Global organizations face ongoing governance, risk, and compliance challenges. OpenPages is a governance, risk, and compliance (GRC) solution that uses business analytics and intelligence to assess enterprise risk across an organization. OpenPages centralizes risk management functions to improve operational risk responses, make more risk-aware decisions, and satisfy regulatory compliance requirements.
IBM commissioned Forrester Consulting to conduct a Total Economic Impact™ (TEI) study and examine the potential return on investment (ROI) enterprises may realize by deploying IBM OpenPages1. The purpose of this study is to provide readers with a framework to evaluate the potential financial impact of IBM OpenPages on their organizations.
To better understand the benefits, costs, and risks associated with this investment, Forrester interviewed four customers with experience using OpenPages. For the purposes of this study, Forrester aggregated the interviewees’ experiences and combined the results into a single composite organization that is a global organization with 35,000 employees and revenue of $19 billion per year.
Prior to using OpenPages, these interviewees noted how their organizations were unable to view their risk data holistically. Additionally, prior attempts yielded limited success, leaving them with disparate reporting and business intelligence (BI) tools and many manual processes. These limitations led to siloed risk management processes and complex level of effort to satisfy compliance requirements.
After the investment in OpenPages, the interviewees’ organizations replaced legacy tools with the GRC platform. Key results from the investment include digital transformation at the enterprise level, improved data quality, and a transparent and holistic view across the OpenPages GRC platform.
Key Findings
Quantified benefits. Three-year, risk-adjusted present value (PV) quantified benefits for the composite organization include:
- A 50% reduction in risk management effort. The composite organization standardizes and automates risk management processes across the organization. It reduces overall effort in risk reporting, testing internal controls, and supporting audit processes.
For , the reduction in risk management effort could total .
- At least a 20% reduction in the likelihood of regulatory penalties. With IBM OpenPages, the composite organization focuses on risk management and mitigation, decision-making, and creating risk-aware cultures. This reduces the likelihood of regulatory and financial penalties.
For , the reduction in the likelihood of regulatory penalties could be worth .
- Nearly $200,000 in legacy tool cost savings annually. The composite retires legacy tools after adopting IBM OpenPages, which results in savings in license and subscription costs, training, maintenance, and repurposing teams.
For , the legacy tool cost savings over three years could total .
Unquantified benefits. Benefits that provide value but are not quantified in this study include:
- A reliable GRC platform. Interviewees reported that the OpenPages platform is consistently reliable, and their business and technology teams trust OpenPages and its data.
- Improved data quality and decision-making. Interviewees noted that consistent data formats and reporting improved their organizations’ overall data hygiene, completeness, and trust. Data was more actively used and relied upon to communicate with regulators.
- Reduced siloes and improved transparency across the enterprise. After implementing OpenPages, interviewees reported that their risk and compliance teams gained the same view of data internally as operation teams. Users could view risks, issues, and mitigation plans across units.
- Essential tool for digital transformation. Implementing the OpenPages platform as part of its larger enterprise architecture was a critical step in the digital transformation process. Interviewees’ organizations required a single platform that supported digital transformation on the front end.
Costs. Three-year, risk-adjusted PV costs for the composite organization include:
- Software-as-a-service (SaaS) contract costs totaling $424,000. Interviewees reported licensing costs for the OpenPages SaaS contract.
For , the SaaS contract costs could total .
- Implementation and ongoing support costs of $450,000. Costs included internal and external implementation efforts, ongoing support, and training.
For , implementation and ongoing support costs could total .
The representative interviews and financial analysis found that a composite organization experiences benefits of $3.05 million over three years versus costs of $874,000, adding up to a net present value (NPV) of $2.17 million and an ROI of 249%.
could experience benefits of over three years versus costs of , adding up to a net present value (NPV) of and an ROI of .
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Return on investment (ROI):
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Benefits PV:
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Net present value (NPV):
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Payback:
Benefits (Three-Year)
Reduced risk management effort Penalty avoidance Avoided legacy tool costsTEI Framework And Methodology
From the information provided in the interviews, Forrester constructed a Total Economic Impact™ framework for those organizations considering an investment in IBM OpenPages.
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 IBM OpenPages can have on an organization.
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Due Diligence
Interviewed IBM stakeholders and Forrester analysts to gather data relative to IBM OpenPages.
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Interviews
Interviewed four representatives at organizations using IBM OpenPages to obtain data with respect to 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: Readers should be aware of the following:
This study is commissioned by IBM and delivered by Forrester Consulting. It is not meant to be used as a competitive analysis.
Forrester makes no assumptions as to the potential ROI that other organizations will receive. Forrester strongly advises that readers use their own estimates within the framework provided in the study to determine the appropriateness of an investment in OpenPages.
IBM reviewed and provided feedback to Forrester, but Forrester maintains editorial control over the study and its findings and does not accept changes to the study that contradict Forrester’s findings or obscure the meaning of the study.
IBM provided the customer names for the interviews but did not participate in the interviews.
Consulting Team: Nina Lund
Drivers leading to the OpenPages investment
Interviews
| Role | Industry | Geography | Revenue | Employees |
|---|---|---|---|---|
| Senior technology audit team lead | Banking | Asia | $3.6 billion | 3,500 |
| Operational risk lead | Financial services | South Africa | $14 billion | 60,000 |
| Risk manager | Banking | Europe | $9.4 billion | 46,000 |
| Director of GRC transformation | Industry | North America | $18.5 billion | 32,000 |
Key Challenges
The interviewees noted how their organizations struggled with common challenges prior to using OpenPages, including:
- Siloed risk data. Interviewees reported that they did not have a holistic view of risk data. Users logged into multiple tools to access and manage risk and issue data. Processes and workflows were complex and required extensive importing and exporting to and from legacy tools.
- Poor data quality. Interviewees reported incomplete data and poor data quality prior to OpenPages. Manual reporting resulted in different data formats as well as inconsistent field values.
- Lack of holistic enterprise risk management. The interviewees noted their organizations could not manage corporate risk management data in one place. This resulted in money and time spent locating data and complex reporting across the organization.
- High level of effort to satisfy compliance requirements. Interviewees reported significant effort and time understanding regulatory requirements, tracking regulations and risk mitigation actions, and satisfying internal audit requests.
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 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 global organization with $19 billion in annual revenue. It is part of the financial services industry and has 35,000 employees.
Quantified benefit data as applied to the composite
Total Benefits
| Ref. | Benefit | Year 1 | Year 2 | Year 3 | Total | Present Value |
|---|---|---|---|---|---|---|
| Atr | Reduced risk management effort | |||||
| Btr | Penalty avoidance | |||||
| Ctr | Avoided legacy tool costs | |||||
| Total benefits (risk-adjusted) |
Reduced Risk Management Effort
Evidence and data. Interviewees reported that the OpenPages GRC platform streamlined and automated processes across risk areas to reduce time and effort spent identifying, assessing, monitoring, and reporting risks. Interviewees noted:
- Reporting effort was reduced by half by leveraging automated processes and moving away from manual reporting tools.
- OpenPages integrated with third-party tools to export live data to auditors and regulators faster.
- OpenPages enabled risk management teams to perform root-cause analysis to prevent future issues.
- Their organizations reduced effort supporting internal audits. Additionally, they minimized interactions with external auditors who directly accessed their OpenPages environments.
Modeling and assumptions. For the composite organization, Forrester makes the following assumptions:
- The composite organization assigns 100 risk analysts across the organization to manage reporting tasks.
- The composite organization spends 8 hours per week on reporting efforts without OpenPages.
- The composite organization reduces time spent on reporting efforts by 50% with OpenPages.
Risks. Reduced risk management effort benefits experienced by other organizations may vary based on:
- The level of effort required to develop reports and support audits may vary based on current processes.
- Fully burdened salary differences.
Results. To account for these risks, Forrester adjusted this benefit downward by 15%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $1.9 million.
For with users spending of their time in risk analysis efforts, this benefit may have a three-year, risk-adjusted total PV of .
Reduced Risk Management Effort
| Ref. | Metric | Source | Year 1 | Year 2 | Year 3 | |
|---|---|---|---|---|---|---|
| A1 | Number of users directly involved in risk analysis efforts | |||||
| A2 | Fully burdened annual salary for risk analyst | Assumption | ||||
| A3 | Percent of time dedicated to reporting without Open Pages | |||||
| A4 | Reduction in reporting effort with Open Pages | Assumption | ||||
| At | Reduced risk management effort | A1*A2*A3*A4 | ||||
| Risk adjustment | ↓15% | |||||
| Atr | Reduced risk management effort (risk-adjusted) | |||||
| Three-year total: | Three-year present value: | |||||
Penalty Avoidance
Evidence and data. Interviewees stated that OpenPages’ integrated GRC platform combined multiple benefits to reduce the likelihood of incurring regulatory penalties or fines. Interviewees noted:
- Their organizations’ risk management teams saved time reviewing data and reporting. These teams spent more of their time managing and analyzing risks with OpenPages, improving the organizations’ ability to react quickly to risk areas.
- Their leadership could proactively respond to risk and make better, risk-informed decisions.
- Their risk-aware culture improved overall compliance and encouraged ownership and accountability for risk teams.
Modeling and assumptions. For the composite organization, Forrester makes the following assumptions:
- Prior to OpenPages, there is a 5% chance annually that the composite organization will incur a $30 million regulatory penalty or fine.
- With OpenPages, the composite organization reduces the likelihood of penalty or fine by 20% in the Year 1.
- The reduction in likelihood of penalty or fine increases to 25% in Year 2 and 30% in Year 3 as the composite organization improves its overall risk management strategy and decision-making.
Risks. Penalty avoidance may vary based on the penalty size and likelihood.
Results. To account for these risks, Forrester adjusted this benefit downward by 25%, yielding a three-year, risk-adjusted total PV of $691,000.
For with an annual revenue of , this benefit may have a three-year, risk-adjusted total PV of .
Penalty Avoidance
| Ref. | Metric | Source | Year 1 | Year 2 | Year 3 | |
|---|---|---|---|---|---|---|
| B1 | Potential regulatory fines or penalties | 0.158% of annual revenue | ||||
| B2 | Likelihood of penalties without Open Pages | Assumption | ||||
| B3 | Reduction of likelihood with Open Pages | Assumption | ||||
| Bt | Penalty avoidance | A1*A2*A3 | ||||
| ↓25% | ||||||
| Btr | Penalty avoidance (risk-adjusted) | |||||
| Three-year total: | Three-year present value: | |||||
Avoided Legacy Tool Costs
Evidence and data. Interviewees reported that their organizations retired multiple legacy BI tools after implementing IBM OpenPages. They noted:
- Their organizations sunset manual and automated BI tools over time.
- There was an overall savings related to training and maintenance of those previous tools.
- A reduction in their organizations’ overall system license and management costs annually.
Modeling and assumptions. The composite organization saves $200,000 annually on the retired legacy systems.
Risks. Avoided legacy system costs may vary due to:
- The number of legacy tools used.
- The cost of legacy tools.
Results. To account for these risks, Forrester adjusted this benefit downward by 15%, yielding a three-year, risk-adjusted total PV of $423,000.
For , this benefit may have a three-year, risk-adjusted total PV of .
Avoided Legacy Tool Costs
| Ref. | Metric | Source | Year 1 | Year 2 | Year 3 | |
|---|---|---|---|---|---|---|
| C1 | Legacy system license and management costs | |||||
| Ct | Avoided legacy tool costs | C1 | ||||
| Risk adjustment | ↓15% | |||||
| Ctr | Avoided legacy tool costs (risk-adjusted) | |||||
| Three-year total: | Three-year present value: | |||||
Unquantified Benefits
Interviewees mentioned the following additional benefits that their organizations experienced but were not able to quantify:
- A reliable GRC platform. Interviewees reported that the OpenPages platform is consistently reliable, and business and technology teams trust OpenPages and its data.
- Improved data quality and decision-making. Interviewees noted that consistent data formats and reporting improved their organizations’ overall data hygiene, completeness, and trust. Data was more actively used and relied upon to communicate with regulators. Interviewees reported that improved data quality demonstrated internal control and confidence of processes and risks.
- Reduced siloes and improved transparency across the enterprise. After implementing OpenPages, interviewees reported that their risk and compliance teams gained the same view of data internally as operation teams. Users could view risks, issues, and mitigation plans across units. Additionally, internal teams received access to the same data as regulators and auditors.
- Essential tool for digital transformation. Implementing the OpenPages platform as part of their larger enterprise architecture was a critical step in the digital transformation process for the interviewees’ organizations. The interviewees’ organizations required a single platform that supported digital transformation on the front end.
Flexibility
The value of flexibility is unique to each customer. There are multiple scenarios in which a customer might implement OpenPages and later realize additional uses and business opportunities, including AI capabilities. Interviewees reported that IBM OpenPages has AI capabilities that they are in process of testing and/or exploring future use cases. This includes a natural language translator, AI-powered chatbots, and AI predictions.
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 | Total | Present Value |
|---|---|---|---|---|---|---|---|
| Dtr | SaaS contract cost | ||||||
| Etr | Implementation and ongoing support cost | ||||||
| Total costs (risk-adjusted) |
SaaS Contract Cost
Evidence and data. Interviewees reported the estimated SaaS contract costs for their OpenPages deployments, which included an annual contract cost and ongoing support contract costs.
- Interviewees stated their annual contract costs were $140,000.
- The interviewees’ organizations paid $15,000 annually for ongoing support contracts.
Modeling and assumptions. For the composite organization, Forrester makes the following assumptions:
- The composite organization scales OpenPages to as many users as needed under the licensing agreement.
- Pricing may vary. Contact IBM for additional details.
Risks. The SaaS contract cost incurred by other organizations may vary based on the following factors:
- The size of the organization and number of users.
- The level of support required.
- Established processes, taxonomies, reporting needs and workflows.
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 $424,000.
For , the SaaS contract costs may have a three-year, risk-adjusted total PV of . Please note that this is based on a high-level estimation and does not represent a quote. For a more detailed business case, please request a tailored quote directly from IBM.
SaaS Contract Cost
| Ref. | Metric | Source | Initial | Year 1 | Year 2 | Year 3 | |
|---|---|---|---|---|---|---|---|
| D1 | Contract cost | Assumption | |||||
| D2 | Ongoing support contract | Assumption | |||||
| Dt | SaaS contract cost | D1+D2 | |||||
| Risk adjustment | ↑10% | ||||||
| Dtr | SaaS contract cost (risk-adjusted) | ||||||
| Three-year total: | Three-year present value: | ||||||
Implementation And Ongoing Support Cost
Evidence and data. Interviewees stated that one internal resource was required over the six-month implementation period.
- Interviewees reported total contract costs of $140,000 annually.
- Interviewees noted that ongoing support cost their organizations $15,000 annually.
Modeling and assumptions. For the composite organization, Forrester makes the following assumptions:
- The composite pays an initial professional services cost of $200,000.
- One internal implementation resource provides ongoing support for OpenPages with 50% of time for implementation.
- Implementation takes six months.
Risks. Implementation and ongoing support costs experienced by other organizations may vary based on:
- Professional service costs.
- Required internal support.
- Required training.
- Internal resource costs.
Results. To account for these risks, Forrester adjusted this cost upward by 10%, yielding a three-year, risk-adjusted total PV of $450,000.
For , these costs may have a three-year, risk-adjusted total PV of .
Implementation And Ongoing Support Cost
| Ref. | Metric | Source | Initial | Year 1 | Year 2 | Year 3 | |
|---|---|---|---|---|---|---|---|
| E1 | Implementation professional services | Assumption | |||||
| E2 | Number of months for implementation | Assumption | |||||
| E3 | Internal implementation resources | Assumption | |||||
| E4 | Percentage of time spent supporting Open Pages | Assumption | |||||
| E5 | Internal implementation resource cost | Assumption | |||||
| Et | Implementation and ongoing support cost | E1+(E4*E5) | |||||
| Risk adjustment | ↑10% | ||||||
| Etr | Implementation and ongoing support cost (risk-adjusted) | ||||||
| Three-year total: | Three-year present value: | ||||||
Consolidated Three-Year Risk-Adjusted Metrics
Cash Flow Chart (Risk-Adjusted)
Total costs Total benefits Cumulative net benefits-
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 | Total | Present Value | |
|---|---|---|---|---|---|---|
| Total costs | ||||||
| Total benefits | ||||||
| Net benefits | ||||||
| ROI | ||||||
| Payback period (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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