The Total Economic Impact of SAP Cloud for Sales

A Forrester Total Economic

Impact™ Study

Commissioned By SAP

Project Director:

Adrienne Breslin

February 2014

The Total Economic

Impact Of SAP Cloud for

Sales Cost Savings And Business Benefits Enabled By SAP Cloud for Sales

Table Of Contents

Executive Summary .................................................................................... 1

Disclosures .................................................................................................. 3

TEI Framework And Methodology ............................................................ 3

Analysis ........................................................................................................ 5

Financial Summary ................................................................................... 20

SAP Cloud For Sales: Overview .............................................................. 21

Appendix A: Composite Organization Description .............................. 23

Appendix B: Total Economic Impact™ Overview ................................. 24

Appendix C: Glossary ............................................................................... 25

Appendix D: Endnotes .............................................................................. 25

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Executive Summary

In today’s sales organizations, sales effectiveness is the key to staying competitive. These organizations are facing a world

of dispersed sales teams managing a diverse portfolio of products and services, trying to stay ahead of an increasing field of

competition. Sales organizations are looking for applications that support these goals — they need applications to help

salespeople access the right information quickly — whether they’re at their desk or on the road, shorten sales cycles, and

ultimately close more deals. Salespeople need support when guiding their prospects through the buying journey and

orchestrating a deal. Sales organizations want to harness the power of collaboration and analytics without slowing down their

salespeople. This means finding a fast, easy-to-use sales application that aligns with how salespeople want to sell, all while

being a cost-effective solution for the business.

In January 2014, SAP commissioned Forrester Consulting to conduct a Total Economic Impact™ (TEI) study and examine

the potential return on investment (ROI) enterprises may realize by deploying SAP Cloud for Sales. The purpose of this

study is to provide readers with a framework to evaluate the potential financial impact of SAP Cloud for Sales on their

organizations.

To better understand the benefits, costs, and risks associated with an SAP Cloud for Sales implementation, Forrester

interviewed four customers with experience using SAP Cloud for Sales.

SAP CLOUD FOR SALES IMPROVES SALES EFFECTIVENESS

Our interviews with four existing customers and subsequent financial analysis found that a composite organization based on

these companies experienced the risk-adjusted ROI, benefits, and costs shown in Figure 1.1 See Appendix A for a

description of the composite organization.

FIGURE 1

Financial Summary Showing Three-Year Risk-Adjusted Results

ROI: 655%

Total benefits (present value): $2,420,533

Total costs (present value): ($320,753)

Net present value: $2,099,780

Source: Forrester Research, Inc.

To further understand the value they are receiving from their investment in SAP Cloud for Sales, the representative

organization based on the four interviews looked at specific metrics across several different benefit areas. These metrics and

their resulting values are outlined in Table 1.

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TABLE 1

Metrics And Benefit Areas

Value Metric Total

Increasing revenue/win rates 53 additional deals Results in $493,500 additional revenue

generated

Increasing sales effectiveness/productivity 12% productivity improvement

across sales Results in $1,887,638 value captured

Increasing forecasting capability 20% improved forecasting

effectiveness Results in $119,388 value captured

Reducing sales cycle times 10% reduction in sales cycle

times Results in $105,000 in value captured


› Benefits. The composite organization experienced the following risk-adjusted benefits that represent those experienced by

the interviewed companies:

• Increased sales due to better visibility. By increasing visibility into the sales process and uncovering key analytics

and data, SAP Cloud for Sales enables sales teams to win net new deals.

• Improved efficiency of sales team members. The easy-to-use features and functionality of SAP Cloud for Sales

supports individual sales team members with their day-to-day tasks, making them more efficient. With SAP Cloud for

Sales, everyday processes are improved, and functionality like mobile access and integration with ERP tools

ensures that sales staff has the information they need whenever they may need it. The social context of the tool also

enables collaboration between the sales team members, helping them work together more efficiently to sell better.

• Improved collaboration between sales reps, sales managers, and sales directors. SAP Cloud for Sales

enables sales reps, sales managers, and sales directors to work together better, through improving specific activities

like forecasting.

• Improved time to closure. SAP Cloud for Sales helps shorten the sales cycle by enabling sales staff to cut down

on time spent on sales activities like opportunity follow-up.

• Time savings on report creation. SAP Cloud for Sales also enables the sales staff to cut down on timely activities

like report creation, providing key information to sales and supporting staff faster.

• Savings from reduced legacy system. SAP Cloud for Sales covers the lead-to-quote process and allows for

previous sales support systems to be taken offline, removing the cost for IT maintaining those systems.

› Costs. The composite organization experienced the following risk-adjusted costs:

• Licensing costs. This is the billable cost of SAP Cloud for Sales.

• Professional services and training costs. This is a one-time cost paid to SAP for professional services that go

toward the planning, implementation, and training for the SAP Cloud for Sales investment.

• Internal implementation costs. This is the cost for internal team members associated with planning and managing

the deployment, working with SAP Cloud for Sales developing training material, and driving the adoption of SAP

Cloud for Sales.

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Disclosures

The reader should be aware of the following:

› The study is commissioned by SAP 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 report to determine the appropriateness of an

investment in SAP Cloud for Sales.

› SAP 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.

› SAP provided the customer names for the interviews but did not participate in the interviews.

TEI Framework And Methodology

INTRODUCTION

From the information provided in the interviews, Forrester has constructed a Total Economic Impact™ (TEI) framework for

those organizations considering implementing SAP Cloud for Sales. The objective of the framework is to identify the cost,

benefit, flexibility, and risk factors that affect the investment decision.

APPROACH AND METHODOLOGY

Forrester took a multistep approach to evaluate the impact that SAP Cloud for Sales can have on an organization (see

Figure 2). Specifically, we:

› Interviewed SAP marketing, product management, and sales personnel, along with Forrester analysts, to gather data

relative to SAP Cloud for Sales and the marketplace for SAP Cloud for Sales.

› Interviewed four organizations currently using SAP Cloud for Sales to obtain data with respect to costs, benefits, and risks.

› Designed a composite organization based on characteristics of the interviewed organizations (see Appendix A).

› Constructed a financial model representative of the interviews using the TEI methodology. The financial model is

populated with the cost and benefit data obtained from the interviews as applied to the composite organization.

› Risk adjustment is a key part of the TEI methodology. While interviewed organizations provided cost and benefit estimates,

some categories included a broad range of responses or had a number of outside forces that might have affected the

results. For that reason, some cost and benefit totals have been risk-adjusted, and is detailed in each relevant section.

Forrester employed four fundamental elements of TEI in modeling SAP Cloud for Sales’ service: benefits, costs, flexibility,

and risks.

Given the increasing sophistication that enterprises have regarding ROI analyses related to IT investments, Forrester’s TEI

methodology serves to provide a complete picture of the total economic impact of purchase decisions. Please see Appendix

B for additional information on the TEI methodology.

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FIGURE 2

TEI Approach


Perform duediligence

Conductcustomerinterviews

Designcomposite

organization

Constructfinancial

model usingTEI framework

Write casestudy

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Analysis

COMPOSITE ORGANIZATION

For this study, we conducted a total of four interviews with representatives from the following companies, which are SAP

customers:

› A global manufacturing firm for the automotive, aerospace, and industrial industries. The organization is headquartered in

Europe, and spread over 11 countries. It has 1,200 employees worldwide, with 125 licenses for SAP Cloud for Sales.

› A global organization focusing on information and communication technology. The company employees around 150

individuals based in Europe, with about 30 using SAP Cloud for Sales.

› A college textbook company based in the US, with about 2,000 employees. The company has about 50 users of SAP

Cloud for Sales.

› A European-based manufacturer of construction materials. It has 200,000 employees worldwide, and is currently rolling out

SAP Cloud for Sales to its US sales team of about 300 users.

Based on the interviews, Forrester constructed a TEI framework, a composite company, and an associated ROI analysis that

illustrates the areas financially affected. The composite organization that Forrester synthesized from these results represents

an organization with the following characteristics:

› A US-based sales organization with employees spread across the globe.

› The annual revenue of the composite organization is $50 million a year.

› The composite organization employs 100 salespeople, with 10 sales managers, three directors, and 12 individuals in sales

support roles.

› The composite organization has 5,000 deals a year, with an average deal size of $10,000.

› The composite organization has deployed SAP Cloud for Sales to support its sales professionals and sales support team.

INTERVIEW HIGHLIGHTS

The four interviews uncovered the following drivers behind their need for SAP Cloud for Sales:

› Organizations needed to increase the visibility across their sales organization. Our interviews highlighted that

gaining visibility and transparency into the overall sales process is key to the success of these sales organizations. The

companies we spoke with discussed how they lacked the tools needed to understand how their dispersed global sales

teams were doing, and how they could better support each other through the sales process. “Transparency means we can

see a global view of our customers, and everyone has gotten access to the data they need to have.” Our organizations

lamented that their current means of organizing and gathering information were difficult to manage, time-consuming, and

ultimately did not provide the level of visibility that was needed. “Prior to implementing this, our sales folks had to gather

data and statistical information from a host of internal sources, hard copy, and online sources, and they’d trade information

back and forth over the phone and email — it just wasn’t working.” The old ways of doing things just did not support the

sales efficiency these organizations were looking to drive. They needed a way to easily keep tabs on all aspects of the

sales cycle.

› These companies wanted to create a single global sales organization on one system. A main driver behind the hunt

for a sales tool like SAP Cloud for Sales was the need to have everything available in one system — to not only build

visibility, but to create a unified sales team. These organizations discussed how they wanted to support their sales staff,

regardless of location, ensuring that they could quickly access the information they need, when they need it, and easily

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collaborate with their global sales network, all in one place. “Previously, we had local sales solutions, but they were all

done on a local level by our individual plans in different countries. And then there were others that didn’t have anything and

certainly they weren’t integrated. What drove our need is that we were working very autonomously, and we wanted a

global sales organization.” In order to create their vision, they wanted a common tool to manage the sales process. As

another organization stated, “We needed a single source for all

our agents and support staff to meet and connect on client

information, one stop shopping. We wanted them to have the

ability to meet in a social-networking way to exchange information

that we get from the field and also a place where we could also

tap into metrics and information about specific accounts. This

solution is the answer for us.” SAP Cloud for Sales allowed these

organizations to create a single source of truth that connected

their organization.

› Organizations needed a tool that increased sales

effectiveness to support the bottom line. Our interviewees

were realistic about their hunt for a sales application — it needed

to be easy to use, and help increase sales and profitability. They

were not interested in spending money on software that would not

be adopted or would be a waste of time. “Our underlying goal is always to increase sales and increase profitability.” Their

sales solution needed to be quickly put to use to better the company’s bottom line.

Our interviews uncovered that SAP Cloud for Sales was selected not only because it helped the organizations with the

above goals, but also because of its ease of use, ability to integrate with existing SAP applications, and mobile access. Our

interviews discussed how they deployed SAP Cloud for Sales, with everyone up and running in a matter of weeks. To ensure

the success of the deployment and support adoption throughout the company, the organizations discussed how local

champions were identified and engaged to support training and adoption. The investment in SAP Cloud for Sales is regarded

as a key piece of a larger effort to improve the overall sales organization; our interviews uncovered that SAP Cloud for Sales

is a piece of the puzzle in increasing the overall efficiency and effectiveness of the sales team. “Our organization has been

undergoing a lot of huge changes in the last year, reorganization and things to improve our sales organization.” The Cloud

for Sales application supported their overall efforts to become a better sales organization.

The interviews revealed that SAP Cloud for Sales was selected because it:

› Is easy to use. Our interviewees were impressed with the overall user experience of SAP Cloud for Sales, and each

company discussed how the easy-to-use interface was key in their decision-making. As one interviewee noted, the

salespeople will not use a solution that is too cumbersome. Interviews noted how intuitive the user interface was and how

that supported adoption efforts. Along with enlisting champions, having an easy-to-use platform helps drive adoption

among users. “The user perception on my team is very good. It has some great features and the user experience in my

group is very good.”

› Is a cost-effective, easy-to-implement solution. Our interviewees were impressed with the low cost of ownership for the

solution. “If we looked at it and compared it to the cost, you don’t have to close a lot of additional business to pay for the

cost of it. Certainly one of the benefits of the cloud system is that there isn’t a very high upfront cost. So there is not that

very big investment associated with other solutions.” Because it is cloud based, companies did not need to invest heavily

in maintenance and found that it was easy to get up and running within their sales organizations.

› Provides an easy-to-use mobile solution for the on-the-go sales force. Supporting the mobile workforce was another

key reason businesses selected SAP Cloud for Sales. With the solution, they were able to ensure that their sales force had

the key information they required, wherever they were. “We had tried another solution with mobility, but the people weren’t

using it; with Cloud for Sales, the mobile user experience is almost the same as it is on a desktop or notebook and that’s a

“The company vision was to

get us a single source of

information so we could

improve our efficiency and

manage our accounts better.”

~Director of analytics at textbook company

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great benefit for us. The sales reps are on the road and we always want to provide them with the latest information.”

Through implementation of SAP Cloud for Sales, they were able to have an out-of-the-box mobile solution.

› Integrates easily with existing systems. Another key reason SAP Cloud for Sales was selected because organizations

saw the need to pull in different systems and connect different existing applications. “Our objective is to connect different

existing applications, financial data, sales data all together.” SAP Cloud for Sales allowed companies to easily access

back-office information, and helped save the sales team’s time finding important information to close sales.

› Enables better team collaboration through social networking. Our interviews highlighted that the social aspects of

SAP Cloud for Sales fosters better collaboration among the team members, bringing global salespeople together to create

and share information and best practices, enabling a discussion that helps to win more deals. “The social context where

we can exchange information among individuals or a group of individuals. We share information about individual accounts

or the industry as a whole, or a particular competitor or a partner. There are a lot of different levels that enable us to be

more collaborative.”

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BENEFITS

The composite organization experienced a number of quantified benefits in this case study:

› Increased sales due to better visibility.

› Improved efficiency of sales team members.

› Improved collaboration between sales reps, sales managers, and sales directors.

› Improved time to closure.

› Time savings on report creation.

› Savings from retired legacy systems.

Increased Sales Due To Better Visibility

The first benefit identified is the ability to have better visibility into the overall sales process. All of the companies interviewed

noted that SAP Cloud for Sales provided their team with a complete view of the sales processes, giving them a clearer

picture of what needed to be done to win sales. As one interview told us, “Before there were so many different sources to get

the information they need — it was cumbersome. They just didn’t have the information they needed when they needed it;

they couldn’t see it. The tool helps us consolidate all that information into one area.” The tool enables the sales and support

team to see new data that was previously unavailable to them, helps

uncover new analytics and ratios that were not previously analyzed,

and creates better reports than what was previously available,

enabling the team to increase sales by improving the sales process.

One organization explained how the tool helped them uncover

additional opportunities with one of their largest global clients; before

SAP Cloud for Sales, the sales organizations acted alone — each

sales team concentrating only on understanding the local country

outfit of their global client. With SAP Cloud for Sales, they were able to

leverage best practices and sales information from sales teams in

other countries to make better sales and win net new deals. This

organization told us “the fact that they can even just get the

information, to be able to go to a customer in Hungary and say look,

we are already selling to your company in the US and other countries,

and this is what we’re doing there, this is why they are buying from us

and these are the results they are seeing. It builds a very strong case

for our sales organization to get the same from the different country — we are leveraging [information in] SAP Cloud for

Sales to help us make sales in different countries. Our sales are increasing with them, and we are getting better business

from countries where we didn’t get it before.” Another organization told us “before the tool, we were all working separately —

with the tool, we are able to uncover sales leads that weren’t always visible beforehand — that information is now more

accessible.” The tool provided information and insights that provided the sales team with better information to meet their

specific needs, enabling them to make better decisions that resulted in increased sales.

“Our sales are increasing with

them, and we are getting

better business from countries

where we didn’t get it before.”

~Director of customer order management at a

global manufacturing firm for the automotive,

aerospace, and industrial industries

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TABLE 2

Increased Sales Due To Better Visibility

Ref. Metric Calculation Year 1 Year 2 Year 3

A1 Number of annual deals 5,000 5,000 5,000

A2 Percent increase in sales due to better visibility 0.25% 0.3% 0.5%

A3 Number of extra deals closed due to better visibility A1*A2 12.5 15 25

A4 Average deal size $10,000 $10,000 $10,000

At Increased sales due to better visibility A3*A4 $125,000 $150,000 $250,000

Risk adjustment 6%

Atr Increased sales due to better visibility (risk-adjusted) $117,500 $141,000 $235,000


To calculate this benefit, the model assumes that our representative organization closes 5,000 deals annually. Forrester

conservatively estimates that the percent increase in sales due to better visibility in the first year is .25%. As the sales team

grows more comfortable with the tool and improves how they use it, the percent increase in sales raises to .3% in Year 2 and

.5% in Year 3. With an assumed average deal size of $10,000, the increase in sales due to better visibility for our

representative organization is valued at $493,500. Table 2 illustrates the calculations used.

Interviewed organizations provided a broad range of details relating to the increase in sales, since there are a variety of

outside forces that might also impact this. To compensate, this benefit was risk-adjusted and reduced by 6%. The risk-

adjusted present value total benefit resulting from increased sales due to better visibility over the three years was $399,906.

See the section on Risks for more detail.

Improved Efficiency Of Sales Organization Members

Another key benefit from the Cloud for Sales implementation was an overall improved efficiency of sales organization

members. Our interviews uncovered that this was not merely a tool that made salespeople more efficient, but was being

used by the whole team — “Our whole sales team is using this — external salespeople, market segment leaders, sales

managers, internal sales department, technical people, support teams.” Our interviews uncovered that the use of the tool

made the sales reps, sales managers, sales directors, and sales support staff more effective in their everyday activities. Prior

to Cloud for Sales, information to support the sales process was not available in one place. As a result, team members relied

largely on gathering information from different online and offline sources, waiting on other team members to return phone

calls or emails, wasting valuable time that could be used more efficiently. As one organization we spoke with stated: “The

increasing complexity of the marketplace in general means that to stay in the game, we have to be able to respond faster

with more timely, up-to-date information, and this software is a key part of that.”

Interviewees noted improvement across the board on these day-to-day tasks, and a variety of factors impacted this:

› Our interviews uncovered that the social aspect of Cloud for Sales supported team members to more effectively

collaborate with one another to get best practice information and support sales activities. One interviewee told us how

important this is to his organization: “The social context [of SAP Cloud for Sales] where we can exchange information

among individuals or group of individuals is key to my group. We share information about individual accounts or the

industry as a whole, or a particular competitor or a partner. There are a lot of different levels that enable us to be more

collaborative.” Team members now have instant access to an extended network to gain best practices and expert advice.

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› Mobile access allowed team members to access data, reports, and analytics wherever they were, whenever they need it.

As one organization stated: “Having the mobile capability has improved the sales process for us — it helps us save time,

extract information on the fly. We have up-to-date information available on the fly. We are much more fleet of foot in the

sales effort — we can respond more quickly and are aware of changes in data much quicker. We need that kind of

responsiveness to be competitive. It’s just not fast enough in today’s marketplace without the mobile access.” Mobile

access provided the sales team with agility that was not available to them previously.

› Interviewees also noted that a solid user experience made adoption easier, and sales associates were more likely to use

this tool as compared to others in the past. “The user experience and the non-complexity of the solution, that’s a key

benefit of this. Adoption will only happen if the product speaks for itself.” It was easy to use and intuitive, and its easy-to-

understand user interface helped the team get information quickly, in a context that made sense to their sales efforts.

› SAP Cloud for Sales back-end integration allowed users better access to information and details about clients and sales

orders. Time is no longer wasted trying to track this information down; they now have access to it in one system, saving

the sales team and support staff valuable time. “All of our different team members are working together for different sales

opportunities, and they all have access to the same information in the ERP system right there — it saves them a lot of time

each week.”

SAP Cloud for Sales helps support the team members through many different processes, helping them better manage

accounts and access information more quickly, which improves their overall efficiency. As one company noted, “Our sales

staff now has more time to engage with the customers.” With the time savings, the sales team can now spend more time on

important tasks and close more deals.

TABLE 3

Improved Efficiency Of Sales Organization Members


B1 Number of sales reps, managers, and support staff 75 100 125

B2 Fully loaded annual salary $105,000 $105,000 $105,000

B3 Percentage productivity improvement 10% 12% 15%

B4 Percent captured 50% 50% 50%

Bt Improved efficiency of sales organization members B1*B2*B3*B4 $393,750 $630,000 $984,375

Risk adjustment 6%

Btr Improved efficiency of sales organization members (risk-

adjusted) $370,125 $592,200 $925,313


To calculate this benefit, the model assumes that our representative organization is using SAP Cloud for Sales to support the

sales reps, sales managers, sales directors and sales support staff. We assume the composite organization starts with 75

salespeople, sales managers, and support staff who have access to SAP Cloud for Sales in Year 1, rolling out to 100 and

125 in Years 2 and 3. Based on the feedback from the interviewed organizations, Forrester conservatively estimates that the

productivity savings to be between 10% and 15%, depending on the growth of adoption over time. Forrester also adjusts

productivity savings by assuming that only 50% of this time saved is used for productive work. With an assumed annual fully

loaded salary of $105,000, the improved efficiency of the entire sales team and support staff is for our representative

organization is valued at $2,008,125. Table 3 illustrates the calculations used.

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To compensate for the variety of adoption challenges and efficiency gains that could potentially affect this calculation, this

benefit was risk-adjusted and reduced by 6%. The risk-adjusted total benefit resulting from improved efficiency of the team

over the three years was $1,887,638. See the section on Risks for more detail.

Improved Collaboration Between Sales Reps, Sales Managers, And Sales Directors

Several of the organizations noted that use of SAP Cloud for Sales had a positive effect on collaboration between the sales

teams and their upper management. This benefit looks specifically at the usage case of sales members needing to

communicate and collaborate with their management on a specific activity. For the purpose of this analysis, the model

assumes a case where salespeople and their management are creating and collaborating on individual and team forecasts

before and after the implementation of Cloud for Sales. Prior to the use of Cloud for Sales, the process of creating forecasts

for our representative organization was very manual; the data was traditionally kept in spreadsheets, with no universal

formatting methods used among different teams. Different managers would rely on their teams to provide their forecasts, and

then spend time formatting all of these together; it was a manual process to combine forecasts and get a view of the entire

team. The process would then need to be duplicated again for increasingly broad views of the organization. Now, SAP Cloud

for Sales allows for a more automated process that enables easier creating and sharing of forecasts. The user interface

ensures that different levels of the sales team and managers see what they need — it is more easily rolled up based on the

level of the individual. As one interviewed organization shared with us, “It’s the single source of truth from the account

manager all the way up to the senior director at the organization. That’s very important for me because I talk to all of them

and I want transparency in the figures, and I’m now certain that I can get that through them with one simple report. I’m

confident that it’s the truth so I can go to my senior director with the correct information and without any doubt; it’s a good

thing.”

TABLE 4

Improved Collaboration Between Sales Reps, Sales Managers, And Sales Directors


C1 Number of sales reps, managers, and directors 56 85 113

C2 Number of hours spent per week developing

forecasts 1 hour/week*52 weeks 52 52 52

C3 Total hours spent developing forecasts before SAP

Cloud for Sales C2*C1 2,912 4,420 5,876

C4 Hourly sales salary $48.08 $48.08 $48.08

C5 Estimated time improvement on forecasting activities 20% 20% 20%

Ct Improved collaboration between sales reps, sales

managers, and sales directors C3*C4*C5 $28,002 $42,503 $56,504

Risk adjustment 6%

Ctr Improved collaboration between sales reps, sales

managers, and sales directors (risk-adjusted) $26,322 $39,953 $53,113


To calculate this benefit, the model assumes that our representative organization starts with 56 sales reps and their upper

management that have access to SAP Cloud for Sales in Year 1, rolling out to 85 and 113 in Years 2 and 3. For each of

these, we assume that 1 hour a week is spent on forecasting activities prior to SAP Cloud for Sales. Based on the feedback

from the interviewed organizations, the estimated reduction in time spent on forecasting activities is 20% with Cloud for Sales

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implemented. With an assumed hourly salary of $48.08, the improved collaboration between the sales reps and their upper

management is for our representative organization is valued at $127,008. Table 4 illustrates the calculations used.

Interviewed organizations did note that this benefit could fluctuate, since there are a variety of outside forces that might also

impact this. To compensate, this benefit was risk-adjusted and reduced by 6%. The risk-adjusted total benefit resulting from

improved collaboration between sales reps and their upper management over the three years was $119,388. See the

section on Risks for more detail.

Improved Time To Closure

Using SAP Cloud for Sales has enabled the sales reps to close deals more quickly. This benefit looks specifically at the

usage case of the sales reps shortening time to closure through improved follow-up processes as noted by the interviewed

organizations. For the purpose of this analysis, the model assumes a case where the sales reps are following up on potential

sales opportunities before and after SAP Cloud for Sales is implemented, based on the experience of our interviewed

organizations. Prior to the use of Cloud for Sales, our representative organization did not have a specific process in place to

ensure timely, thorough follow-ups to potential sales opportunities. SAP Cloud for Sales introduced a controlled process that

ensured diligent follow-ups to these opportunities, resulting in less time being wasted, better overall visibility into the

opportunity, and a shorter overall time to closing the deal. As one organization highlighted for us, “When we get an inquiry,

the sales rep has to use the system to send out the follow-up. Now our team worldwide can keep informed on what’s

happening with a particular inquiry or follow-up.”

TABLE 5

Improved Time To Closure


D1 Number of salespeople 50 75 100

D2 Average hourly salary of sales $48.08 $48.08 $48.08

D3 Time spent in follow-up activities before SAP Cloud

for Sales 2 hours/week*52 weeks 104 104 104

D4 Percent decrease with SAP Cloud for Sales 10% 10% 10%

Dt Improved time to closure D1*D2*D3*D4 $25,002 $37,502 $50,003

Risk adjustment 6%

Btr Improved time to closure (risk-adjusted) $23,502 $35,252 $47,003


To calculate this benefit, the model assumes that our representative organization starts with 50 sales reps with access to

SAP Cloud for Sales in Year 1, rolling out to 75 and 100 in Years 2 and 3. We assume that 2 hours a week were spent on

follow-up activities prior to SAP Cloud for Sales. Based on the feedback from the interviewed organizations, the estimated

reduction in time spent on follow up activities is 10% now that the organization uses SAP Cloud for Sales to manage the

follow-up process. With an assumed hourly salary of $48.08, the improved time to closure for our representative organization

is valued at $112,507. Table 5 illustrates the calculations used.

To compensate for fluctuations in the follow-up process, this benefit was risk-adjusted and reduced by 6%. The risk-adjusted

total benefit resulting from improved collaboration between sales teams and their management over the three years was

$105,757. See the section on Risks for more detail.

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Time Savings On Report Creation

SAP Cloud for Sales also helped organizations save time on report creation. Our interviewed organizations highlighted that

creating reports in SAP Cloud for Sales cut down drastically on the time it took to create reports. As one interviewee put it,

“The efforts we have to put in to get the right figures from the system are close to nil.” Previously, all the information for the

different reports was kept in different areas, and it was a labor-intensive process to gather together all the information for any

given type of report. Now all the information is in one area and the sales organization can easily pull data to track sales

cycles, revenue trends, and other reports configured to the specific need of the sales organization. “We used to not be able

to pull these reports too many times a week, once a week maximum, because if you did it every day, it would just take too

much time. Now I’d be shocked if it took five minutes. We decreased the time spent from hours to minutes, definitely.” SAP

Cloud for Sales helps the sales organization get the right information in front of the right people faster so that each team

member’s team can be used more effectively to impact the bottom line.

To calculate this benefit, the model assumes that our representative organization pulls an average of 10 reports a week.

Based on our customer interviews, we assume that, prior to implementing SAP Cloud for Sales, it took 1.5 hours to gather

information and build out each report into a usable format. Based on the feedback from the interviewed organizations, the

estimated reduction in time spent creating reports is 90% now that the organization uses SAP Cloud for Sales. With an

assumed hourly salary of $48.08, the improved time to closure for our representative organization is valued at $33,752.

Table 6 illustrates the calculations used.

While each organization we spoke with noted a dramatic decrease in the time spent creating reports, Forrester risk-adjusted

the benefit by decreasing it by 1% in order to account for any circumstances that may impact this benefit. The risk-adjusted

benefit resulting from time savings on report creation each year is $33,415. See the section on Risks for more detail.

TABLE 6

Time Savings On Report Creation


E1 Number of reports pulled per week 10 reports*52 weeks 520 520 520

E2 Time before SAP Cloud for Sales on pulling reports 1.5 hours per report 780 780 780

E3 Percent savings creating reports 90% 90% 90%

E4 Hourly sales salary $48.08 $48.08 $48.08

Et Time savings on report creation E1*E2*E3*E4 $33,752 $33,752 $33,752

Risk adjustment 1%

Etr Time savings on report creation (risk-adjusted) $33,415 $33,415 $33,415


IT Savings From Reduced Legacy Systems

As we heard from interviewed organizations, implementing SAP Cloud for Sales eliminated the need for the representative

organization to continue maintaining two legacy applications that are no longer used. This represents the savings from the

cost of maintaining those two systems, for a total savings of $300,000. Table 7 illustrates the calculations used.

To compensate for variations in the annual cost of maintenance for legacy systems, Forrester risk-adjusted the benefit by

decreasing it by 6%. The risk-adjusted total benefit resulting from time savings on report creation over the three years was

$282,000. See the section on Risks for more detail.

14

TABLE 7

IT Savings From Reduced Legacy Systems


F1 Number of retired legacy systems 2 2 2

F2 Annual cost of maintenance $50,000 $50,000 $50,000

Ft Savings from reduced legacy systems F1*F2 $100,000 $100,000 $100,000

Risk adjustment 6%

Ftr IT Savings From Reduced Legacy Systems (risk-adjusted) $94,000 $94,000 $94,000


Total Benefits

Table 8 shows the total of all benefits across the six areas listed above, as well as present values (PVs) discounted at 10%.

Over three years, the composite organization expects risk-adjusted total benefits to be a PV of more than $2.4 million.

TABLE 8

Total Benefits (Risk-Adjusted)

Ref. Benefit Year 1 Year 2 Year 3 Total Present value

Atr Increased sales due to better

visibility $117,500 $141,000 $235,000 $493,500 $399,906

Btr Improved efficiency of sales

organization members $370,125 $592,200 $925,313 $1,887,638 $1,521,100

Ctr

Improved collaboration between

sales reps, sales managers, and

sales directors

$26,322 $39,953 $53,113 $119,388 $96,852

Dtr Improved time to closure $23,502 $35,252 $47,003 $105,757 $85,813

Etr Time savings on report creation $33,415 $33,415 $33,415 $100,244 $83,097

Ftr Savings from reduced legacy

systems $94,000 $94,000 $94,000 $282,000 $233,764

Total benefits $664,863 $935,819 $1,387,844 $2,988,526 $2,420,533


In addition to these benefits, our representative organization considered additional metrics across several different benefits

areas to further understand the value they are receiving from their investment in SAP Cloud for Sales. These metrics and

their resulting values are outlined in Table 9.

15

TABLE 9

Metrics And Benefit Areas

Value Metric Total

Increasing revenue/win rates 53 additional deals Results in $493,500 additional revenue

generated

Increasing sales

effectiveness/productivity

12% productivity improvement

across sales Results in $1,887,638 value captured

Increasing forecasting capability 20% improved forecasting

effectiveness Results in $119,388 value captured

Reducing sales cycle times 10% reduction in sales cycle times Results in $105,000 in value captured


16

COSTS

The composite organization experienced a number of costs associated with the Cloud for Sales solution:

› Licensing costs.

› Professional services and training costs.

› Internal implementation costs.

These represent the mix of internal and external costs experienced by the composite organization for initial planning,

implementation, and training associated with the solution.

Licensing Costs

The composite organization incurs a monthly fee of $80 per license. Note that this is the list pricing, and different

organizations may have different licensing agreements. The composite organization started in Year 1 with licensing for 75

sales reps, managers, directors, and support staff, increasing to 100 in Year 2 and 125 in Year 3. Table 10 illustrates the

calculations for these for a total of $288,000 in licensing fees over three years.

TABLE 10

Licensing Costs


G1 Number of users 75 100 125

G2 License cost per month $80 $80 $80

Gt Licensing cost (not risk adjusted) ($72,000) ($96,000) ($120,000)


Professional Services And Training Costs

The composite organization paid a one-time upfront cost to SAP Cloud for Sales for professional services helping with the

planning, implementation, and development of training for the Cloud for Sales investment. In addition, the composite

organization requires training, regardless of role, for all users of Cloud for Sales. The organization incurs two types of internal

costs to train users on the tool. The first cost, to train new users on the tool, is assumed to be $75 per new user. The model

assumes that 75 users start in Year 1, with an additional 25 new users in Year 2 and Year 3. The second cost is for recurring

training to ensure that users are up-to-date with the tool. The model assumes that the recurring training costs $50 per user.

The model assumes that the initial 75 users take recurring training in Year 2, and the following year, 100 users take the

recurring training. Table 11 illustrates how this was calculated.

Forrester found that what was spent on training varied from organization to organization. To compensate, this cost was risk-

adjusted up by 8%. For more information, see the section on Risks.

17

TABLE 11

Professional Services And Training Costs

Ref. Metric Calculation Initial Year 1 Year 2 Year 3

H1 Professional services and training $20,000

H2 Number of users for new user training 75 25 25

H3 Cost of new user training per user $75 $75 $75

H4 Total cost of new user training H2*H3 $5,625 $1,875 $1,875

H5 Number of users for recurring training 75 100

H6 Cost of recurring training per user $50 $50

H7 Total cost of recurring training H5*H6 $3,750 $5,000

Ht Professional services and training costs (not

risk-adjusted) H1+H4+H7 ($20,000) ($5,625) ($5,625) ($6,875)

Risk adjustment 8%

Htr Professional services and training costs (risk-

adjusted) ($21,600) ($6,075) ($6,075) ($7,425)


Internal Implementation Costs

Based on feedback from the interviewed organizations, Forrester estimates the composite organization will spend 1,000

man-hours for planning, training, and supporting the SAP Cloud for Sales to get up and running. Table 12 outlines the

calculation for this cost.

TABLE 12

Internal Implementation Costs

Ref. Metric Calculation Initial

I1 Man-hours spent on implementation and training development 1,000

I2 Average hourly salary $48.08

Itr Internal implementation costs (not risk-adjusted) I1*I2 $48,080


Total Costs

Table 13 shows the total of all costs as well as associated present values, discounted at 10%. Over three years, the

composite organization expects total risk-adjusted costs to total a net present value of a little more than $320,000.

18

TABLE 13

Total Costs (Risk-Adjusted)

Ref. Cost Initial Year 1 Year 2 Year 3 Total Present value

Gtr Licensing $0 ($72,000) ($96,000) ($120,000) ($288,000) ($234,951)

Htr Professional services and

training ($21,600) ($6,075) ($6,075) ($7,425) ($41,175) ($37,722)

Itr Internal implementation

costs ($48,080) $0 $0 $0 ($48,080) ($48,080)

Total costs (risk-adjusted) ($69,680) ($78,075) ($102,075) ($127,425) ($377,255) ($320,753)


FLEXIBILITY

Flexibility, as defined by TEI, represents an investment in additional capacity or capability that could be turned into business

benefit for some future additional investment. This provides an organization with the “right” or the ability to engage in future

initiatives but not the obligation to do so. There are multiple scenarios in which a customer might choose to implement Cloud

for Sales and later realize additional uses and business opportunities. Flexibility would also be quantified when evaluated as

part of a specific project described in more detail in Appendix B.

One particular scenario that could realize additional benefits in the future is further integration with back-end systems, with

the expectation that this will help organizations accelerate the sales cycles, drive more revenue, and deliver more value to

their customers.

RISKS

Forrester defines two types of risk associated with this analysis: “implementation risk” and “impact risk.” “Implementation risk”

is the risk that a proposed investment in Cloud for Sales may deviate from the original or expected requirements, resulting in

higher costs than anticipated. “Impact risk” refers to the risk that the business or technology needs of the organization may

not be met by the investment in Cloud for Sales, resulting in lower overall total benefits. The greater the uncertainty, the

wider the potential range of outcomes for cost and benefit estimates.

19

TABLE 14

Benefit And Cost Risk Adjustments

Benefits Adjustment

Increased sales due to better visibility 6% — Medium

Improved efficiency of sales organization members 6% — Medium

Improved collaboration between sales reps, sales managers, and sales directors 6% — Medium

Improved time to closure 6% — Medium

Time savings on report creation 1% — Low

Savings from reduced legacy systems 6% — Medium

Costs Adjustment

Licensing None

Professional services and training 8% — Medium

Internal implementation costs None


Quantitatively capturing investment risk and impact risk by directly adjusting the financial estimates results provides more

meaningful and accurate estimates and a more accurate projection of the ROI. In general, risks affect costs by raising the

original estimates, and they affect benefits by reducing the original estimates. The risk-adjusted numbers should be taken as

“realistic” expectations since they represent the expected values considering risk.

The following impact risks that affect benefits are identified as part of the analysis:

› Slower adoption than anticipated.

› Employees resisting using new processes and methodologies through SAP Cloud for Sales.

› Variability in efficiencies gained and time saved depending on employee engagement.

› Variability in average deal size.

The following implementation risk that affects costs is identified as part of this analysis:

› Internal labor needed for planning, implementation and training is higher than expected.

Table 14 shows the values used to adjust for risk and uncertainty in the cost and benefit estimates. Readers are urged to

apply their own risk ranges based on their own degree of confidence in the cost and benefit estimates.

20

Financial Summary

The financial results calculated in the Benefits and Costs sections can be used to determine the ROI, NPV, and payback

period for the organization’s investment in Cloud for Sales.

Table 15 below shows the risk-adjusted ROI, NPV, and payback period values. These values are determined by applying the

risk-adjustment values from Table 14 in the Risks section to the unadjusted results in each relevant Costs and Benefits

section.

FIGURE 3

Cash Flow Chart (Risk-Adjusted)


TABLE 15

Cash Flow: Risk-Adjusted

Initial Year 1 Year 2 Year 3 Total Present value

Total costs ($69,680) ($78,075) ($102,075) ($127,425) ($377,255) ($320,753)

Total benefits $0 $664,863 $935,819 $1,387,844 $2,988,526 $2,420,533

Net benefits ($69,680) $586,788 $833,744 $1,260,419 $2,611,271 $2,099,780

ROI 655%

Payback period 1.4 months


($500,000)

$0

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

$3,000,000

Initial Year 1 Year 2 Year 3

Cas

h f

low

s

Financial analysis (risk-adjusted)

Total Costs Total Benefits Running Total

21

SAP Cloud For Sales: Overview

The following information is provided by SAP. Forrester has not validated any claims and does not endorse SAP or its

offerings.

High-performing sales organizations are super-charging their sales forces with SAP Cloud for Sales. Built for the needs of

today’s sellers with a beautiful user experience, SAP Cloud for Sales is a modern, smart sales solution that goes far beyond

sales force automation. SAP Cloud for Sales drives sales effectiveness through social collaboration, real-time customer

insight, out-of-the-box analytics, flawless deal orchestration and complete mobile apps — all without putting a strain on IT.

Sales professionals and sales managers target the right accounts, gain the insight they need to proactively guide customers

through the buying journey, execute deals flawlessly and deliver a great buying experience that keeps customers coming

back. Learn more now about SAP Cloud for Sales and its key features:

Personalization And Productivity

› Drive rapid adoption with a

“consumerized” sales rep-centric

user experience.

› Improve efficiency with quick-create

and shortcut capabilities.

› Use the Shelf to bookmark tagged

and flagged items for one-click

access to the information that’s most

important to you.

› Personalize and organize layouts and

tabs based on your preferences and

working style.

In-Context Social Collaboration

› Use native Feed for instant

collaboration with team members and

your sales network in the context of

your accounts, contacts,

opportunities, competitors, and more.

› Crowdsource and share sales best practices and find the right experts relevant to each stage of the deal.

› Collaborate on customer documents, and plan and prepare for customer interactions more effectively.

› Connect with customers in real time to answer questions without delay and accelerate decision-making.

Social Selling

› Learn what your customers care about and leverage your network to engage with decision-makers earlier in the buying

journey.

› Turn every cold call into a warm introduction.

› Make every interaction personalized and relevant.

22

Prospecting And Predictive Lead And Opportunity Management

› Create and track marketing and sales campaigns.

› Gain predictive insights on the right leads to focus on.

› Understand who the key decision-makers are and identify their trusted advisors.

› Leverage insight from marketing automation systems to know where your prospects have been, what they’ve responded

to, and when they’re ready to engage.

› Easily track opportunity stage, status, and value, and relevant products, contacts, account team, activities, and more.

› Collaborate with team members and customers in the context of each deal.

Account Management And Sales Intelligence

› Target the right accounts — ones that align to your value prop and have the greatest propensity to buy.

› Manage accounts easily and more effectively.

› Gain real-time account updates and sales intelligence.

› Uncover new sales opportunities quickly and have everything you need to know about your customers in one place.

Flawless Deal Orchestration

› Provide sales professionals real-time pricing, quoting, sales orders, and more through native integration to your existing

enterprise systems.

› Seamlessly orchestrate the end-to-end opportunity from prospect to payment.

Complete Mobile Apps

› Have the entire office in your pocket while on the road — out-of-the-box in minutes without the cost or complexity of

custom apps.

› Use your favorite device with support for Apple iOS, Android, and BlackBerry devices.

› Orchestrate deals flawlessly — anytime, anywhere.

Microsoft Outlook And Lotus Notes Support

› Increase productivity with convenient access to SAP Cloud for Sales in Microsoft Outlook and Lotus Notes.

› Automatically sync emails, appointments, tasks, contacts, and more — no double data entry.

Insightful Sales Analytics

› Track real-time sales performance with a complete library of prebuilt dashboards.

› Generate and review forecasts and easily create configurable reports.

› Identify how best to make your number and where to focus with pipeline simulation.

23

Appendix A: Composite Organization Description

For this TEI study, Forrester has created a composite organization to illustrate the quantifiable benefits and costs of

implementing SAP Cloud for Sales. The composite company is intended to represent US-based sales organization with

employees spread across the globe and is based on characteristics of the interviewed customers.

The composite company has the following characteristics:

› The annual revenue of the composite organization is $50 million a year.

› The composite organization employs 100 salespeople, with 10 sales managers, three directors and 12 individuals in sales

support roles.

› The composite organization has 5,000 deals a year, with an average deal size of $10,000.

› The composite organization has deployed SAP Cloud for Sales to support its sales team and sales staff.

FRAMEWORK ASSUMPTIONS

Table 16 provides the model assumptions that Forrester used in this analysis.

The discount rate used in the PV and NPV calculations is 10% and time horizon used for the financial modeling is three

years. Organizations typically use discount rates between 8% and 16% based on their current environment. Readers are

urged to consult with their respective company’s finance department to determine the most appropriate discount rate to use

within their own organizations.

TABLE 16

Model Assumptions

Ref. Metric Calculation Value

C1 Hours per week 40

C2 Weeks per year 52

C3 Hours per year (M-F, 9-5) 2,080

C4 Hours per year (24x7) 8,736

C5 Average fully loaded salary $105,000

C6 Average hourly salary $48.08


24

Appendix B: Total Economic Impact™ Overview

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.

The TEI methodology consists of four components to evaluate investment value: benefits, costs, flexibility, and risks.

BENEFITS

Benefits represent the value delivered to the user organization — IT and/or business units — by the proposed product or

project. Often, product or project justification exercises focus just on IT cost and cost reduction, leaving little room to analyze

the effect of the technology on the entire organization. The TEI methodology and the resulting financial model place 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. Calculation of benefit estimates involves a clear dialogue with the user organization to understand

the specific value that is created. In addition, Forrester also requires that there be a clear line of accountability established

between the measurement and justification of benefit estimates after the project has been completed. This ensures that

benefit estimates tie back directly to the bottom line.

COSTS

Costs represent the investment necessary to capture the value, or benefits, of the proposed project. IT or the business units

may incur costs in the form of fully burdened labor, subcontractors, or materials. Costs consider all the investments and

expenses necessary to deliver the proposed value. In addition, the cost category within TEI captures any incremental costs

over the existing environment for ongoing costs associated with the solution. All costs must be tied to the benefits that are

created.

FLEXIBILITY

Within the TEI methodology, direct benefits represent one part of the investment value. While direct benefits can typically be

the primary way to justify a project, Forrester believes that organizations should be able to measure the strategic value of an

investment. Flexibility represents the value that can be obtained for some future additional investment building on top of the

initial investment already made. As an example, an embedded collaboration feature may translate to greater worker

productivity if activated. The collaboration can only be used with additional investment in training at some future point.

However, having the ability to capture that benefit has a PV that can be estimated. The flexibility component of TEI captures

that value.

RISKS

Risks measure the uncertainty of benefit and cost estimates contained within the investment. Uncertainty is measured in two

ways: 1) the likelihood that the cost and benefit estimates will meet the original projections, and 2) the likelihood that the

estimates will be measured and tracked over time. TEI applies a probability density function known as “triangular distribution”

to the values entered. At a minimum, three values are calculated to estimate the underlying range around each cost and

benefit.

25

Appendix C: Glossary

Discount rate: The interest rate used in cash flow analysis to take into account the time value of money. Companies set

their own a discount rate based on their business and investment environment. Forrester assumes a yearly discount rate of

10% for this analysis. Organizations typically use discount rates between 8% and 16% based on their current environment.

Readers are urged to consult their respective organizations to determine the most appropriate discount rate to use in their

own environment.

Net present value (NPV): The present or current value of (discounted) future net cash flows given an interest rate (the

discount rate). A positive project NPV normally indicates that the investment should be made, unless other projects have

higher NPVs.

Present value (PV): The present or current value of (discounted) cost and benefit estimates given at an interest rate (the

discount rate). The PV of costs and benefits feed into the total NPV of cash flows.

Payback period: The breakeven point for an investment. This is the point in time at which net benefits (benefits minus costs)

equal initial investment or cost.

Return on investment (ROI): A measure of a project’s expected return in percentage terms. ROI is calculated by dividing

net benefits (benefits minus costs) by costs.

A NOTE ON CASH FLOW TABLES

The following is a note on the cash flow tables used in this study (see the example table below). The initial investment

column contains costs incurred at “time 0” or at the beginning of Year 1. Those costs are not discounted. All other cash flows

in Years 1 through 3 are discounted using the discount rate (shown in Framework Assumptions section) at the end of the

year. PV calculations are calculated for each total cost and benefit estimate. NPV calculations are not calculated until the

summary tables are the sum of the initial investment and the discounted cash flows in each year.

TABLE [EXAMPLE]

Example Table



Appendix D: Endnotes

1 Forrester risk-adjusts the summary financial metrics to take into account the potential uncertainty of the cost and benefit

estimates. For more information see the section on Risks.

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