A Frrester Ttal Ecnmic Impact Study Prepared Fr cleverbridge Executive Summary (Fr the full case study, please g t: http://www.cleverbridge.cm/crprate/tei-pages/tei-landingpage) Prject Directr: Reggie Lau August 2012
Frrester Cnsulting Executive Summary In August 2012, cleverbridge cmmissined Frrester Cnsulting t examine the ttal ecnmic impact (TEI) and ptential return n investment (ROI) enterprises may realize by deplying the cleverbridge ecmmerce clud platfrm. The purpse f this study is t prvide readers with a framewrk t evaluate the ptential financial impact f implementing the cleverbridge slutin. cleverbridge Generates Incremental Revenues and Simplifies ecmmerce fr Organizatins Our interview with an existing custmer and subsequent financial analysis fund that custmers are likely t experience the risk-adjusted ROI, csts, and benefits shwn in Table 1. The psitive risk-adjusted ROI f 18% means that a custmer can recup mre than its investment in implementing the cleverbridge platfrm. Furthermre, it takes less than ne mnth t pay back the investment due t lw initial csts. The custmer that Frrester interviewed is a U.S.-based sftware cmpany with annual ecmmerce revenues f $20M and sells utilities sftware glbally t bth cnsumers and businesses. Prir t implementing the cleverbridge platfrm, the custmer managed its ecmmerce using an in-huse slutin and an internal ecmmerce team f apprximately 10 resurces. Fr a mre detailed descriptin f the interviewed custmer, please refer t the Interview Highlights sectin. Table 1 cleverbridge Custmer s Three-Year Risk-Adjusted ROI 1 ROI Payback perid Ttal benefits (PV) Ttal csts (PV) Net present value 18% <1 mnth $5,146,281 ($4,376,716) $769,566 Surce: Frrester Research, Inc. Benefits. The rganizatin interviewed experienced the fllwing benefits: 1 Frrester risk-adjusts the summary financial metrics t take int accunt the ptential uncertainty f the cst and benefit estimates. Fr mre infrmatin n Risk, please refer t Appendix A. (Fr the full case study, please g t: http://www.cleverbridge.cm/crprate/tei-pages/tei-landing-page ) Page 1
Frrester Cnsulting Incremental internatinal revenue This benefit includes internatinal revenue that wuld nt have been generated withut the implementatin f cleverbridge and the suite f freign payment ptins, currencies, and checkut languages ffered n the platfrm. IT-fcused prductivity This benefit centers n the features and functins that cleverbridge builds int the platfrm t make business prcesses easier, faster, and mre autmated, which can free up resurces. ecmmerce efficiencies This benefit fcuses n the intrinsic staffing efficiencies gained when utsurcing ecmmerce t a third-party prvider, which can als free up resurces. Sme resurces that benefited frm this efficiency were reallcated t fcus n mre strategic initiatives like new prduct develpment. Incremental partnership revenue This benefit speaks t the revenue gained by frming new partnerships and identifying sales pprtunities thrugh cleverbridge netwrking events. Csts 2. Althugh csts/ratis may vary slightly by custmer, rganizatins using cleverbridge can expect t incur csts similar t the fllwing: Direct sales transactin cst The transactin fee charged per sale is the main cmpnent f the cst. The fee will differ depending n whether the sale is direct r thrugh an affiliate. The direct sale transactin fee is 8%. Direct sales accunt fr mre than 96% f all transactins prcessed fr the custmer ver the cleverbridge platfrm. Affiliate sales transactin cst The affiliate sale transactin fee is an additinal 3% n tp f the direct sales transactin fee f 8%, resulting in an 11% fee. Affiliate sales make up 3.5% f all transactins prcessed fr the custmer ver the cleverbridge platfrm. Backup sftware cst A blended fee (CD s and DVD s) fr backups als factrs int the ttal csts at $6.50 per cpy requested. Figure 1 displays the breakdwn f each cst and benefit as part f the three-year risk-adjusted NPV. 2 Please nte, all csts used in this case study are reprted by cleverbridge and actual pricing may vary by custmer. (Fr the full case study, please g t: http://www.cleverbridge.cm/crprate/tei-pages/tei-landing-page ) Page 2
Frrester Cnsulting Figure 1 Three-Year Risk-Adjusted Cst/Benefit Breakdwn IT-fcused prductivity 0.4% Three-Year Risk-Adjusted Benefits Breakdwn ecmmerce efficiencies 8% Incremental partnership revenue 0.5% Incremental internatinal revenue 92% Affiliate sales transactin cst 5% Three-Year Risk-Adjusted Csts Breakdwn Backup sftware cst 13% Direct sales transactin cst 82% Surce: Frrester Research, Inc. Factrs Affecting Benefits and Csts Table 1 illustrates the risk-adjusted financial results that were achieved by the cleverbridge custmer. The risk-adjusted values take int accunt any ptential uncertainty r variance that exists in estimating the csts and benefits, which prduces mre cnservative estimates. The fllwing factrs may affect the financial results that an rganizatin may experience: Transactin fees. Breakdwn f direct and affiliate sales. Annual grwth, especially glbal grwth. Understanding and adptin f platfrm features and functins. Size and cst f an rganizatin s in-huse ecmmerce team and custmer service center. Participatin in cleverbridge netwrking events. 3 (Fr the full case study, please g t: http://www.cleverbridge.cm/crprate/tei-pages/tei-landing-page ) Page 3
Frrester Cnsulting Disclsures The reader shuld be aware f the fllwing: The study was cmmissined by cleverbridge and delivered by the Frrester Cnsulting grup. Frrester makes n assumptins as t the ptential return n investment that ther rganizatins will receive. Frrester strngly advises that readers use their wn estimates within the framewrk prvided in the reprt t determine the apprpriateness f an investment in cleverbridge. cleverbridge reviewed and prvided feedback t Frrester, but Frrester maintains editrial cntrl ver the study and its findings and des nt accept changes t the study that cntradict Frrester s findings r bscure the meaning f the study. The custmer names fr the interviews were prvided by cleverbridge. 4 (Fr the full case study, please g t: http://www.cleverbridge.cm/crprate/tei-pages/tei-landing-page ) Page 4
Frrester Cnsulting TEI Framewrk and Methdlgy Intrductin Based n the infrmatin gathered in the interviews, Frrester has cnstructed a Ttal Ecnmic Impact (TEI) framewrk fr thse rganizatins cnsidering a transitin frm an in-huse ecmmerce slutin t the cleverbridge platfrm. The bjective f the framewrk is t identify the cst, benefit, flexibility, and risk factrs that affect the utsurcing decisin. Apprach and Methdlgy Frrester tk a multistep apprach t evaluate the impact that cleverbridge can have n an rganizatin (see Figure 2). Specifically, we: Interviewed cleverbridge marketing, sales, and technical persnnel as well as Frrester analysts t gather data relative t cleverbridge and its target market. Interviewed ne rganizatin currently using the cleverbridge platfrm t btain data with respect t csts, benefits, risks, and flexibility. Cnstructed a financial mdel representative f the interviews using the TEI methdlgy. The financial mdel is ppulated with the cst and benefit data btained frm the interviews. 5 Figure 2 TEI Apprach Perfrm due diligence Cnduct custmer interviews Cnstruct financial mdel using TEI framewrk Write case study Surce: Frrester Research, Inc. Frrester emplyed fur fundamental elements f TEI in mdeling the cleverbridge service: 1. Csts. (Fr the full case study, please g t: http://www.cleverbridge.cm/crprate/tei-pages/tei-landing-page ) Page 5
Frrester Cnsulting 2. Benefits t the entire rganizatin. 3. Flexibility. 4. Risk. Given the increasing sphisticatin that enterprises have regarding ROI analyses related t IT investments, Frrester s TEI methdlgy serves the purpse f prviding a cmplete picture f the ttal ecnmic impact f purchase decisins. Please see Appendix A fr additinal infrmatin n the TEI methdlgy. 6 (Fr the full case study, please g t: http://www.cleverbridge.cm/crprate/tei-pages/tei-landing-page ) Page 6