RESEARCH NOTE THE VALUE OF SUBSCRIPTION AND SUPPORT FOR IBM BUSINESS ANALYTICS THE BOTTOM LINE THE CHALLENGE. January 2013.

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1 RESEARCH NOTE THE VALUE OF SUBSCRIPTION AND SUPPORT FOR IBM BUSINESS ANALYTICS THE BOTTOM LINE Software subscription and support agreements are not just sunk costs, but opportunities to obtain additional return on investment for analytics. Nucleus found that multiple IBM customers have increased the ROI of their analytics projects and reduced project cycle times, cost, and risk through their investments in IBM subscription and support (S&S). THE CHALLENGE Companies use business intelligence (BI), performance management (PM), predictive analytics, and risk analytics efforts to standardize the visualization and analysis of enterprise data. These business analytics deployments typically generate the strongest benefits of any enterprise technology investment (Nucleus Research l122 - Analytics pays back $10.66 for every dollar spent, November 2011). However, as IT budgets and staffing levels shrink, analytics end users have become increasingly difficult to manage. In response, managers have scrutinized support and subscriptions contracts as a potential opportunity to cut recurring costs. Although the costs can outweigh the benefits of a support and subscription agreement for some technologies, this is seldom true in analytics projects because of consistent performance improvements, new analytics use cases, demand for support, and opportunities to consolidate solutions over time. No one should blindly pay for annual license maintenance support: the business case for subscription and support should be based on a cost/benefit analysis and a clear understanding of both the potential business results and the full impact of cancelling subscription and support. Analytics projects often require ongoing support for evolving business requirements and expanding end-user populations that outgrow the initial resources assigned to the project. Annual S&S contracts can be an effective way to reduce support costs and futureproof analytics deployments over the long run if used correctly. Although annual license maintenance support tends to be underappreciated, companies supporting analytics deployments that deliver value over time often rely on this support. As an example, Nucleus has observed that the vast majority of IBM Cognos customers maintain support Nucleus Research Inc. 100 State Street Boston, MA Phone:

2 and subscription agreements long after the go-live date of a deployment. An IBM S&S agreement provides customers with: Case resolution services in the form of online and phone-based support. Knowledge assets, including best practices that have been vetted by IBM s analytics team, tips and techniques, and an online knowledge base. Product continuation in the form of point releases, fixes, and patches. To find why companies maintained these support agreements, Nucleus analyzed multiple deployments, including US Lumber, Blue Mountain Resorts, Martin s Point, Ryerson, Huntsman, Clark County Family Services, Concept One, the Cincinnati Zoo, and Accelrys. BENEFITS OF ANALYTICS MAINTENANCE AND SUPPORT Nucleus found that annual agreements can strengthen a company s ability to reduce support costs, manage risk, and solve business challenges throughout the application life cycle. Unlike mature technologies where upgrades typically only deliver marginal benefits, analytic upgrades deliver significant ROI as they scale throughout an organization. Greater productivity through maintenance-based upgrades By using annual maintenance agreements to upgrade analytics solutions, end users can make data-driven business decisions more efficiently. Nucleus found productivity came from reduced project times, reduced report building requests, and process improvements: We publish data for subscription-paying customers. Completing projects end to end without going to non-ibm Cognos tools for visualization or reports is taking about 20 percent off of our project cycle times. In Cognos 8, people had to have the Report Studio module in order to build their own reports. This has been replaced by a friendlier user interface in IBM Cognos 10. And people can merge assets from the trusted data sources with data from their PC [U]sers give 30 to 40 percent fewer requests to report builders. Our users flow from one ad-hoc analysis to another based on their exploration of data for whatever they re doing. Because things like dragging and dropping and chart building move almost as fast as decision making in their head, they re able to accomplish about 20 to 30 percent more work in a given period of time. Reduced software costs through maintenance-based upgrades As new software versions add visualization, report authoring, and editing capabilities, companies with an S&S agreement will be able to consolidate solutions and may gain additional opportunities to consolidate data integration, visualization tools, point solutions, and/or predictive analytics tools over time. One IBM user moving from IBM Cognos 8 to IBM Cognos 10 saw the opportunity to cancel over 100 seats of TIBCO Spotfire and observed, Currently, users experiment and explore data in Spotfire which we can t use as a delivery tool. Then they start all over again in IBM Cognos 8 to create the Page 2

3 report we ll sell. With IBM Cognos 10, the entire process, from authoring to fine tuning to publishing extremely powerful reports, will happen in IBM Cognos 10. Nucleus saw similar savings for an organization using IBM OpenPages that recognized, We were able to shut down between 60 and 100 separate application instances that were previously tracking risk functions, risk management, and information. These applications ranged from Microsoft Access to enterprise applications. We also eliminated over a thousand spreadsheets and incorporated all of that information from desktops to a shared risk environment. Accelerating time to value from improved functionality Initial analytics projects typically expand both in functionality and user base over time (Nucleus Research m17 - The stages of an Analytic Enterprise, March 2012). The increased functionality from new versions often allows IT to expand an analytics deployment to pursue opportunities associated with extending analysis capabilities to line-of-business users. For example, Concept One used IBM Cognos Express to reduce its design staff by 43 percent by enabling managers to directly analyze the profitability of design activities (Nucleus research l54 IBM Cognos Concept One Accessories, April 2011). Nucleus has also tracked the ROI of predictive analytics when IBM SPSS is combined with ESRI geographic information (Nucleus Research m153 - IBM SPSS ROI case study - City of Lancaster, November 2012). SPSS Version 20 provided users with map templates and native support for ESRI files within IBM SPSS Statistics Base, which allowed SPSS customers with S&S contracts to either add geographic support or to consolidate software licenses. Business analytics growth is often driven by pressures that were not initially considered. This uncertainty often makes it difficult to predict which functionalities or upgrades will be needed over the life of the analytics deployment. In these cases, Nucleus found that the S&S agreement served as a business agility agreement for unexpected analytics use cases. As an example, when the Cincinnati Zoo deployed IBM Cognos, it upgraded seats to IBM Cognos 10 to make ad-hoc queries easier (Nucleus Research l72 IBM Business Analytics Cincinnati Zoo, July 2011). This resulted in benefits including improved marketing effectiveness, greater profits across multiple revenue streams, and avoided headcount. Improved data security, governance, risk management, and compliance (GRC) Data security is a necessary battle between corporate IT and the forces of evil. Companies lacking an annual S&S agreement must continually develop custom defenses for analyticsspecific security threats, which is an expensive and difficult proposition. Subscription and support can also play a role in corporate governance efforts, since compliance without vendor support requires continuous interactions between IT and personnel who can translate new reporting requirements into standard reports. In Page 3

4 contrast, by standardizing data controls and ensuring that new data sources can be integrated into IBM OpenPages or IBM Algorithmics, IBM customers can maintain a compliant environment even as external business needs change. Managing the challenges of diverse data sources Business analytics now requires the analysis and integration of many different internal and external sources of data which must be provided at a pace dependent on whether decisions are being made on a tactical, operational, or strategic level (Nucleus Research m36 Measuring the half life of data, May 2012). The applications and databases integrated with analytics applications will steadily change over time. Custom data integration efforts are challenging endeavors requiring a variety of development and deployment skills, but access to specialized vendor support can make these projects more manageable when companies take advantage of vendor experience. Minimizing downtime and maximizing user access One challenge associated with faster, more distributed, and more varied data is the greater potential for service disruption, but vendor support can help accelerate the response associated with unwanted downtime. In industries such as financial services and retail where downtime has direct revenue consequences, companies must have a preventative strategy for avoiding downtime. For example, a major electronics distributor addressed a sudden supply chain disruption by using expertise contracted in its IBM Cognos Premium Support agreement to help maintain data for multiple SAP instances while preserving both product availability and customer satisfaction levels. Optimizing analytics support cost and time Companies can take advantage of online and self-service resources such as knowledge bases, documentation of best practices, and customer forums provided through S&S agreements to solve standard problems. IBM customers identified numerous benefits associated with these resources including: Prioritization of resources. Analytics deployments are often customized to corporate needs, which may prevent the vendor s help desk from answering every question. But with an S&S agreement, companies can apply a tiered approach so that only complex problems with a company-specific data context need to be handled in-house. Lower help-desk costs. By offsetting support efforts through a tiered approach to helping end users, companies can reduce help desk costs. Global and continuous support. IBM is able to provide support for its software offerings on a follow the sun basis, which can be valuable for global organizations seeking a single standard of business truth through its analytics deployment. Greater championing of best practices. The cold hard reality is that most analysts are busy taking care of tactical and operational needs. By freeing up analytics-savvy personnel, companies can expand the ROI associated with analytics by pursuing strategic endeavors such as a BI center of excellence. Page 4

5 Maximizing breadth of adoption. As end users improve usage through best practices and guidance provided through S&S agreements, deployment teams will be able to focus on expanding their deployments to new populations seeking analytical insight. When problems arise, access to online knowledge assets and phone-based support enables staff to troubleshoot far more rapidly. These users also indicated the quality and breadth of the information available on line was better than other vendors online knowledge bases. IBM customer responses included the following: I can answer a question or find out how to do something by using the knowledge base about a third of the time. The rest of the time I contact support. It s typically resolved in an hour or two. I m in charge of IBM Cognos here. When something comes up in a project, the knowledge base, the Web site, and the service request tool all enable me to solve problems and answer questions in at least half the time. I m accessing the knowledge base all the time. I use it to understand how to use Javascript embedded in reports or drill through functionality so that I can publish reports in multiple formats or embed microbar charts in grids. THE CONCLUSION In today s analytics-hungry environment, most organizations can likely benefit from an investment in S&S by taking full advantage of the agreement. Nucleus found that companies tend to underestimate value received from annual S&S agreements. However, these agreements can enable companies to reduce the total cost of ownership and increase the value that can be extracted from analytics, resulting in additional ROI. For IBM customers investing in S&S, Nucleus found that the IBM Cognos 10 upgrade provided the greatest opportunities for ROI by increasing performance and providing improved data discovery capabilities. However, Nucleus also documented multiple point upgrades that also provided incremental analytics ROI that justified an investment in S&S. When an analytics project goes into production, the deployment often evolves in unexpected ways based on business demands. The support aspect of maintenance contracts allows analytics deployments to evolve more quickly by reducing business demands for help-desk staff, improving application performance, and avoiding upgrade costs over the analytics deployment. IT budget managers must weigh these benefits against the cost of an S&S agreement over the expected life of an analytics investment. For projects with a high projected ROI, time-to-value becomes the greatest obstacle to obtaining value, so it is in the company s best interest to shorten project cycle times and accelerate the delivery of business benefits. Through the use of IBM S&S agreements, Nucleus found that IBM customers can support business analytics more efficiently and optimize opportunities to maximize analytics ROI. Page 5