% higher project success rate with Accolade and about 20 innovation launches per year over five years, which generated additional revenue for the company each year. The interviewee said: “Before Accolade and the new processes, we measured no return. Today, we measure the revenue of new products launched within the past five years and compare it to the revenue of our total sales. Before [Accolade] this was almost zero, and now more than 9% of new products make up our total revenue.”
- Across all interviews, innovation was a key area of interest. The programming and process manager in the manufacturing organization said: “In our product innovation area, we defined three areas for defending projects and gave three strategic buckets with a resource allocation. The first area is maintaining our products in the market or expanding the lifecycle. The second area is attack-the-competition projects. And the third area is change-the-world projects. [Those are] the most radical projects we have in place. And with this portfolio area, we are now able to compare those projects to each other in the different buckets, so there’s no comparison between apples and pears. We have different metrics for different project types.” Prior to Accolade, the organization struggled to organize its strategy and select innovative projects that aligned with its strategy.
- Additionally, the innovation applications administrator described how Accolade democratized the ideation process: “We have several idea models out there. Someone on the shop floor can create an idea.” It was previously a challenge to gather ideas from all levels and departments of the organization to fuel innovation.
Modeling and assumptions. Based on interviewee results, Forrester assumes for the financial model:
- Over five years the composite organization expands its innovative products to drive 5% of its revenue.
- With Accolade, the composite organization experiences increased throughput and product success rates for its innovation portfolio, resulting in a 5% increase in revenue for innovative products in Year 1, a 20% increase in Years 2 and 3 as one major Accolade implementation completes, and a 25% increase in Years 4 and 5.
- The composite organization attributes 15% of its innovation-focused revenue growth to Accolade.
- The profit margin for the composite organization is 10%.
Risks. Results may not be representative of all experiences and the benefit will vary based on the following variables:
- The composition of the organization’s complete product offerings.
- The organization’s appetite for innovation.
- Organizational culture, leadership, and change management across business units.
- The organization’s creation of additional frameworks that use consumer-driven data and set success criteria.
Results. To account for these risks, Forrester adjusted this benefit downward by 20%, yielding a five-year, risk-adjusted total PV (discounted at 10%) of $9.1 million.
Innovation-Focused Throughput And Success
| Ref. | Metric | Source | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | ||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| A1 | Annual revenue prior to Accolade investment | Composite | $25B | $25B | $25B | $25B | $25B | ||||
| A2 | Percentage of revenue driven by innovation-focused emerging products before Accolade | Composite | 3% | 4% | 4% | 5% | 5% | ||||
| A3 | Revenue from innovation-focused emerging products before Accolade | A1*A2 | $750M | $1B | $1B | $1.3B | $1.3B | ||||
| A4 | Percentage increase in revenue with Accolade through increased throughput and higher success rate | Interviews | 5% | 20% | 20% | 25% | 25% | ||||
| A5 | Attribution to Accolade | Interviews | 15% | 15% | 15% | 15% | 15% | ||||
| A6 | Revenue growth attributable to Accolade | A4*A5 | 0.75% | 3.00% | 3.00% | 3.75% | 3.75% | ||||
| A7 | Revenue growth from innovation-focused initiatives attributable to Accolade | A3*A6 | $5.6M | $30M | $30M | $46.9M | $46.9M | ||||
| A8 | Profit margin | Composite | 10% | 10% | 10% | 10% | 10% | ||||
| At | Innovation-focused throughput and success | A7*A8 | $562,500 | $3M | $3M | $4.7M | $4.7M | ||||
| Risk adjustment | ↓20% | ||||||||||
| Atr | Innovation-focused throughput and success (risk-adjusted) | $450,000 | $2.4M | $2.4M | $3.8M | $3.8M | |||||
| Five-year total: $12,750,000 | Five-year present value: $9,085,473 | ||||||||||
Increased Portfolio Value From Strategic Spend
Evidence and data. Several interviewees described a prior state in which projects were never discontinued, sometimes despite negative returns. With Accolade, interviewees unlocked the ability to strategically reallocate funds. Interviewees who discontinued a project reinvested focus and resources toward initiatives that yielded higher returns and drove growth. Discontinuing projects in the ideation phase rather than the execution phase meant saving a higher percentage of the overall project budget, which was then available to reinvest. Interviewees were also able to reinvest in more projects the funds freed through process efficiencies gained with Accolade.
- The programming and process manager in manufacturing said: “If we look at the kill rate with Accolade, 20% of new upcoming projects are killed, so we can add 20% more with other projects and feed them into the pipeline.” The interviewee also explained that the kill rate can drop because of better ideas over time: “You can observe both effects. If we have an idea campaign, the number of ideas grows. When people look very early at the strategic fit, the kill rate goes down. For example, before our new processes, there was also an internal focus on products. Today, we wouldn’t see ideas centered on that focus because we completely changed this internal interest to customer-oriented behavior. Therefore, we now first ask the customer what they’re interested in, and we develop that. We specifically create ideas that fit into that direction. Over time, the kill rate goes down because those ideas [that don’t align with customer interests] don’t show up anymore.”
- The innovation applications administrator in manufacturing said: “I think prior to Accolade, we did not kill projects. We liked to hold onto them forever. Now, we’re starting to see the benefit of ‘fail fast.’ So our kill percentage has gone from around 6% to 13%.”
- With Accolade, interviewees said they can identify and discontinue projects that don’t meet their organizations’ defined criteria. The head of Accolade program, electronics, at the manufacturing and pharmaceuticals company said, “If you don’t do such a process [of killing projects], you can burn money on 20% of your portfolio.” The interviewee described two scenarios in which projects waste resources: “One case is if the business case isn’t compelling, then you can see this right away with the beauty of portfolio management. So if you have a good portfolio management system, then you identify this case. The other case is when you have a zombie that carries on and for the next year promises things — by the time you see that it’s a zombie, you’ve already wasted resources, but in some cases, you continue, based on the willingness of the manager to speak up and kill the thing.”
- Organizational culture was a factor that interviewees often identified as one cause of wasted resources on projects with low yield. The global commercialization lead in the consumer packaged goods (CPG) industry described the guidance achieved through Accolade on the subject of discontinuing projects. The interviewee explained: “We’ve started doing a lot more analytics around how many projects are killed, and we’ve also highlighted the projects where historically they get to a certain point in their lifecycle and people conclude we’ve come too far now not to launch it. And actually, we say ‘No, you haven’t come too far not to launch it.’ If it doesn’t work, it doesn’t work. And investing in launching something that you know is going to fail is a crazy thing. But we were doing that in the past. And I’m sure we’re not unique in that situation when we say, ‘We’ve done all this work now, shouldn’t we just push on?’ And then what you do is you launch it in the market. You probably don’t invest behind it in the way that you wanted, and then it just fails in market, and you think, ‘What was the point of that?’ We wasted everybody’s time and effort.” With Accolade, interviewees saved these resources and reinvested into the portfolio rather than moving forward with failed launches. The global commercialization lead in the CPG industry said, “About 40% of our portfolio right now are projects that were created in the last 12 months. That is a far more agile, reactive, and dynamic portfolio than we ever had in the past.”
- The director of portfolio management in the manufacturing industry described how Accolade allowed the organization to make more investments due to efficiencies in resource allocation: “Globally we’ve had about at least a 40% percent increase in investments in operations. We’ve expanded to new areas, new geographies, and undergone an acquisition. We’ve increased our investment through our ability to clearly illustrate our strategy, our investment, our prioritization. It builds credibility, which goes a long way for us to keep having an increased budget. Where other functions are struggling, we are getting fantastic feedback because we’re able to show results. In fact, one of the regional presidents looked at our five-year capital-planning process, which is all done within Accolade. He said this is how everyone in the company should do it. This has helped support and endorse our budget request year over year.”
Modeling and assumptions. Based on interviewee results, Forrester assumes for the financial model:
- The weighted average annual project budget per project is $168,750.
- The number of projects in Accolade at the composite organization ramps, beginning with 3,000 projects in Year 1 and increasing to 3,600 projects in Year 2. In Year 3, the composite launches a new core product, which increases its number of projects to 4,554. In Years 4 and 5, the composite continues ramping up after the second major implementation, with 4,854 projects and 5,009 projects, respectively.
- Without Accolade, the composite has a 6% cancellation rate of projects, with 25% of its budget preserved (75% expended), as most of its discontinued projects are canceled in execution.
- With Accolade, the project cancellation rate increases to 13% in Year 1 and 20% in Year 2 as the organization gains visibility into underperforming projects. As the composite organization sees an increase in ideas aligned to company strategy, the cancellation rate of projects declines to 15% in Year 3, 10% in Year 4, and 5% in Year 5.
- A higher percentage of the project budget is saved as projects are canceled earlier in the process, in ideation rather than in execution. In Year 1, the composite avoids 50% of its budget spend. In Year 2, when project visibility has the starkest contrast to the prior state, budget savings increase to 70% as a result of more rapid identification of wasted resources. In Years 3 and 4, 75% of project budget for canceled projects is saved from early identification of projects not aligning to company strategy, which increases to 80% saved by Year 5 as more emerging ideas are discontinued in the early ideation phase.
- Of the funds saved, the composite recaptures 50% for projects.
- Additionally, the composite frees funds from project cost efficiencies due to Accolade, half of which the composite then reinvests in higher-value projects. Projects have an average two-year completion period for the composite. With the additional funds available from canceled projects and project cost efficiencies, the composite organization sees a cumulative increase of 607 projects from reallocated funds by Year 5.
- The composite’s return on reinvestment into higher-value projects is 20%.
- The attribution to Accolade for increased portfolio value from strategic spend is 15%.
Risks. Results may not be representative of all experiences, and the benefit will vary based on the following variables:
- The organization’s annual project budget.
- The organization’s approach to evaluating and canceling projects prior to Accolade.
- The organization's use of Accolade across business units and projects.
- The organization’s established metrics and evaluation of projects against its strategy.
- The organization’s reinvestment approach.
- Idea campaigns and other processes and frameworks at the organization.
Results. To account for these risks, Forrester adjusted this benefit downward by 20%, yielding a five-year, risk-adjusted total PV (discounted at 10%) of $20.9 million.
Increased Portfolio Value From Strategic Spend
| Ref. | Metric | Source | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|---|---|---|
| B1 | Weighted average annual project budget (per project) | Composite | $168,750 | $168,750 | $168,750 | $168,750 | $168,750 | |
| B2 | Projects in Accolade | Composite | 3,000 | 3,600 | 4,554 | 4,854 | 5,009 | |
| B3 | Project cancellation rate prior to Accolade | Interviews | 6% | 6% | 6% | 6% | 6% | |
| B4 | Percentage of project budget spend avoided with cancellation prior to Accolade | Composite | 25% | 25% | 25% | 25% | 25% | |
| B5 | Project cancellation rate with Accolade | Interviews | 13% | 20% | 15% | 10% | 5% | |
| B6 | Percentage of project budget spend avoided with Accolade | Interviews | 50% | 70% | 75% | 75% | 80% | |
| B7 | Additional funding freed with Accolade | B1*B2(B5*B6-B3*B4) | $25.3M | $75.9M | $74.9M | $49.1M | $21.1M | |
| B8 | Percentage of funds recaptured for projects | Composite | 50% | 50% | 50% | 50% | 50% | |
| B9 | Additional funds freed from gained efficiencies | F1*F2*F3 | $5.1M | $15.2M | $30.7M | $40M | $42.3M | |
| B10 | Subtotal: Funds freed with Accolade reinvested into higher-value projects | B7*B8+B9 | $17.7M | $53.2M | $68.2M | $65.5M | $52.8M | |
| B11 | Additional projects launched using reinvested funds with Accolade | B10/B1 | 105 | 315 | 404 | 388 | 313 | |
| B12 | Additional projects completed using reinvested funds with Accolade | B11*50% for two-year average annual project completion rate | 53 | 158 | 202 | 194 | 157 | |
| B13 | Cumulative increase in completed projects with Accolade | B12, sum of previous years | 0 | 53 | 211 | 413 | 607 | |
| B14 | Percentage of return on reinvestment of funds into higher-value projects | Composite | 20% | 20% | 20% | 20% | 20% | |
| B15 | Attribution to Accolade | Interviews | 15% | 15% | 15% | 15% | 15% | |
| Bt | Increased portfolio value from strategic spend | (B1*B14+B1)*B13*B15 | $0 | $1.6M | $6.4M | $12.6M | $18.4M | |
| Risk adjustment | ↓20% | |||||||
| Btr | Increased portfolio value from strategic spend (risk-adjusted) | $0 | $1.3M | $5.1M | $10M | $14.8M | ||
| Five-year total: $31,201,200 | Five-year present value: $20,929,903 | |||||||
Increased Profit Margin From Product Improvements
Evidence and data. In addition to discontinuing projects that did not align to company strategy or had negative returns, Accolade helped the interviewees’ organizations identify underperforming products and areas to improve their performance. Interviewees defined performance as the market demand of a product, or high sales, as well as lower investments in order to produce the product. Underperforming products yielded fewer sales or required high investments — factors that when combined create low margins.
- The global commercialization lead in the CPG industry explained how Accolade helped track the in-market performance of products, allowing the company to learn from product successes and address underperformance: “Accolade helps us with market performance evaluation. We’ve automatically started to track performance versus the original targets. So we bring all of our actual data into Accolade. That allows you to start to identify where you’ve got underperforming products versus what you planned. Then you can do the root cause analysis to go back to what were your initial assumptions and actually see where, for example, you were misguided. That allows you to take that learning now and actually course-correct. You can refine it if it’s not fully addressing a particular consumer need or consumer problem.”
- The programming and process manager’s organization in the manufacturing industry saw 30% higher revenue related to product improvements, which equated to 2% topline growth for the organization in the past five years.
- The innovation applications administrator in the manufacturing industry saw $11 million in additional annual cost savings generated by completing 1,200 projects in two divisions with better-than-expected results, which was a 17.7% larger annual return than projected.
Modeling and assumptions. Based on interviewee results, Forrester assumes for the financial model:
- The composite experiences product improvements in its ancillary revenue streams.
- Due to improved success rates — higher sales with lower investments — with Accolade, the composite organization gradually increases its product profit margin in ancillary revenue streams by 1 percentage point by Year 5.
- The composite organization attributes 15% of increased profit margin from product improvements to Accolade.
Risks. Results may not be representative of all experiences, and the benefit will vary based on the following variables:
- The organization’s product profit margins before Accolade.
- The portion of product offerings on which an organization focuses its product improvement efforts.
- The organization’s use of Accolade across projects and business units.
Results. To account for these risks, Forrester adjusted this benefit downward by 25%, yielding a five-year, risk-adjusted total PV (discounted at 10%) of $8.2 million.
Increased Profit Margin From Product Improvements
| Ref. | Metric | Source | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|---|---|
| C1 | Revenue from ancillary revenue streams before Accolade | Composite: A1*17% | $4.3B | $4.3B | $4.3B | $4.3B | $4.3B |
| C2 | Average product profit margin before Accolade | Interviews | 10% | 10% | 10% | 10% | 10% |
| C3 | Average product profit margin with Accolade | Interviews | 10.00% | 10.20% | 10.50% | 10.80% | 11.00% |
| C4 | Attribution to Accolade | Composite | 15% | 15% | 15% | 15% | 15% |
| Ct | Increased profit margin from product improvements | C1*(C3-C2)*C4 | $0 | $1.3M | $3.2M | $5.1M | $6.4M |
| Risk adjustment | ↓25% | ||||||
| Ctr | Increased profit margin from product improvements (risk-adjusted) | $0 | $956,250 | $2.4M | $3.8M | $4.8M | |
| Five-year total: 11,953,125 | Five-year present value: $8,167,708 | ||||||
Business Growth From A New Top-Performing Product Launch
Evidence and data. Accolade helped drive innovation for interviewees who bundled innovation with project management. With Accolade, the composite organization is able to introduce a core product to its offerings. New core products for interviewees were the result of either internal ideas or acquisitions. Accolade played a significant role in facilitating acquisitions by maintaining operational speed and providing necessary visibility during transitions.
- The head of Accolade program, electronics, in the manufacturing and pharmaceuticals industry described a top-performing product at the organization that Accolade tracked: “The gross margin for the product was pretty high. Most sales are made by the top 10 to 20 products, different by size. One of these top-selling products would have failed if you hadn’t had Accolade. Then this is the peak value that we probably could have attributed to Accolade.” The organization had been using Accolade for 20 years.
- For some interviewees, products were a result of acquisitions. Several interviewees described that acquisitions were made smoother — and made possible at all — with Accolade. The innovation applications administrator in manufacturing said, “[Without Accolade], we’d have to really consider how we’re operating at all because I don’t know that we would operate and acquire companies at the same speed without that visibility.”
- The director of portfolio management in manufacturing said: “Accolade was a massive benefit when we did the acquisition because we didn’t have to try to munge a bunch of different systems. Through the acquisition, we had new product lines, new geographies.”
Modeling and assumptions. Based on interviewee results, Forrester assumes for the financial model:
- The composite organization offers 14 core, top-performing products, which drive 70% of its revenue.
- In Year 3, with the help of Accolade, the composite organization introduces an additional 15th core top-performing product. The composite expands its workforce and number of projects to support the product.
- The composite organization realizes 50% of the revenue from the top-performing product in Year 3, 80% in Year 4, and 100% in Year 5.
- The composite’s attribution to Accolade for the product’s success is 15%.
- The composite’s profit margin is 10%.
Risks. Results may not be representative of all experiences, and the benefit will vary based on the following variables:
- The economic landscape in which the organization operates, its performance in its industry, research and development, and market demands.
- The frequency and nature of the organization’s acquisition of companies and development of products.
- The organization’s use of Accolade across projects and business units.
Results. To account for these risks, Forrester adjusted this benefit downward by 25%, yielding a five-year, risk-adjusted total PV (discounted at 10%) of $21.7 million.
Business Growth From A New Top-Performing Product Launch
| Ref. | Metric | Source | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|---|---|
| D1 | Core products before Accolade | Composite | 14 | 14 | 14 | 14 | 14 |
| D2 | Core products with Accolade | Interviews | 14 | 14 | 15 | 15 | 15 |
| D3 | Additional core products with Accolade | D2-D1 | 0 | 0 | 1 | 1 | 1 |
| D4 | Average revenue per core product | Composite: A1*70%/D1 | $1.3B | $1.3B | $1.3B | $1.3B | $1.3B |
| D5 | Percentage of average revenue realized from the new project | Composite | 0% | 0% | 50% | 80% | 100% |
| D6 | Attribution to Accolade | Interviews | 15% | 15% | 15% | 15% | 15% |
| D7 | Revenue growth from additional core product attributable to Accolade | (D2-D1)*D4*D5*D6 | $0 | $0 | $93M | $150M | $187.5M |
| D8 | Profit margin | Composite | 10% | 10% | 10% | 10% | 10% |
| Dt | Business growth from a new top-performing product launch | D7*D8 | $0 | $0 | $9.4M | $15M | $18.8M |
| Risk adjustment | ↓25% | ||||||
| Dtr | Business growth from a new top-performing product launch (risk-adjusted) | $0 | $0 | $7M | $11.3M | $14.1M | |
| Five-year total: $32,343,750 | Five-year present value: $21,698,290 | ||||||
Incremental Profit From Faster Time To Market
Evidence and data. Four out of the six interviewees reported that Accolade’s enhancement of strategic planning, portfolio optimization, and process management resulted in faster time to market.
- The innovation applications administrator in the manufacturing industry mentioned that their team halved project time, which for the organization doubled the throughput on projects, and noted three to four months saved each time.
- The programming and process manager in the manufacturing industry accelerated product improvements by 21%. The organization’s payback period was two years.
- The head of Accolade program, electronics, in the manufacturing and pharmaceuticals industry described a faster time to market of two months.
- The director of portfolio management saw faster time to market with wide variance across products.
Modeling and assumptions. Based on interviewee results, Forrester assumes for the financial model:
- The average time to market for the composite without Accolade is 104 weeks, or two years.
- With its use of Accolade, the composite organization experiences 5% accelerated time to market for all innovative products and 40% of ancillary revenue streams in Year 1, which increases to 10% in Year 2 and 15% in Years 3, 4, and 5.
- A third (33%) of the sales during additional weeks on the market would not have been earned otherwise.
- The composite organization attributes 15% of incremental profit from faster time to market to Accolade.
- The composite’s profit margin is 10%.
Risks. Results may not be representative of all experiences, and the benefit will vary based on the following variables:
- The organization’s time to complete a project and launch a product in its prior state.
- The organization’s approach to product improvements across business units and offerings.
- The organization’s application of Accolade across business units.
Results. To account for these risks, Forrester adjusted this benefit downward by 20%,yielding a five-year, risk-adjusted total PV (discounted at 10%) of $9.7 million.
Incremental Profit From Faster Time To Market
| Ref. | Metric | Source | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | ||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| E1 | Average weekly revenue from impacted streams | (A3+(C1*40%))/52 | $47.1M | $51.9M | $51.9M | $56.7M | $56.7M | ||||
| E2 | Average time to market before Accolade (weeks) | Composite | 104 | 104 | 104 | 104 | 104 | ||||
| E3 | Improved time to market | Interviews | 5% | 10% | 15% | 15% | 15% | ||||
| E4 | Additional weeks on market | E2*E3 | 5 | 10 | 16 | 16 | 16 | ||||
| E5 | Percentage of sales during additional weeks on market that would not have been earned otherwise | TEI methodology | 33% | 33% | 33% | 33% | 33% | ||||
| E6 | Attribution to Accolade | Interviews | 15% | 15% | 15% | 15% | 15% | ||||
| E7 | Incremental gross revenue due to faster time to market | E1*E4*E5*E6 | $11.7M | $25.7M | $41.1M | $44.9M | $44.9M | ||||
| E8 | Operating profit margin | Composite | 10% | 10% | 10% | 10% | 10% | ||||
| Et | Incremental profit from faster time to market | E7*E8 | $1.2M | $2.6M | $4.1M | $4,.5M | $4.5M | ||||
| Risk adjustment | ↓20% | ||||||||||
| Etr | Incremental profit from faster time to market (risk-adjusted) | $932,885 | $2.1M | $3.3M | $3.6M | $3.6M | |||||
| Five-year total: $13,467,808 | Five-year present value: $9,706,031 | ||||||||||
Project Cost And Labor Optimization
Evidence and data. Interviewees reported that Accolade’s improvement of scoping and alignment of projects led to better planning and execution. Accolade’s integration of budgeting, resourcing, and execution tracking into one system allowed for more efficient use of resources and a reduction in the time required for processes such as gate reviews and portfolio analysis.
- The innovation applications administrator in the manufacturing industry said, “Accolade reduced the issues in quality, improper handoff, [and] defective parts.” This reduction impacted 5% to 10% of the overall budget.
- The head of Accolade program, electronics, in the manufacturing and pharmaceuticals industry noted that the organization saved anywhere from 20 to 30 project management FTEs, which the organization would have needed to hire to achieve the same work had it not implemented Accolade.
Modeling and assumptions. Based on interviewee results, Forrester assumes for the financial model:
- Due to product development efficiencies and supply chain optimizations with Accolade, the composite organization saves 2% of its total project budget in Year 1, 5% in Year 2, 8% in Year 3, and 10% in Years 4 and 5.
- It reinvests 50% of these funds into more projects and realizes the remaining 50% as savings.
- The composite organization attributes 15% of the savings to Accolade.
- With Accolade, the composite organization avoids higher additional FTEs to manage projects, with 10 avoided in Years 1 and 2, 12 avoided in Year 3, 15 avoided in Year 4, and 20 avoided in Year 5.
- The average fully burdened annual salary of avoided project managers is $114,000.
Risks. Results may not be representative of all experiences, and the benefit will vary based on the following variables:
- The processes in place prior to the Accolade implementation.
- The use of Accolade across business units and projects.
- The composite’s strategy for savings or reinvestment of funds from product development efficiencies and supply chain optimization.
- The fully burdened annual salary of a project manager.
Results. To account for these risks, Forrester adjusted this benefit downward by 15%, yielding a five-year, risk-adjusted total PV (discounted at 10%) of $16.8 million.
Project Cost And Labor Optimization
| Ref. | Metric | Source | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |||
|---|---|---|---|---|---|---|---|---|---|---|
| F1 | Total project budget per year | B1*B2 | $506.3M | $607.5M | $768.5M | $819.1M | $845.3M | |||
| F2 | Percentage of project budget saved with product development efficiencies and supply chain optimization with Accolade | Interviews | 2% | 5% | 8% | 10% | 10% | |||
| F3 | Percentage of funding from optimization reinvested into other projects | Composite | 50% | 50% | 50% | 50% | 50% | |||
| F4 | Attribution to Accolade | Composite | 15% | 15% | 15% | 15% | 15% | |||
| F5 | Subtotal: Budget optimization for projects managed with Accolade | F1*F2*(1-F3)*F4 | $759,375 | $2.3M | $4.6M | $6.1M | $6.3M | |||
| F6 | Project manager FTEs avoided | Interviews | 10 | 10 | 12 | 15 | 20 | |||
| F7 | Project manager fully burdened annual salary | Assumption | $114,000 | $114,000 | $114,000 | $114,000 | $114,000 | |||
| F8 | Subtotal: savings from reallocated or avoided project managers | F6*F7 | $1.1M | $1.1M | $1.4M | $1.7M | $2.3M | |||
| Ft | Project cost and labor optimization | F5+F8 | $1.9M | $3.4M | $6M | $7.9M | $8.6M | |||
| Risk adjustment | ↓15% | |||||||||
| Ftr | Project cost and labor optimization (risk-adjusted) | $1.6M | $2.9M | $5.1M | $6.7M | $7.3M | ||||
| Five-year total: $23,603,892 | Five-year present value: $16,795,691 | |||||||||
Unquantified Benefits
Interviewees mentioned the following additional benefits that their organizations experienced but were not able to quantify:
- Increased customer lifetime value and retention. Interviewees noted that customers were happier with the timely delivery of higher-quality products. The director of portfolio management in the manufacturing industry described more engaged customers as a result of Accolade empowering the organization to focus on innovation: “We’re getting longer and longer contracts with our key customers, and a lot of that’s predicated on customers wanting to be partners in innovation and in developing and co-developing solutions. That’s been a huge boost.”
- Retired legacy system and annual maintenance. Several interviewees used point solutions prior to Accolade, with some using homegrown solutions. After moving to Accolade, the director of portfolio management’s manufacturing organization retired a system that had cost just short of $1 million with a yearly maintenance fee of $150,000.
- Improved auditing through traceability. Several interviewees described an easier auditing process. The head of Accolade program, electronics, in the manufacturing and pharmaceuticals industry said: “What Accolade at our company is enforcing is accountability and traceability. The way we configure Accolade helps our auditability.” Accolade enables the organization to comply with regulatory standards and demonstrate the quality and impact of projects.
Flexibility
The value of flexibility is unique to each customer. There are multiple scenarios in which a customer might implement Accolade and later realize additional uses and business opportunities, including:
- Upskilled roles as Accolade systematizes mundane tasks. The director of portfolio management at a manufacturing organization described upskilling those who worked on the previous homegrown solution. Accolade enabled FTEs to shift their focus to higher-value tasks as other mundane, time-consuming tasks were taken off their plates due to the Accolade implementation.
- Democratized ideation process. Accolade democratized the ideation process and facilitated ideation at different levels of the organization across business units. The innovation applications administrator in the manufacturing industry said: “We also have the idea module. We had no way to generate ideas other than hoping someone talks to a salesperson. We had no way. Now, we have several idea models out there. Someone on the shop floor can create an idea.”
- Improved visibility and transparency to foster collaboration. Interviewees described the identification of organizational priorities as an open and collaborative process with Accolade. The head of project management in the manufacturing industry said: “Transparency gives you trust you’re doing the right thing, but it’s more socially beneficial. I can’t give a number for this, but we made our system quite open. Everybody can see everything, so we can discuss data and decisions. It helps us to find the right decision in our portfolio. But it’s not only portfolio value — it’s more on the transparency of the portfolio to ensure we made the right decisions and set the right priorities.”
- Monitored performance of sustainability metrics. Several interviewees described launching and measuring sustainability-focused projects with Accolade. The innovation applications administrator in the manufacturing industry noted that without Accolade, sustainability metrics would have been difficult to achieve. The head of Accolade program, electronics, in the manufacturing and pharmaceuticals sector said: “We also have sustainability scorecards and a risk scorecard attached to every project. We have attached to Accolade our own visualization system. It’s a click system, and with this we create the slides and graphs and analysis pages for our portfolio reviews.”
Flexibility would also be quantified when evaluated as part of a specific project (described in more detail in Appendix A).
Quantified cost data as applied to the composite
Total Costs
| Ref. | Cost | Initial | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | Total | Present Value |
|---|---|---|---|---|---|---|---|---|---|
| Gtr | Subscriptions, configuration, and professional services | $187,000 | $842,600 | $893,640 | $1.2M | $1.8M | $2M | $6.9M | $5.1M |
| Htr | Implementation and ongoing management | $1.5M | $705,640 | $609,960 | $1.8M | $645,840 | $645,840 | $6M | $4.9M |
| Itr | Training and process adaptation | $4.1M | $1.8M | $975,053 | $2.2M | $2M | $1.7M | $12.7M | $10.6M |
| Total costs (risk-adjusted) | $5.8M | $3.3M | $2.5M | $5.2M | $4.4M | $4.4M | $25.6M | $20.5M | |
Subscriptions, Configuration, And Professional Services
Evidence and data. Interviewees have used Accolade for as long as 20 years and experienced subscription costs, as well as maintenance costs, which comprised about 20% of subscription costs. The composite organization’s implementation of Accolade does not model maintenance costs, as maintenance is not included in the new subscription.
Pricing may vary. Contact Sopheon for additional details.
Modeling and assumptions. Forrester assumes for the financial model:
- The composite’s licensing costs are $416,000 in Year 1, $662,400 in Year 2, $832,000 in Year 3, $1,590,000 in Year 4, and $1,830,400 in Year 5.
- The composite incurs additional service contract, configuration, change requests, and process workshop costs of $20,000 initially, then $200,000 in Year 1, $150,000 in Year 2, $250,000 in Year 3 during an increase in workforce, and $30,000 in Years 4 and 5.
- In the initial period and Year 1, the composite organization incurs $150,000 in professional services costs.
Risks. Results may not be representative of all experiences, and the benefit will vary based on the following variables:
- The organization’s size and its number of projects and users.
- The complexity of the organization’s configuration and its frequency of new implementations, configurations, and change requests.
Results. To account for these risks, Forrester adjusted this cost upward by 10%, yielding a five-year, risk-adjusted total PV (discounted at 10%) of $5.1 million.
Subscriptions, Configuration, And Professional Services
| Ref. | Metric | Source | Initial | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | ||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| G1 | Subscription costs | Composite | $416,000 | $662,400 | $832,000 | $1.6M | $1.8M | |||||
| G2 | Additional costs incurred for service contract, configuration, change requests, and process workshops | Composite | $20,000 | $200,000 | $150,000 | $250,000 | $30,000 | $30,000 | ||||
| G3 | Professional services | Interviews | $150,000 | $150,000 | ||||||||
| Gt | Subscriptions, configuration, and professional services | G1+G2+G3 | $170,000 | $766,000 | $812,400 | $1.1M | $1.6M | $1.9M | ||||
| Risk adjustment | ↑10% | |||||||||||
| Gtr | Subscriptions, configuration, and professional services (risk-adjusted) | $187,000 | $842,600 | $893,640 | $1.2M | $1.8M | $2M | |||||
| Five-year total: $6,941,880 | Five-year present value: $5,073,569 | |||||||||||
Implementation And Ongoing Management
Evidence and data. Interviewees described implementations of Accolade in two to five waves that involved front-loading processes and adding users. These implementations varied between four months and two years, with the COVID-19 pandemic contributing to implementations on the longer end of the range for some interviewees. Ongoing management also varied vastly across company and usage. The programming and process manager in the manufacturing industry described project teams of about six FTEs who developed and created all the different flexible processes. The global commercialization lead in the CPG industry described 26 people in the initial implementation, then a global solution owner, two product owners, and a solution process expert (all in-house) who support the tool as well.
Modeling and assumptions. Based on interviewee results, Forrester assumes for the financial model:
- Ten key stakeholders and users initially dedicate 30% of their time to assisting with software implementation and process migration, then five in Years 1 and 2 (one per each of the five business units) dedicating 20% of their time, which increases to 15 key stakeholders and users in Year 3 with the growth of the workforce.
- The key stakeholders and users also dedicate an initial 50% of their time assisting with migrating data hierarchies and conducting manual conversions and data quality assurance activities, then 20% of their time in Year 1 and 10% of their time in Years 2 and 3.
- The average fully burdened annual salary of division heads and subject matter experts is $166,400.
- One FTE offers additional ongoing management support in Years 1 and 2 with an fully burdened annual salary of $135,200, which increases to three FTEs in Year 3 with an expanded workforce, then decreases to two FTEs in Years 4 and 5.
- One FTE offers additional effort for new processes, creativity, management of ideas, organization of decision-makers, and acquisitions in Years 1 and 2 with an fully burdened annual salary of $145,600, which increases to three FTEs in Year 3 with an expanded workforce, then decreases to two FTEs in Years 4 and 5.
Risks. Results may not be representative of all experiences, and the benefit will vary based on the following variables:
- Business units using Accolade and FTEs involved in migration and change management.
- The fully burdened annual salaries of division heads and subject matter experts, senior project managers and product owners, and solution process experts.
Results. To account for these risks, Forrester adjusted this cost upward by 15%, yielding a five-year, risk-adjusted total PV (discounted at 10%) of $4.9 million.
Implementation And Ongoing Management
| Ref. | Metric | Source | Initial | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| H1 | Key stakeholders and users assisting with implementation and migration | Composite | 10 | 5 | 5 | 15 | |||||||
| H2 | Percentage of time spent assisting with implementation (software implementation and new processes) | Interviews | 30% | 20% | 20% | 20% | |||||||
| H3 | Percentage of time spent assisting with migrating from prior environment into Accolade (data, hierarchies, manual conversions, metadata, and data quality assurance activities) | Interviews | 50% | 20% | 10% | 10% | |||||||
| H4 | Average fully burdened annual salary: division heads and subject matter experts | Assumption | $166,400 | $166,400 | $166,400 | $166,400 | |||||||
| H5 | Implementation efforts with key stakeholders and Accolade users | (H1*H2*H4)+(H1*H3*H4) | $1.3M | $332,800 | $249,600 | $748,800 | |||||||
| H6 | FTEs offering additional ongoing management support | Composite | 1 | 1 | 3 | 2 | 2 | ||||||
| H7 | Average fully burdened annual salary: senior project managers and product owners | Assumption | $135,200 | $135,200 | $135,200 | $135,200 | $135,200 | ||||||
| H8 | FTEs offering additional effort for new processes, creativity, management of ideas, organization of decision-makers, and acquisitions | Composite | 1 | 1 | 3 | 2 | 2 | ||||||
| H9 | Average burdened annual salary: solution process experts | Assumption | $145,600 | $145,600 | $145,600 | $145,600 | $145,600 | ||||||
| H10 | Ongoing management | (H6*H7)+(H8*H9) | $280,800 | $280,800 | $842,400 | $561,600 | $561,600 | ||||||
| Ht | Implementation and ongoing management | H5+H10 | $1.3M | $613,600 | $530,400 | $1.6M | $561,600 | $561,600 | |||||
| Risk adjustment | ↑15% | ||||||||||||
| Htr | Implementation and ongoing management (risk-adjusted) | $1.5M | $705,640 | $609,960 | $1.8M | $645,840 | $645,840 | ||||||
| Five-year total: $5,968,040 | Five-year present value: $4,893,419 | ||||||||||||
Training And Process Adaptation
Evidence and data. Training and process adaptation also varied widely across organizations, as interviewees brought in revenue ranging from $60 million to $1.7 billion. These costs were lower for companies with lower revenue compared to larger enterprises.
- The head of project management described six hours of ongoing training followed by 3-hour refreshers.
- The innovation applications administrator in the manufacturing industry described 2-hour in-person ongoing trainings and online trainings each quarter.
- The global commercialization lead described the training of 4,500 people across 22 modules at 90 minutes. Users were trained in modules that were relevant to them.
Some interviewees described adapting to the new process. The director of portfolio management in the manufacturing industry described two scenarios:
- Holdouts who engaged in no project charters or other basic information in Accolade that the organization required. The interviewee said: “These team members managed projects extremely informally and rejected any attempts to enforce governance or standards, regardless of system.” This had cascading impacts on the rest of the team.
- Holdouts who engaged in project charters and other governance by manually using presentation decks, spreadsheets, and email. The interviewee said, “They were probably wasting at least a few hours a month themselves (per project), plus 10-plus hours a month for my team for the whole portfolio due to following up with project managers, retraining them, manually compiling our analytics, etc.”
Modeling and assumptions. Based on interviewee results, Forrester assumes for the financial model:
- The composite organization onboards 500 initial Accolade users. The composite has a total of 800 Accolade users in Year 1, 1,000 in Year 2, 1,550 in Year 3, 2,000 in Year 4, and 2,200 in Year 5. The organization experiences a 10% churn rate. Onboarding training per user is 24 hours per year for the composite.
- Ongoing training comprises 12 hours per year for the composite.
- The average fully burdened hourly rate for an Accolade user is $48.
- The composite organization loses some time due to friction from adopting a new system, duplicated efforts due to change management resistance, process retraining, and cascading impacts on portfolio team. This is 5% initially, then 2.5% in Year 1, 0.5% in Year 2, 1% in Year 3 due to growth in the workforce, 0.5% in Year 4, and 0% in Year 5.
Risks. Results may not be representative of all experiences, and the benefit will vary based on the following variables:
- The number of Accolade users and the turnover rate.
- Revisions and updates to the organization’s processes conveyed in refresh trainings for Accolade users.
- The average fully burdened hourly rate of an Accolade user.
Results. To account for these risks, Forrester adjusted this cost upward by 20%, yielding a five-year, risk-adjusted total PV (discounted at 10%) of $10.6 million.
Training And Process Adaptation
| Ref. | Metric | Source | Initial | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|---|---|---|
| I1 | Total Accolade users per year | Composite | 500 | 800 | 1,000 | 1,550 | 2,000 | 2,200 |
| I2 | New users onboarded per year | (I1-I1 previous year)*10% churn+(I1-I1 previous year) | 550 | 330 | 220 | 605 | 495 | 220 |
| I3 | Onboarding training hours | Interviews | 24 | 24 | 24 | 24 | 24 | 24 |
| I4 | Ongoing training hours | Interviews | 12 | 12 | 12 | 12 | 12 | |
| I5 | Average fully burdened hourly rate: Accolade user | Assumption | $48 | $48 | $48 | $48 | $48 | $48 |
| I6 | Percentage of time lost to friction from adopting a new system, duplicated efforts due to change management resistance, process retraining, and cascading impacts on portfolio team | Composite | 5.0% | 2.5% | 0.5% | 1.0% | 0.5% | 0.0% |
| It | Training and process adaptation | ((I1-I2)*I4*I5)+(I2*I3*I5)+(I2*I5*I6*2,080) | $3.4M | $1.5M | $812,544 | $1.8M | $1,.7M | $1.4M |
| Risk adjustment | ↑20% | |||||||
| Itr | Training and process adaptation (risk-adjusted) | $4.1M | $1.8M | $975,053 | $2.2M | $2M | $1.7M | |
| Five-year total: $12,707,712 | Five-year present value: $10,552,207 | |||||||
Consolidated Five-year Risk-Adjusted Metrics
Cash Flow Chart (Risk-Adjusted)
Total costs Total benefits Cumulative net benefits Initial Year 1 Year 2 Year 3 Year 4 Year 5-
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.
Cash Flow Analysis (Risk-Adjusted Estimates)
| Initial | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | Total | Present Value | |
|---|---|---|---|---|---|---|---|---|
| Total costs | ($5.8M) | ($3.3M) | ($2.5M) | ($5.2M) | ($4.4M) | ($4.4M) | ($25.6M) | ($20.5M) |
| Total benefits | $0 | $3M | $9.6M | $25.3M | $39.1M | $48.3M | $125.3M | $86.4M |
| Net benefits | ($5.8M) | ($320,358) | $7.1M | $20.1M | $34.7M | $43.9M | $99.7M | $65.9M |
| ROI | 321% | |||||||
| Payback | 23 months | |||||||
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
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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.
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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.
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Flexibility represents 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.
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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 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.
Appendix B: 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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