The Total Economic Impact™ Of Salesforce B2B Commerce
Cost Savings And Business Benefits Enabled By Commerce Cloud
A Forrester Total Economic Impact™ Study Commissioned By Salesforce, April 2024
Salesforce B2B Commerce digitizes the buying and selling process, provides AI-powered personalization, and drives AI-powered productivity. It helps businesses drive profitability through customer self-service, automates low-level tasks, and uncovers insights to personalize the buying experience. B2B Commerce further amplifies existing Salesforce investments and elevates the B2B buying experience at scale.
Salesforce B2B Commerce enables businesses to build a self-service purchasing experience on top of the Salesforce Customer 360, improving the customer experience and helping businesses reduce cost to serve and reach economies of scale with digital business. B2B Commerce is specifically designed for professional transactions and facilitates product discovery and self-serve ordering for B2B buyers.
Salesforce commissioned Forrester Consulting to conduct a Total Economic Impact™ (TEI) study and examine the potential return on investment (ROI) enterprises may realize by deploying B2B Commerce.1 The purpose of this study is to provide readers with a framework to evaluate the potential financial impact of B2B Commerce on their organizations.
Return on investment (ROI)
289%
Net present value (NPV)
$9.60M
To better understand the benefits, costs, and risks associated with this investment, Forrester interviewed four representatives with experience using B2B Commerce. For the purposes of this study, Forrester aggregated the interviewees’ experiences and combined the results into a single composite organization that is a manufacturing organization with revenue of $1 billion per year.
Interviewees said that prior to using B2B Commerce, their organizations’ sales cultures were built around relationship building and consultative selling. They struggled with inefficient and high-touch selling, lagged behind their more digital-first competitors, had a growing list of underserved long-tail customers, and struggled to make sense of vast amounts of data.
After the investment in B2B Commerce, the interviewees enabled their customers to place their own orders, browse product catalogs, and find relevant order information independently with digital portals. They also automated back-office tasks like processing returns and warranties, entering orders, and preparing orders for shipment.
Key Findings
Quantified benefits. Three-year, risk-adjusted present value (PV) quantified benefits for the composite organization include:
- Increased B2B sales margin by 5 to 6 percentage points. The introduction of B2B Commerce helps the composite organization continuously increase margins as more customers adopt self-service. Margins are positively impacted by lowered cost of customer acquisition and growth without hiring additional sales reps. Additionally, the more strategic use of representatives’ time results in better outcomes while a more modern customer experience improves customer retention. The composite also expands into new markets without heavy investment and better serves long-tail customers at scale. Improved margins drive $8.9 million over three years for the composite organization.
- Increased annual spend for accounts that have adopted self-service by up to 25%. The composite organization measures growth in the average annual spend from customer accounts after the B2B Commerce investment. Self-service options enable customers to place orders when convenient to them and browse broader catalog options than previously available. The composite organization generates additional revenue by changing customers’ ordering behaviors with promotions, next-best-action options, and AI recommendations and increases customer engagement by connecting with them through multiple channels. It also creates new revenue channels by offering new digital products and services to customers through the portal. Representatives (reps) use data from Salesforce to be better business partners and more effectively serve long-tail customers. These improvements result in higher annual spend figures and drive $3.4 million in additional operating profit for the composite organization.
- Saved 18,000 hours over three years due to process automation. The composite organization uses B2B Commerce to automate many processes and drive productivity savings across the organization. It removes operations staff from the order-taking process, streamlines fulfillment, reduces load on the customer service team, improves warranty and returns processing, and uses prebuilt partner integrations from the Salesforce AppExchange to automate tax calculations. These automations save the composite organization 18,000 hours of manual labor across 40 operations staff, driving $672,000 in savings.
Unquantified benefits. Benefits that provide value for the composite organization but are not quantified for this study include:
- Increased speed of development and innovation.
- Increased ability to share resources between parts of the Salesforce solution.
- Reduced technical debt and integration costs.
Costs. Three-year, risk-adjusted PV costs for the composite organization include:
- Salesforce and add-on subscription costs of $2.0 million over three years. The composite organization licenses B2B Commerce based on gross merchandising value (GMV) and chooses to integrate an add-on solution from the AppExchange to support its B2B Commerce environment.
- Implementation costs include $266K of internal labor and a $150K SI engagement. Twelve internal business and technical resources dedicate a portion of their time to the initial implementation over the course of four months to implementing B2B Commerce. This time is worth $267,000. A system integrator provides support during the implementation at an engagement fee of $150,000.
- Channel shift costs, training, and ongoing administration total $907,000 over three years. Three internal resources are partially dedicated to the ongoing administration and optimization of the platform, including secondary implementations and use case expansion. Forty reps participate in training on the new solution. Finally, between 1 and 3 hours are spent helping each customer adopt the portal.
The representative interviews and financial analysis found that a composite organization experiences benefits of $12.91 million over three years versus costs of $3.32 million, adding up to a net present value (NPV) of $9.60 million and an ROI of 289%.
Key Statistics
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Return on investment (ROI)
289%
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Benefits PV
$12.91M
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Net present value (NPV)
$9.60M
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Payback
<6 months
Benefits (Three-Year)
Increased profitability of digital sales B2B business growth Process automation savingsTEI Framework And Methodology
From the information provided in the interviews, Forrester constructed a Total Economic Impact™ framework for those organizations considering an investment B2B Commerce.
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 B2B Commerce can have on an organization.
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Due Diligence
Interviewed Salesforce stakeholders and Forrester analysts to gather data relative to B2B Commerce.
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Interviews
Interviewed four representatives at organizations using B2B Commerce 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 Salesforce 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 B2B Commerce.
Salesforce 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.
Salesforce provided the customer names for the interviews but did not participate in the interviews.
Consulting Team:
Veronica Iles
Kara Luk
Drivers leading to the B2B Commerce investment
Interviews
| Role | Industry | Region | Revenue | Employees |
|---|---|---|---|---|
| CIO | Manufacturing | US HQ, US operations | $250 million | 350 |
| Commercial director | Manufacturing | Australia HQ, global operations | $130 million | 500 |
| Program lead | Pharmaceuticals | Europe HQ, global operations | $5 billion | 11,000 |
| Technical e-commerce director | Manufacturing | US HQ, global operations | $17 billion | 54,200 |
Key Challenges
Before implementing Salesforce B2B Commerce, the least mature of the interviewees’ organizations had no digital commerce solution in place for their B2B customers. The more mature organizations provided their customers with access to informational portals that had no order-taking capabilities. The interviewees’ sales reps relied on traditional sales methods including site visits and forming long-lasting, high-touch relationships with customers. Orders were typically communicated during site visits or over the phone with a member of the sales operations team.
The interviewees noted how their organizations struggled with common challenges, including:
- Inefficient, high-touch selling that wasted customers’ and sales representatives’ time. The sales culture of manufacturing companies has been built around relationship building and consultative selling, long sales cycles, and then many years of reorders. One pain point highlighted by interviewees was the inefficiency of the traditional selling motion, especially when the majority of B2B sales were comprised of reorders. Interviewees noted that their reps are knowledgeable and could better use their time on value selling, cross-selling, and upselling. The CIO of a manufacturing company said: “Our reps are very high touch and there is a lot of time spent visiting customers. But at the same time, much of our business is really reordering. Our customers get the same thing unless there’s new technology. It was a pain point that they were still having to have this high-touch interaction for something that’s going to end up being a reorder. Our sales reps are very knowledgeable, so they could be using their time for the unexpected.”
- Trouble adapting to a digital landscape due to traditional sales. Even in the B2B world, buyers want experiences that align more closely with their experiences in their personal lives, including the ability to self-serve and purchase items online. Interviewees found that their organizations were failing to keep up with customer expectations of a more B2C-like selling experience. The program lead at a pharmaceutical company said: “What is happening today in the pharmacy business is that pharmacists don’t want to spend time with the sales rep. [Sales reps] have to book their time two months in advance. And it’s completely inefficient to fill gaps because they have a rigid calendar.”
- Struggled to serve an increasingly long tail of small customers. Interviewees shared that since sales reps were tied up servicing the largest customers, there was little time to dedicate to the smaller and long-tail customers. These accounts were being neglected and the customer experience was suffering for those organizations. Interviewees also identified that there was untapped potential for growth if they were able to connect with their long-tail customers more effectively.
- Wrestled with creating insights amidst a large amount of disconnected data. Interviewees noted that growth through acquisition resulted in siloed datasets and a vast amount of data. The program lead at a pharmaceutical company said: “Of course it was not easy because all the countries were local organizations before, and global commercial had very little voice. All the tools and processes were locally driven.”
Investment Objectives
Decision-makers at the interviewees’ organizations evaluated options and ultimately selected Salesforce as their commerce solution. They cited the following goals for their organizations’ investments:
- Better serve long-tail customers. Interviewees highlighted that B2B Commerce and the automations it enables would give reps more time to connect with long-tail customers. Additionally, personalization and automated marketing campaigns targeted at long-tail customers would increase touchpoints and engagement. The commercial director of a manufacturing company said: “We’ve got a very long tail of small customers. And that’s really the primary function of the e-commerce platform is to service the long tail of small customers on a self-serve basis.”
- Meet buyer expectations by innovating with speed and scale. Interviewees shared that it was a competitive advantage to be the easiest company to do business with and that Salesforce technology helped them better deliver on customer expectations for personalized B2C-like experiences. The commercial director of a manufacturing company shared: “One [reason for selecting Salesforce] is the competition. We were seeing portals emerging from our competitors and Salesforce themselves were promoting this concept. And the changes in the market were pushing us to do it.”
- Enable omnichannel and self-service. Interviewees noted that Salesforce B2B Commerce was the next step for their organizations in their omnichannel journey to unify physical and online environments. The program lead at a pharmaceutical company said, “Our vision is that the way of doing business needs to change and [B2B Commerce] needs to enable omnichannel and self-service.”
Why Salesforce?
The interviewees’ cited the following reasons that decision-makers at their organizations choose B2B Commerce:
- B2B Commerce was an additive investment to the Salesforce ecosystem. The interviewees’ organizations were already anchored on Salesforce’s other CRM offerings and strategies. The additional investment in B2B Commerce complemented existing investments and enriched their 360-degree view of the customer with more customer data. The technical e-commerce manager at a manufacturing company said, “One of the core reasons we chose Salesforce is because we have other Salesforce products, and so it gives us the flexibility of having a 360-view of all of the data in one platform.”
- The workforce had existing experience using Salesforce. Interviewees noted that an inherent benefit in adding to their Salesforce ecosystem was the existing knowledge base that employees and the community already had with the solution. Purchasing a new solution would have required additional user upskilling and more cost for training.
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 global, billion-dollar manufacturer provides sales, customer support, and service/warranty support for its consumer and B2B products in high volume. The organization has a strong brand, global operations, and a B2B customer base of about 6,500 accounts that drive 20% of companywide revenue. The average value of a B2B account is $32,000 each year. There are 40 sales reps and 40 back-office support staff (operations).
Deployment characteristics. The composite organization has grown through acquisition and has large amounts of data. Before the B2B Commerce investment, the B2B sales reps relied on a traditional selling motion for their B2B accounts, performing site visits and developing in person relationships with their account holders. The operations staff support the sales org by entering customer orders, processing returns and warranties, and performing customer service.
Quantified benefit data as applied to the composite
Total Benefits
| Ref. | Benefit | Year 1 | Year 2 | Year 3 | Total | Present Value |
|---|---|---|---|---|---|---|
| Atr | Increased profitability of digital sales | $1,291,680 | $3,335,904 | $6,598,800 | $11,226,384 | $8,888,976 |
| Btr | B2B business growth | $404,352 | $1,213,056 | $2,639,520 | $4,256,928 | $3,353,229 |
| Ctr | Process automation savings | $218,880 | $273,600 | $328,320 | $820,800 | $671,769 |
| Total benefits (risk-adjusted) | $1,914,912 | $4,822,560 | $9,566,640 | $16,304,112 | $12,913,974 | |
Increased Profitability Of Digital Sales
Evidence and data. The most financially significant benefit experienced by the interviewees’ organizations was the increased profitability of sales made through the B2B Commerce platform versus orders placed through traditional sales motions. Interviewees shared several ways that Salesforce B2B Commerce helped to improve their margins, including:
- Increased margins as more customers adopted self-service. Compared to the manual order taking and physical site visits that were the norm before their organizations’ B2B Commerce investment, interviewees noted orders placed through self-service were lower touch and higher margin. They said that their organizations reduced costs related to sales rep travel, streamlined sales teams, reduced commission payments on reorders, and directly acquired new customers. Over time, as more of their customers placed orders through self-service, the interviewees’ organizations recognized more incremental margin. With lower-touch sales gaining traction with customers and becoming part of organizational culture, interviewees’ organizations increasingly improved margins for the B2B business unit.
- Lowered cost of customer acquisition. The CIO at a manufacturing organization noted that the number of new customers increased after reducing the barrier to entry for new customers by making ordering available online. The new customers that were organically acquired had a very low cost of acquisition. Additionally, because these customers were not directly tied to a sales representative, the interviewee’s manufacturing company did not owe commission to a sales representative for customers directly acquired through the B2B Commerce portal. The CIO shared: “Most of our orders have ended up being a guest buyer that then becomes a customer. And so, we’re not paying a sales representative commission, which can be 16% to 24% of the gross profit. It’s significant.” Reducing commission expense on even a portion of B2B sales had a positive impact on business unit margin.
- Experienced growth without hiring additional sales reps. The interviewees noted that a significant portion of their sales reps had been employed for many years and were aging out of the workforce. With the investment in B2B Commerce and the productivity lift it provided to sales reps, the interviewees’ organizations avoided backfilling the retiring reps. The CIO of a manufacturing company shared: “Two to five [avoided headcount] is absolutely reality because we have a lot of reps that have been here 20 years and as those people are retiring, we’re not always replacing one person with one person. We might be replacing three people with one person, and I don’t think we’d be in that position if it weren’t for adding all these new Commerce channels.” Other interviewees noted that the lift on sales reps due to customers using self-service meant that they were able to reduce redundant roles. The program lead at a pharmaceutical company said, “We streamlined our organization in terms of the number of field reps simply because of the ability to drive self-service.”
- More strategic use of reps’ time, resulting in better outcomes. Interviewees noted that much of their B2B business was composed of low-complexity reorders. However, before B2B Commerce, reps were still dedicating significant time to these reorders. With the ability for customers to place their own reorders quickly and easily through online portals, reps began to use their time more strategically. For example, interviewees shared that reps had more time to consult on unusual orders, create more value from existing customers by highlighting new products that might interest a customer, and spending time on more forward-looking planning that furthered the customer relationship. The program lead at a pharmaceutical company shared: “We enabled self-service so all the transactional activities should be placed with full autonomy by the customer. The rep will act at certain points to negotiate annual agreements with the right promotions, with the right assortment strategy, with the right seasonal activation. In following visits, the rep will propose services based on data points captured through the customer interactions on the B2B portal.”
- Increased customer retention with more transparency and a more modern customer experience. Interviewees noted that by offering a more modern buying experience that reflected customers’ personal buying experiences, they were better able to retain customers that might otherwise have left for a competitor’s better buying experience. Modern experiences that interviewees highlighted were the ability for the customer to place orders outside of business hours, access documents independently, and browse digital product catalogs. By retaining more happy customers, the interviewees’ organizations avoided costs related to new customer acquisition and the higher retention rates led to longer relationships and, therefore, higher customer lifetime values. The commercial director of a manufacturing company said: “[B2B Commerce] gives us greater stickiness with our customers because we’ve got transparency of inventory, which is the number-one reason for a phone call to our customer service: price and availability. And now that’s all online through the portal. It certainly helps with the retention of customers and the ease of use of the portal drives sales.”
- Expanded into new markets without heavy investment. Interviewees noted that without a strong online presence for their B2B customers, they were limited in selling only in geographies where they had field sales reps or brick-and-mortar locations. With the investment in B2B Commerce, the interviewees’ organizations were able to expand their sales regions without deploying additional field sales resources or make further infrastructure investments. This enabled them to grow new business with little investment and a high margin. The CIO at a manufacturing company said: “[B2B Commerce gives us] the ability to take orders at any time and the ability to service the whole country even though we only are [physically] in 20 states. Just in the month of September, we sold to 41 states on our Commerce site. That’s such a cool statistic. We’re growing our reach in a way that costs us less money to fulfill.”
- Better served long-tail customers at scale. Before B2B Commerce, a common challenge was to effectively reach and serve long-tail customers. With sales reps focusing their time and energy on large accounts, they were underserving smaller accounts. With the investment in B2B Commerce, interviewees shared that they drove revenue from long-tail customers without requiring reps to interact directly with the customer by automating and personalizing communications, so customers had the perception of greater engagement and attention from the manufacturer. Increasing sales to these long-tail customers without a larger investment in the sales rep workforce drove higher margin sales while improving the customer experience.
Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite organization:
- The composite processes between $28.7 million and $122.2 million of revenue through the B2B Commerce platform.
- The average margin for B2B sales in the prior environment was 30%.
- With B2B Commerce, the composite organization measures increasing improvements to the sales margin of 5 percentage points in Year 1, 5.5 percentage points in Year 2, and 6 percentage points in Year 3.
Risks. Forrester recognizes that these results may not be representative of all experiences. The impact of this benefit will vary depending on the following:
- The volume of revenue processed through the B2B Commerce platform and margins in the prior environment.
- The effectiveness of change management for reps adopting the new technology and processes to support using Salesforce.
Results. To account for these risks, Forrester adjusted this benefit downward by 10%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $8.9 million.
Increased Profitability Of Digital Sales
| Ref. | Metric | Source | Year 1 | Year 2 | Year 3 | |
|---|---|---|---|---|---|---|
| A1 | Revenue through B2B Commerce | B3*B6 | $28,704,000 | $67,392,000 | $122,200,000 | |
| A2 | Margin for traditional sales | Interviews | 30% | 30% | 30% | |
| A3 | Additional margin percentage points attributed to Salesforce B2B Commerce | Interviews | 5.0 | 5.5 | 6.0 | |
| A4 | Margin for digital sales | A2+A3/100 | 35% | 35.5% | 36% | |
| At | Increased profitability of digital sales | (A1*A4)-(A1*A2) | $1,435,200 | $3,706,560 | $7,332,000 | |
| Risk adjustment | ↓10% | |||||
| Atr | Increased profitability of digital sales (risk-adjusted) | $1,291,680 | $3,335,904 | $6,598,800 | ||
| Three-year total: $11,226,384 | Three-year present value: $8,888,976 | |||||
B2B Business Growth
Evidence and data. In addition to having higher margins for sales through B2B Commerce, interviewees noted that moving the B2B business to a digital portal also drove increased order values from existing customers. They shared several ways that Salesforce B2B Commerce changed buying behaviors and improved annual spend metrics, including the following:
- Increased customer engagement by connecting with them through multiple channels. Interviewees noted that B2B Commerce enabled their organizations to connect with their customers through new channels like digital storefront, resulting in more touchpoints and greater engagement. Higher engagement led to more purchasing behaviors and higher annual spend. The program lead at a pharmaceutical company shared: “We’ve seen true commercial effectiveness and commercial excellence, which has improved the [revenue] turnover by roughly 2%. We’ve also improved the number of touchpoints by 10%, which are interactions with the customer, whether it’s through offline or online channels. And that number will likely increase over time with more adoption of the digital portals.”
- Self-service enabled customers to place orders when convenient to them and browse broader catalog options. Interviewees shared that customer experience improved as customers were able to place orders outside of business hours with the B2B Commerce portals. The CIO at a manufacturing company shared that these orders were incremental revenue gains. Furthermore, with time to browse offerings that fell outside their typical reorder SKUs and freedom to purchase without speaking with a sales representative, they were more likely to make novelty purchases. The CIO shared: “With some of our product categories going online, customers will order more. Like paint, if they can reorder for themselves, they are more inclined to change that more often, add some colors. That’s a real thing.”
- Generated additional revenue by changing ordering behaviors with AI-powered promotions and next-best-action options. Interviewees shared that with a digital portal, they were able to change customer ordering behavior to expand the order product mix beyond the typical reorder basket. For example, the program lead stated that their pharmaceutical company surfaced promotions and recommendations with product banners and messaging around less active SKUs that customers typically did not include in a simple reorder. These order sizes tended to be larger than their reorder counterparts.
- Created new revenue channels through new digital products and services. With B2B Commerce and the Salesforce platform, interviewees began selling digital offerings and services to customers, generating new revenue channels. The program lead at a pharmaceutical company said: “Through services and value-added content or partnership, we will have better customer satisfaction. Therefore, it will help us to better negotiate commercial activation and generate extra revenue through services like paid training and content on the B2B portal.”
- Reps used data from Salesforce to be better business partners. Interviews noted that reps used new-found time to focus on value-added selling and used AI-powered data and insights from Salesforce to better position the right products at the right time based on their data-informed understanding of the customer’s needs. The program lead at a pharmaceutical company shared: “The role of the reps will move from visiting customers and doing things that have limited added value into an orchestrator to make customers aware of the events, the new trainings, the new content on the portal, and the new promotions that are available. They will become activators, orchestrators, and business partners.”
- Onboarded more customers and better served long-tail customers. The technical e-commerce manager at a manufacturing company had a strong use case where they captured new customers directly through their digital channel, while other interviewees focused on better serving their existing long-tail customers to grow sales. They shared, “After we stabilized and matured the system, we started onboarding more customers and the sales has gone up.” These factors contributed to increased order values.
Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite organization:
- The composite organization rolls out a B2B Commerce-driven experience to 6,500 accounts.
- Sales reps at the composite organization invite their customers to transition to making purchases through the B2B Commerce portal. In the Year 1, 12% of accounts make the majority of their orders through the platform. Adoption increases to 27% in Year 2 and 47% in Year 3.
- In the prior environment, account spend averaged $32,000 per year.
- With the investment in B2B Commerce, the composite organization measures an increase in average account spend each year, increasing by 15% in Year 1, 20% in Year 2, and 25% in Year 3.
- The operating profit margin for the organization is 12%. Increased margin is measured in benefit A.
Risks. Forrester recognizes that these results may not be representative of all experiences. The impact of this benefit will vary depending on the following:
- The average account spend of the customers.
- The number and rate of customers adopting the digital portal.
- There may be a portion of customers that transact through electronic data interchange (EDI) transactions that will not be directly impacted by the B2B Commerce investment.
- The operating margin of the business.
- The effectiveness of change management for reps adopting the new technology and processes to support using Salesforce.
Results. To account for these risks, Forrester adjusted this benefit downward by 10%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $3.4 million.
B2B Business Growth
| Ref. | Metric | Source | Year 1 | Year 2 | Year 3 | |
|---|---|---|---|---|---|---|
| B1 | Number of B2B accounts in prior environment | Composite | 6,500 | 6,500 | 6,500 | |
| B2 | Percentage of B2B accounts that have adopted digital purchasing | Interviews | 12% | 27% | 47% | |
| B3 | Number of accounts purchasing through B2B Commerce | B1*B2 | 780 | 1,755 | 3,055 | |
| B4 | Average account spend through traditional B2B buying channels | Composite | $32,000 | $32,000 | $32,000 | |
| B5 | Increase in spend attributed to B2B Commerce digital channel | Interviews | 15% | 20% | 25% | |
| B6 | Average account spend through Salesforce B2B Commerce | B4*(1+B5) | $36,800 | $38,400 | $40,000 | |
| B7 | Incremental revenue through B2B Commerce | B3*(B6-B4) | $3,744,000 | $11,232,000 | $24,440,000 | |
| B8 | Operating profit margin | TEI standard | 12% | 12% | 12% | |
| Bt | B2B business growth | B7*B8 | $449,280 | $1,347,840 | $2,932,800 | |
| Risk adjustment | ↓10% | |||||
| Btr | B2B business growth (risk-adjusted) | $404,352 | $1,213,056 | $2,639,520 | ||
| Three-year total: $4,256,928 | Three-year present value: $3,353,229 | |||||
Process Automation Savings
Evidence and data. B2B Commerce enabled the interviewees’ organizations to automate processes. Interviewees shared several ways that Salesforce B2B Commerce drove process automation savings for their organizations, including the following:
- Removed operations staff from the order taking process. Interviewees shared that in their organizations’ prior environments, orders could be placed over the phone with operations, in person with reps who then communicated it to operations, or through other forms of communication that ultimately resulted in a multistep ordering process. After the investment, self-service options and a streamlined order-taking process made it easier for reps to place orders on behalf of their customers directly into Salesforce or for customers to place their own orders independently. Eliminating multistep processes and order entry also reduced the risk of human error and rework. By streamlining the selling experience, the interviewees’ organizations realized productivity savings. The commercial director at a manufacturing company said, “Ordering on behalf of the customer through Salesforce has been a big productivity benefit because that used to be manually done and sent back to customer service and it was a really significant [manual effort].” Plus, empowering reps with the ability to order on behalf of the customers meant they were better positioned to increase basket size with cross-sell and up-sell options that were tailored based on the buyer’s needs.
- Streamlined fulfillment. Interviewees said the B2B Commerce investment also simplified the fulfillment process and reduced the margin of error by removing manual bottlenecks and accelerating the process from order to fulfillment. The CIO of a manufacturing company shared: “On the fulfillment side, accepting customer payment and moving the order through the process of picking and packing and shipping is significantly faster on the Commerce store — I will say it’s four times faster. And our team prefers when an order comes in this way by a landslide.”
- Reduced load on customer service. Empowering customers with self-service and a portal with their relevant order information in a centralized view alleviated the need for customers to call and ask for information related to low-complexity issues like inventory or pricing. As a result, operations (or a defined customer service department) received fewer of these requests, freeing them up to work on other priorities. The commercial director of manufacturing company said: “We get a lot of emailed PDF orders, and [B2B Commerce] has taken a lot of the volume from customer service. The transparency of inventory and delivery dates through the portal has removed the need [for customers] to make a phone call in many cases.” The CIO of a manufacturing company additionally shared, “We repurposed roles and position descriptions for customer service because we [used to be] entirely reactive and we’re now transitioning culturally to a proactive customer service role.”
- Improved warranty and returns processing. Two other processes that interviewees said were improved or automated with B2B Commerce were customer returns and warranty processing. Automating much of these processes reduced human error, provided productivity lifts for those performing the tasks, and improved the customer’s experience. The CIO of a manufacturing company said, “We’ve definitely noticed an increase in productivity because our returns were extremely difficult to process typically, and now it has been a lot more efficient.”
- Automated tax calculations with a third-party tax engine partner tool. The CIO of a manufacturing company highlighted the specific benefits provided by a third-party tax engine product in helping automate tax calculations. They shared: “Figuring out taxes is very painful in our ERP [enterprise resource planning] and on our traditional orders, but because we’re able to use [a third-party tax engine], which has a plug-in with Salesforce, that’s been a huge savings.”
Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite organization:
- The composite organization has 40 operations staff that are a mix of roles that support sales reps and conduct administrative tasks as well as perform customer service.
- Each year as the composite organization continues to add process automations, the operations team saves time each day, averaging 20 minutes a day in Year 1, 25 minutes in Year 2, and 30 minutes in Year 3.
- The fully burdened hourly rate for operations staff is $48.
Risks. Forrester recognizes that these results may not be representative of all experiences. The impact of this benefit will vary depending on the following:
- The number and type of processes automated.
- The number of employees performing the tasks.
- The burdened cost of resources. The mix of roles, location of the employees, and employee seniority will all factor into the burdened cost of the resources performing the tasks.
- The effectiveness of change management for reps adopting the new technology and processes to support using Salesforce.
Results. To account for these risks, Forrester adjusted this benefit downward by 5%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $672,000.
Process Automation Savings
| Ref. | Metric | Source | Year 1 | Year 2 | Year 3 |
|---|---|---|---|---|---|
| C1 | Number of employees on operations staff | Composite | 40 | 40 | 40 |
| C2 | Time savings per day per representative for automations attributed to B2B Commerce | Interviews | 20 | 25 | 30 |
| C3 | Hours saved from automations | C1*C2/60 minutes*360 days | 4,800 | 6,000 | 7,200 |
| C4 | Fully burdened hourly rate for operations staff | TEI standard | $48 | $48 | $48 |
| Ct | Process automation savings | C3*C4 | $230,400 | $288,000 | $345,600 |
| Risk adjustment | ↓5% | ||||
| Ctr | Process automation savings (risk-adjusted) | $218,880 | $273,600 | $328,320 | |
| Three-year total: $820,800 | Three-year present value: $671,769 | ||||
Unquantified Benefits
Interviewees mentioned the following additional benefits that their organizations experienced but were not quantified for this study:
- Increased speed of development and innovation. Interviewees noted that the Salesforce platform has a low-code-powered development model that is consistent across all their Salesforce investments, making it easier for developers and business users to work with. Interviewees noted that the low-code model and out-of-the-box tools helped their organizations move quickly and pursue innovation at scale. The technical e-commerce manager at a manufacturing company shared: “In terms of building on Salesforce Commerce Cloud, our speed of change is much faster compared to the other platform that we had. Especially because it’s all based on API Connect and components and you can use those components across the different Salesforce products, whether it’s Sales Cloud, Commerce Cloud, or Marketing Cloud. It provides us with flexibility. And the technology is more modern, so it’s easy to implement and understand the components, so that’s a plus actually compared to our old platform.”
- Increased ability to share resources between parts of the Salesforce solution. Another unquantified benefit of having B2B Commerce alongside other Salesforce investments is that interviewees’ organizations could readily share skilled resources across areas of the platform and avoided hiring new employees with unique skill sets. B2B Commerce is native on Salesforce and leverages the same configuration and development frameworks as other Salesforce products. Interviewees noted that this enabled them to use existing trained Salesforce resources to work across B2B Commerce and any other Salesforce products departments faster and more efficiently than if they used bespoke solutions for sales, service, and marketing. The technical e-commerce manager said: “Having resources that can learn other Salesforce products and work on other areas like Commerce or CRM, that shared resource allocation is a savings for the company. They can switch between components, and we can train them easily because the base and foundation are similar for all these Salesforce products. There are a lot of cost savings for the company in terms of resourcing.”
-
Reduced technical debt and integration costs.
The interviewees whose organizations had a legacy portal
noted they were able to strategically decommission or
retire some or all of their legacy infrastructure.
Salesforce has a single, shared canonical data model
across products. This shared data model removed the need
for creating or maintaining any integrations to store or
synchronize customer or commerce data across multiple
systems, enabling reduced implementation time and
integration costs. The program lead at a pharmaceutical
company shared: “We will decommission all of [the legacy
sites] because all of the content and the training will
be attached to our B2B Commerce global solution. All
countries will use the same types of content to address
[customers].” Additionally, by keeping data within
Salesforce, the interviewees’ organizations simplified
their integrations and drove integration-related
savings. The technical e-commerce manager shared: “All
the customers and reps are using one system and we’ve
got a 360-degree view of the entire platform. We have
seamless integration and that helps us save a lot of
money in terms of integrating with other components or
other applications with middleware.”
Flexibility
The value of flexibility is unique to each customer. There are multiple scenarios in which a customer might implement B2B Commerce and later realize additional uses and business opportunities, including:
- Better integration of future acquisitions. Interviewees said that their manufacturing companies frequently grow through acquisition and their businesses needed to be able to easily integrate the acquired company’s products or solutions into their Commerce experience. With Salesforce, the interviewees planned to use out-of-the-box functionality and prebuilt connections and components to extend into their newly acquired companies more quickly, readily bringing shared data into their Salesforce environments and pushing out the same unified experience to their new customers.
- Using the momentum created by a successful implementation to spur other transformative projects. The successful implementation of B2B Commerce and the digital transformation that accompanied it served as a roadmap for future transformational projects. The program lead at a pharmaceutical company shared, “The Salesforce technology and the solution enables you to deliver a good quality outcomes and has a lot of added value during a [digital] transformation.“
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 | Salesforce and add-on subscriptions | $0 | $353,892 | $760,116 | $1,335,600 | $2,449,608 | $1,953,371 |
| Etr | Implementation costs | $458,330 | $0 | $0 | $0 | $458,330 | $458,330 |
| Ftr | Channel shift costs, training, and ongoing management efforts | $0 | $280,610 | $320,749 | $514,228 | $1,115,587 | $906,529 |
| Total costs (risk-adjusted) | $458,330 | $634,502 | $1,080,865 | $1,849,828 | $4,023,525 | $3,318,230 | |
Salesforce And Add-On Subscriptions
Evidence and data.
The interviewees noted their organizations incurred
external costs in the following categories as part of the
B2B Commerce investment:
-
Salesforce licensing cost.
Salesforce currently offers three B2B Commerce packages:
Starter, Growth, and Connected Commerce (which is a
bundle that includes other offerings such as
direct-to-consumer (D2C) commerce and order management
capabilities). Interviewees noted these have list prices
of 1% to 2% of GMV. Actual licensing costs varied
between interviewees’ organizations as licensing and
subscription costs were tailored to each organization
and were determined based on multiple factors, including
the volume of transactions through the B2B Commerce
storefront, the number of external and internal user
licenses, and the number of additional components
utilized.
- Add-on product licenses. Interviewees noted that their organizations purchased additional software products from the Salesforce AppExchange, which is an online marketplace where organizations can find, download, and install applications, components, and services that extend the functionality of their Salesforce environments. Interviewees integrated third-party technologies, such as payment gateways, analytics tools, and marketing automation, to enhance their customer experience.
Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite organization:
- Licensing and subscription fees for B2B Commerce are $287,040 in Year 1, $673,920 in Year 2, and $1.2 million in Year 3. These fees are based on the growing volume of transactions and GMV through the platform.
- The composite licenses an add-on solution to support its sales tax calculations for $50,000 per year.
Risks. Forrester recognizes that these results may not be representative of all experiences. The impact of this cost will vary depending on the following:
- The volume of transactions, GMV, number of seats, existing Salesforce footprint, discounts negotiated, level of ongoing support, and terms of contract.
- The number and type of add-on products integrated from the AppExchange marketplace and the needs of an organization.
Results. To account for these risks, Forrester adjusted this cost upward by 5%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $2.0 million.
Salesforce And Add-On Subscriptions
| Ref. | Metric | Source | Initial | Year 1 | Year 2 | Year 3 | |
|---|---|---|---|---|---|---|---|
| D1 | B2B Commerce subscription | $287,040 | $673,920 | $1,222,000 | |||
| D2 | Add-on product licenses | $50,000 | $50,000 | $50,000 | |||
| Dt | Salesforce and add-on subscriptions | D1+D2 | $0 | $337,040 | $723,920 | $1,272,000 | |
| Risk adjustment | ↑5% | ||||||
| Dtr | Salesforce and add-on subscriptions (risk-adjusted) | $0 | $353,892 | $760,116 | $1,335,600 | ||
| Three-year total: $2,449,608 | Three-year present value: $1,953,371 | ||||||
Implementation Costs
Evidence and data. The interviewees estimated that their organizations’ total implementation costs for Salesforce B2B Commerce ranged between $60,000 and $250,000. The interviewees’ organizations incurred external and internal costs in the following categories as part of their B2B Commerce implementations:
-
Internal labor costs for business and technical
resources. Internal resources worked closely with system
integrators to implement their organizations’ B2B
Commerce environments. The implementation timelines
ranged between two and five months. The technical
e-commerce manager of a manufacturing company shared:
“We went with the MVP [minimum viable product] approach,
and our goal was to use out-of-the-box functionality as
much as possible. We built the foundation and went live,
got customer feedback, and then took an iterative
approach to implement the rest of the customized
functionality.”
One implementation risk highlighted by interviewees was that the architecture and data model of B2B Commerce was different than they had expected. For example, the catalog design differed between Salesforce B2B Commerce and the interviewees’ legacy ERP systems. To mitigate this risk, interviewees noted they needed to accommodate a new catalog architecture and focus on master data management. As part of the B2B Commerce implementation, interviewees noted that organizations should be prepared to cleanse, enhance, and optimize any existing data and business rules to ensure they can meet the requirements of their new Salesforce B2B self-service purchasing channel. - System integrator engagement costs. Three of the interviewees’ organizations used an SI partner to support their implementation of B2B Commerce.
Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite organization:
- The composite organization takes a “crawl, walk, run” approach to their B2B Commerce investment, focusing the initial implementation on one use case, demonstrating quick wins and value creation before extending to other use cases. The initial implementation takes place over four months.
- Four technical resources are tasked with the implementation and dedicate 100% of their time on average to implementation tasks.
- The fully burdened monthly rate for a technical resource is $12,500.
- There are eight business resources who step in at various points of the implementation for product design, QA, user acceptance testing (UAT), and process design. Business resources dedicate 25% of their time on average to implementation tasks.
- The fully burdened monthly rate of a business resource is $8,333.
- The composite organization engages a system integrator to assist with the implementation. The SI has previous experience with B2B Commerce implementations and utilizes accelerators to roll out quickly with minimal customization. The engagement cost is $150,000.
Risks. Forrester recognizes that these results may not be representative of all experiences. The impact of this cost will vary depending on the following:
- Scope of implementation. Organizations aiming to deploy B2B Commerce with an incremental approach will have a shorter initial implementation and begin realizing value sooner compared to an organization that aims to have an enterprisewide implementation. Organizations deploying B2B Commerce across multiple geographies will have a longer implementation as global stakeholder alignment takes longer and there are different buyer journeys globally.
- The maturity of the digital team, existing skill sets with software frameworks, and familiarity with the Salesforce platform will determine how steep of a learning curve the organization will face and impact the implementation timeline.
- Size and capacity of the engineering team. There will be a trade-off for organizations who rely more heavily on internal engineering resources versus outsourcing development work to a system integrator.
- Burdened cost of resources. The mix of roles, location of the employees, and employee seniority will all factor into the burdened cost of the resources participating in implementation.
- Existing relationship with system integrator partners. Organizations may have existing relationships with an SI partner or need to find a new system integrator. There may be additional periphery costs related to the sourcing and managing of the SI partner.
- Number of integrations. Consider sources of product data, pricing, inventory, and what APIs or integrations will be required to support the B2B Commerce investment. Each integration will drive cost and complexity. Furthermore, organizations with a history of acquisitions may have more catalogs, more business units, and more processes to consider when defining the purchasing journey.
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 $458,000.
Implementation Costs
| Ref. | Metric | Source | Initial | Year 1 | Year 2 | Year 3 |
|---|---|---|---|---|---|---|
| E1 | Months spent on implementation efforts | Composite | 4 | |||
| E2 | Number of technical resources working full time on implementation | Composite | 4 | |||
| E3 | Number of business resources working part time on implementation | Composite | 8 | |||
| E4 | Average percent of time dedicated by business resources to implementation tasks | Composite | 25% | |||
| E5 | Fully burdened monthly salary for technical resources | TEI standard | $12,500 | |||
| E6 | Fully burdened monthly salary for business resources | TEI standard | $8,333 | |||
| E7 | Subtotal: Internal labor implementation costs | E1*E2*E5+E1*E3*E4*E6 | $266,664 | $0 | $0 | $0 |
| E8 | System integrator professional services costs | Composite | $150,000 | 0 | 0 | 0 |
| Et | Implementation costs | E7+E8 | $416,664 | $0 | $0 | $0 |
| Risk adjustment | ↑10% | |||||
| Etr | Implementation costs (risk-adjusted) | $458,330 | $0 | $0 | $0 | |
| Three-year total: $458,330 | Three-year present value: $458,330 | |||||
Channel Shift Costs, Training, And Ongoing Management Efforts
Evidence and data. As part of the B2B Commerce investment, the interviewees’ organizations dedicated internal labor to training, change management efforts, and the ongoing management of the solution.
- Ongoing platform support and expansion labor. In line with the “crawl, walk, run” approach to implementation, interviewees estimated anywhere between three and 10 FTEs were dedicated to ongoing improvements and optimizations to their Salesforce B2B Commerce environments. The ongoing efforts were performed by roles like Salesforce administrators, developers, and business analysts. The technical e-commerce manager of a manufacturing company said, “Our approach and mindset for go to market was to go with minimal customization and use out-of-the-box functionality as much as possible for first MVP and after that we’ve been having iterative releases every month.”
- Training efforts. Interviewees noted that internal resources participated in training to learn how to best use B2B Commerce. Training materials were created by the interviewees’ marketing teams, and they also utilized formal learning sessions and Trailhead training for both technical users and business users. The level of training depends on roles — for example, store manager training is different from agent training. The interviewees’ organizations were able to leverage existing Salesforce skill sets, which reduced the amount of training required compared to training requirements should they have gone with a net-new digital commerce technology investment.
-
Channel shift costs for customers. In order to shift from a traditionally face-to-face
selling motion to a more self-service offering, sales
reps spent time showing their customers new self-service
options and helping with sustaining adoption of the new
B2B Commerce offering. The interviewees noted that their
customers that adopted the self-service portal early
required little to no handholding, whereas those that
were slower to adopt often received several sessions of
representative-supported buying. The degree of change
management and related channel shift costs varied
depending on the interviewee and their organization,
ranging from no additional effort to significant effort.
Examples from two interviewees include:
- The CIO at a manufacturing company said: “The customer [adoption of B2B Commerce] has been remarkably easy. No one ever asks us any questions; it’s been really intuitive.”
- The program lead at a pharmaceutical company shared: “Change management is key, and we have seen the two approaches. One, a remote approach to drive the adoption does not work. A hybrid approach in the field and remote is much more efficient. It depends on your audience. So, on our side, pharmacists and doctors are not the most digital-savvy population, so we needed to ensure that there was a physical support option until they are at ease using it. We had a physical strategy for a period of six months to one year to ensure full and proper adoption.”
-
Channel shift efforts for sales reps and customer
service agents.
Interviewees also noted that there were change
management efforts dedicated to helping sales reps adopt
the new sales processes and feel comfortable with the
more hands-off sales approach. The interviewees noted
that the internal enablement on the new digital
go-to-market strategy was paramount to success. To aid
with adoption, representatives and agents needed to be
assured that the transformation made them more efficient
to scale interactions, drive more revenue, and focus on
high-value projects and accounts. Examples from two
interviewees include:
- The CIO at a manufacturing company shared, “There’s been change management internally to get our sales representatives comfortable with having multiple channels where they are not always placing the order.” The approach taken for the internal change management was to focus on one business unit or store at a time, develop champions and best practices, and then increase adoption across other areas of the business.
- Some change management efforts included hiring third parties to help with rallying behind the cultural change that B2B Commerce initiated. The commercial director of a manufacturing company said: “We’ve made instructional videos and promotional material for the [B2B Commerce] portal and that’s an ongoing process. But in addition to that, we have long-term loyal staff and some of them are a little change resistant, which is a challenge. And we’ve brought in partners to assist with the cultural transition in customer service in particular.”
Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite organization:
- The composite organization has three resources partially dedicated to the ongoing platform support and expansion of their B2B Commerce investment. This group includes a Salesforce administrator, a developer, and an analyst that dedicate an average of 70% of their time to B2B Commerce-related tasks.
- The fully burdened annual rate of the resources dedicated to ongoing platform support and expansion is $100,000.
- The composite organization provides dedicated training and change management sessions to 40 reps on B2B Commerce tooling, new processes, and cultural development. In Year 1, 8 hours of training are provided. In the following years, reps receive an additional 1 hour of training on new features.
- The fully burdened annual rate of representatives is $85,000 or $41 hourly.
- The composite organization takes a hybrid approach to transitioning customers to new self-serve options powered by B2B Commerce. These efforts include both communication campaigns as well as one-on-one sessions between a customer and their representative. In Year 1, the innovators and early adopters adjust readily to the new processes, requiring only 1 hour of channel shift labor costs. In Year 2, the next cohort of adopters requires 2 hours of channel shift efforts. In Year 3, the late adopters require 3 hours of channel shift efforts before they adopt.
- The fully burdened annual rate of sales representatives is $85,000 or $41 hourly.
Risks. Forrester recognizes that these results may not be representative of all experiences. The impact of this cost will vary depending on the following:
- The extent of secondary implementations and optimization of use cases. Organizations taking the “crawl, walk, run” approach to implementing Salesforce will have varying levels of effort dedicated to the ongoing expansion of their Salesforce use cases. The level of internal effort and prioritization of growth to support these efforts will need to align with the organization’s strategy.
- Structure and size of teams that will receive training like the sales and service teams. An organization may choose to upskill a variety of roles or focus training within certain roles. This will impact the number of people receiving training as well as the type (and therefore length) of the training received.
- Peripheral training costs. Organizations may incur additional internal or external costs for items like training materials, travel and entertainment for in-person sessions, or additional costs for third-party trainers. Organizations may also incur costs for backfilling roles.
- Internal culture of adopting new technologies and customers’ appetite for change. The extent of change management efforts required for internal employees and an organization’s customers will depend on culture and appetite for change. Readers should evaluate the need for a full-time change manager role or change management professional service engagement to assist with internal and external adoption.
- Burdened cost of resources. The mix of roles, location of the employees, and employee seniority will all factor into the burdened cost of the resources noted in the table below.
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 $907,000.
Channel Shift Costs, Training, And Ongoing Management Efforts
| Ref. | Metric | Source | Initial | Year 1 | Year 2 | Year 3 | |
|---|---|---|---|---|---|---|---|
| F1 | Number of resources dedicated to ongoing management efforts | Composite | 3 | 3 | 3 | ||
| F2 | Time dedicated to optimizing and supporting B2B Commerce | Composite | 70% | 70% | 70% | ||
| F3 | Fully burdened annual salary for Salesforce administrator | TEI standard | $100,000 | $100,000 | $100,000 | ||
| F4 | Subtotal: Ongoing platform support and expansion | F1*F2*F3 | $0 | $210,000 | $210,000 | $210,000 | |
| F5 | Number of reps receiving training | Composite | 40 | 40 | 40 | ||
| F6 | Number of hours of training | Composite | 8 | 1 | 1 | ||
| F7 | Fully burdened hourly salary for reps | TEI standard | $41 | $41 | $41 | ||
| F8 | Subtotal: Training costs | F5*F6*F7 | $0 | $13,120 | $1,640 | $1,640 | |
| F9 | Number of incremental buyers transitioned to purchasing on B2B Commerce | B3CY-B3PY | 780 | 975 | 2,080 | ||
| F10 | Number of hours assisting buyers with channel shift | Interviews | 1 | 2 | 3 | ||
| F11 | Fully burdened hourly salary for sales representative | TEI standard | $41 | $41 | $41 | ||
| F12 | Subtotal: Channel shift costs | F9*F10*F11 | $0 | $31,980 | $79,950 | $255,840 | |
| Ft | Channel shift costs, training, and ongoing management efforts | F4+F8+F12 | $0 | $255,100 | $291,590 | $467,480 | |
| Risk adjustment | ↑10% | ||||||
| Ftr | Channel shift costs, training, and ongoing management efforts (risk-adjusted) | $0 | $280,610 | $320,749 | $514,228 | ||
| Three-year total: $1,115,587 | Three-year present value: $906,529 | ||||||
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 | ($458,330) | ($634,502) | ($1,080,865) | ($1,849,828) | ($4,023,525) | ($3,318,230) |
| Total benefits | $0 | $1,914,912 | $4,822,560 | $9,566,640 | $16,304,112 | $12,913,974 |
| Net benefits | ($458,330) | $1,280,410 | $3,741,695 | $7,716,812 | $12,280,587 | $9,595,744 |
| ROI | 289% | |||||
| Payback | <6 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
-
Benefits represent the value delivered to the business by the product. The TEI methodology places equal weight on the measure of benefits and the measure of costs, allowing for a full examination of the effect of the technology on the entire organization.
-
Costs consider all expenses necessary to deliver the proposed value, or benefits, of the product. The cost category within TEI captures incremental costs over the existing environment for ongoing costs associated with the solution.
-
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.
-
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: Supplemental Material
Related Forrester Research
The Forrester Wave™: B2B Commerce Solutions, Q2 2022, Forrester Research, Inc., April 28, 2022.
Demystifying The Technical Functions Of B2B Commerce Solutions, Forrester Research, Inc., March 27, 2023.
Appendix C: 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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