Driving Business Value and Cost Savings

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Total Economic Impact is a methodology developed by Forrester Research that enhances a company’s technology decision-making processes and assists solution providers in communicating their value proposition to clients. The TEI methodology helps companies demonstrate, justify, and realize the tangible value of business and technology initiatives to both senior management and other key stakeholders.

To better understand the benefits, costs, and risks associated with this investment, Forrester interviewed five decision-makers with experience using MX. For the purposes of this study, Forrester aggregated the experiences of the interviewees and combined the results into a single composite organization, which is a financial services institution with $250 billion in assets under management and $30 billion in revenue.

Based on the 5 interviews that Forrester Consulting conducted, Forrester Consulting built a composite organization that is representative of the challenges and benefits of all 5 organizations. The characteristics of the composite organization should be reviewed in order to fully understand the applicability of the study results. This composite organization was used to calculate all quantified benefits stated in the study.

Most prospective organizations won't exactly match the composite metrics, but smaller or larger organizations can refer to the benefit tables and change any firmographic metrics (those with a source of "Composite") when they have better and own organization details.

For example, an organization with $10 billion (or 1/3 the size of the composite) in revenue may only have $500 million in annual fraudulent transactions (or 5% of revenue as mentioned in the TEI study). Based on the formulas in the benefit table that include the actual cost of dealing with fraud and the percentage of transactions that can be impacted by MX, the annual risk-adjusted value of fraud risk reduction would be $4.1 million (versus $14.5 million for the composite).

Another example: an organization with $50 billion in revenue might have 40 million annual call center interactions (note that your prospects metrics do not have to scale equally—they usually do not). If 20% (instead of 15% for the composite) of those interactions are questions about billing statements, that is 8 million statement-related call center interactions. Using the same $5 per interaction cost and the ability to reduce these call center interactions by 50% with MX, that is $20 million saved per year (compared to $7.6 million in the TEI study, for the composite).

And for the third quantified benefit in the TEI, fewer transaction disputes, a composite with 1 million credit card customers (instead of 8 million for the composite) with other similar metrics could estimate risk-adjusted annual savings of $135,000 in reduced transaction disputes and chargebacks. An organization with 20 million customers could estimate risk-adjusted annual savings of $2.7 million.

Very few, if any, organizations will be exactly like the composite. Every reader at an organization considering MX will need to develop their own business case based on their own situation, IT maturity, size, and other considerations.

Yes. While the TEI methodology is not a predictor of results, one can still extrapolate from a TEI what a single company, if similar to the composite organization in its numerous characteristics, might be able to achieve after deploying MX.