The Total Economic Impact™ Of ACL · Ranging in scope from a ... risk factors that affect the...

A Forrester Total Economic Impact™

Study Commissioned By ACL

December 2016

The Total Economic Impact™ Of ACL

Cost Savings And Business Benefits Enabled By The ACL Platform

Table Of Contents Executive Summary 1

Key Findings 1

TEI Framework And Methodology 3

The ACL Customer Journey 4 Interviewed Organization 4

Key Challenges 4

Solution Requirements 4

Key Results 4

Financial Analysis 6 ACL Helps Avoid Costs With Improved Risk Event Management To Reduce Shutdowns 6

ACL Helps Improve Business-Decision-Making With Real-Time Data Access And Improved Analysis And Visualization Tools 8

Audit-Related Cost Savings With ACL 8

Saved And Avoided Resource Costs With ACL 10

Unquantified Benefits 11

Flexibility 11

Deployment And Implementation Costs 12

ACL Licensing And Ongoing Resource Costs 12

Financial Summary 14

ACL Platform: Overview 15

Appendix A: Total Economic Impact 16 Total Economic Impact Approach 16

Project Director:

Sean Owens

December 2016

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1 | The Total Economic Impact™ Of ACL

Executive Summary

ACL provides governance, risk, and compliance (GRC) management

software for assessing risk, executing projects, continuously monitoring

data, managing process documentation, and creating reports and

dashboards for business visibility. ACL commissioned Forrester

Consulting to conduct a Total Economic Impact™ (TEI) study and examine

the potential return on investment (ROI) enterprises may realize by

deploying ACL software. The purpose of this study is to provide readers

with a framework to evaluate the potential financial impact of the ACL

Platform on their organizations.

To better understand the benefits, costs, and risks associated with this

investment, Forrester interviewed a current ACL customer, an international

airport management organization with several years of experience with the

software.

In airport management, regulations and business needs dictate the need

to measure operational, security, and safety data to demonstrate

compliance. Prior to ACL, the organization struggled to quickly pull

together report and dashboard data from various sources to give visibility

to key audit performance metrics. Data sources were not always reliable;

data was often days or weeks old when reviewed by managers. Audits and

operational risk reviews were slow and time intensive.

With ACL, the organization was able to improve data collection and report

creation, speed up operational risk reviews, complete more audits,

improve business visibility and decision-making, and do all this with a

smaller team. “ACL was part of a total solution that delivered the right

software tools to the right personnel for the right activities,” said the

program manager for the airport.

Key Findings Quantified benefits. The following risk-adjusted quantified benefits are

representative of those experienced by the company interviewed:

› Reduced frequency and impact of issues, especially related to

avoidable airport shutdown events, by 50%. With ACL, the

organization is able to both better manage and collaborate on process

documentation and also connect to real-time data sources to identify

out-of-compliance equipment (like a security x-ray machine with a

scanning fluctuation). Avoidable airport or terminal shutdown events are

now greatly reduced in both frequency and duration by about half,

adding up to a three-year present value of nearly $450,000.

› More than $650,000 (present value over three years) in new profit

attributed to improved decision-making with fresh, reliable, and

comprehensive data reports and dashboards. The organization has

developed a number of reports and executive dashboards to monitor

and track performance and share the health of the business with

managers and executives. Those leaders are able to make more

informed decisions, which can reduce avoidable losses and take

advantage of new opportunities.

› A 33% improvement in the number of audits completed and a 50%

reduction in the amount of time it takes to complete some audits — all

with a smaller audit team. With ACL’s easy setup and management,

access to data sources can be quickly configured, and both planned and

ad hoc audits can be completed much more quickly with more and more

Benefits and costs

Reduced frequency and impact of issues with ACL risk management

$446,794

New profit attributed to improved decisions with better data visibility

$652,799

Upfront costs

$140,000


reliable data stored in ACL.

› Two audit team members have been reallocated to other under-

resourced teams. With improvement in audit processes, some current

audit team members — as well as future planned hires — can be

avoided.

Unquantified benefits. The interviewed organization experienced the

following benefits that are not quantified for this study:

› Productivity improvements and cost savings related to the

reduction of other issues. While shutdown-related issues are more

noticeable, there are plenty of other avoidable issues reduced with

better monitoring and management, such as a reduced risk of stockouts

in stores, improved food handling in restaurants, and shorter security

lines.

› Additional audit management improvement time savings. Audit

team time savings have been estimated, but every location and

department participating in an audit can also benefit from streamlined

and faster audit processes.

Costs. The interviewed organization experienced the following risk-

adjusted costs:

› Deployment and implementation costs of $140,000. This includes

planning, implementation, and training.

› Ongoing total licensing and management costs of less than $275,000

(present value over three years).

Forrester’s interview with an ACL customer and subsequent financial

analysis found that the organization experienced benefits of more than $2

million over three years versus costs of less than $415,000, adding up to a

net present value (NPV) of more than $1.6 million and an ROI of 402%.

ROI 402%

NPV $1,657,027

Audit cycle time 4 to 2 weeks

Avoidable risks 50%

PV of benefits

$2,068,715

PV of costs $411,689

Initial Year 1 Year 2 Year 3

Three-Year Risk-Adjusted Financial Summary

$446.8K

$652.8K

$422.0K

$547.1K

Reducedissues

Improveddecisions

Faster andless costly

audits

Avoidedresource

costs

Three-Year Present Value Of Risk-Adjusted Benefits


TEI Framework And Methodology From the information provided in the interview, Forrester has constructed a

Total Economic Impact (TEI) framework for those organizations

considering implementing the ACL Platform.

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 the ACL Platform can have on an

organization. Specifically, we:

DUE DILIGENCE

Interviewed ACL stakeholders and Forrester analysts to gather data relative to the ACL Platform.

CUSTOMER INTERVIEW

Interviewed an organization using the ACL Platform to obtain data with respect to costs, benefits, and risks.

FINANCIAL MODEL FRAMEWORK

Constructed a financial model representative of the interview using the TEI methodology, and risk-adjusted the financial model based on issues and concerns of the interviewed organization.

CASE STUDY

Forrester employed four fundamental elements of TEI in modeling ACL’s impact: 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 A for additional information on the TEI methodology.

The TEI methodology

helps companies

demonstrate, justify, and

realize the tangible value

of IT initiatives to both

senior management and

other key business

stakeholders.

DISCLOSURES

Readers should be aware of the following:

This study is commissioned by ACL 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 ACL.

ACL 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.

ACL provided the customer name for the interview but did not participate in the

interview.


The ACL Customer Journey

BEFORE AND AFTER THE ACL INVESTMENT

Interviewed Organization For this study, Forrester conducted an interview with a current ACL

customer, the audit team at an organization that manages all operations

at several major airports, as well as does parts of terminal or retail

management at several other international airports:

Key Challenges The organization knew it was not managing risk as well as it could, which

exposed it to a greater possibility of a variety of business issues,

including the shutdown of an airport terminal or the complete shutdown

of an airport due to a mistake or lapse in security, food handling, health,

or other procedures.

› Data used for monitoring and reporting was often out of date. Key

systems were measured, but extracting data from various sources was

time consuming; aggregating data from multiple sources would take

even longer. By the time a manager or executive could see business

health, the information was days or weeks old.

› Audit processes were time consuming and required a lot of in-

person management and legwork. Again, data sources were not

easy to access to extract data, meaning audit managers had to create

and run ad hoc reports, sometimes also requiring help from IT.

› Process documentation was not well managed, with no scheduled

review and update actions. Process documents were not stored in a

central place and were not regularly reviewed or updated.

Solution Requirements The interviewed organization searched for a solution that could:

› Help standardize and publish procedures.

› Help manage data from multiple sources that track process metrics.

› Deliver a summary of overall risk management health.

The organization found its own homegrown and third-party solutions

lacking, and it chose the ACL Platform as its global risk and process

management solution. ACL was deployed and connected to data

sources at both the main and international locations to monitor, audit,

and manage risk exposure.

Key Results The interview revealed that key results from the ACL Platform investment

include:

› Reduced risks, leading to reduced issues and shutdown events.

With better and more timely access to key process data, audit

managers can quickly identify when a task or procedure is skipped or

noncompliant to identify and deal with issues before they happen. In

particular, for an airport, many security and health issues can lead to

INDUSTRY REGION INTERVIEWEE TEAM STARTED ACL

Transportation Europe Program manager Six people 2014

“ACL was part of a total

solution that delivered the right

software tools to the right

personnel for the right

activities.”

— Program manager,

international airport

“Using ACL in a more mature

process where essentially

there’s an audit performed

almost every week — that’s at

least 33% more than we

completed before ACL. And

now with fewer people, as

well.”




an area or all-airport shutdown, which can mean significant lost

revenue, expensive compliance fees, upset customers and airline

partners, and costs to remediate any problems.

› Audit and risk management strategic value to the business. For

the airport, like many other organizations, the audit team used to be

seen as an obstacle or a traffic cop. With ACL, the audit team is able to

respond more quickly — before an issue occurs, not days or weeks or

months after. Business groups recognize that these issues are

important and that the audit team is there to help, which has increased

the value of the information the audit team provides and the visibility of

the team within the organization. “ACL enables us to get so forensic

and so precise that it means there is essentially no hiding place. So it

means that the business would take us more seriously than they did

previously,” said the program manager for the airport.

› Audit time savings. With ACL’s easy-to-use tools and data

connections to a wide variety of sources, data monitoring and

dashboarding is much easier and faster to set up. Audit information

is more connected, so in-person audit trips are shorter or needed

less often, saving not only on the overall audit process time but also

on airfare and hotel costs. “Using ACL in a more mature process

where essentially there’s an audit performed almost every week —

that’s at least 33% more than we completed before ACL. And now

with fewer people, as well,” continued the program manager.

› Audit group employee reallocation savings. Along with faster

audit processes, the group is able to take on more audits at more of

its home and international locations, with the same or fewer

resources.

Key metrics

Six FTEs on the audit

team

Up to 48 audits per year

14 days to complete

fieldwork for each audit

“ACL enables us to get so

forensic and so precise that it

means there is essentially no

hiding place. So it means that

the business would take us

more seriously than they did

previously.”




$446,794

Three-year

benefit

Reduced issues

Financial Analysis

QUANTIFIED BENEFIT AND COST DATA

ACL Helps Avoid Costs With Improved Risk Event

Management To Reduce Shutdowns Airport shutdowns occur due to a variety of external influences, such

as the weather or a security threat. But some shutdowns are

avoidable, like evacuating because of a mishandled bag or a

malfunctioning screening device. Process data was stored, but not

immediately available, so that if an x-ray scanner slipped outside of

performance limits it might not be fixed until the end of a shift or the

day, or the scanner might break down completely and cause

significant delays and have an impact on the traffic into a terminal. When

an avoidable event did occur that caused a shutdown, a section of the

terminal, the entire terminal, or even the whole airport could be

evacuated or shut down for several hours. Retail stores could lose sales,

passengers could cancel trips, regulatory agencies could levy fines, and,

as the program manager for the airport said, “In an airport environment, if

a key system goes down, we could have a camera crew from television,”

likely leading to bad PR and having to invest in a marketing campaign to

recover.

With the ACL Platform, the organization is able to reduce, eliminate,

and/or shorten any issues that might lead to a shutdown, as well as

avoid or mitigate many other types of issues. Data monitoring with ACL

is done in real time and can immediately flow into reports and

dashboards for effective information distribution and delivering alerts

before an issue occurs. Before, the organization dealt with issues in a

reactive manner, after something happened. With ACL, the organization

can identify and mitigate issues before they occur:

› Avoidable issues occur about zero or one times per location per year.

› An issue such as those covered above may shut down an area for

about 2 hours.

› The organization, through retail and other operations revenues, earns

about $3,000 (at an international location) to nearly $100,000 (at a

primary airport) per hour at each location.

Total of all benefits across the four areas listed below, as well as present values (PVs) discounted at 10%. Over three years, the organization expects risk-adjusted total benefits to be a PV of more than $2 million.

Total Benefits

REF. BENEFIT YEAR 1 YEAR 2 YEAR 3 TOTAL PRESENT

VALUE

Atr Reduced cost of risk event issues with ACL $179,663 $179,663 $179,663 $538,988 $446,794

Btr New income as a result of better decisions using info from ACL reports

$262,500 $262,500 $262,500 $787,500 $652,799

Ctr Risk management team audit process time and cost avoidance with ACL

$169,698 $169,698 $169,698 $509,095 $422,015

Dtr

Risk management team salary cost avoided with ACL

$220,000 $220,000 $220,000 $660,000 $547,107

Total benefits $831,861 $831,861 $831,861 $2,495,583 $2,068,715


› ACL can reduce the frequency or length of avoidable issues by 50%.

› Regulatory fines cost about $15,000 per avoidable event.

› Marketing costs to recover from any PR mishaps due to avoidable PR

events cost about $20,000 per avoidable event.

› Many other issues, while not causing a shutdown, are also reduced or

avoided with ACL, but they are not as easily measured. See the

Unquantified Benefits section below for more detail.

There are a number of potential risks that can affect this benefit, mainly

stemming from some assumptions that are highly variable. Refer to

Appendix A for more details, but changes in assumptions that can

affect this benefit are:

› Shutdown events happen at irregular times and their frequency is

hard to predict.

› The amount of lost revenue in an hour is greatly dependent on

factors such as the location, what retail shops are nearby, and the

time of day.

Impact risk is the risk that the business or technology needs of the organization may not be met by the investment in the ACL Platform, resulting in lower overall total benefits. The greater the uncertainty, the wider the potential range of outcomes for benefit estimates.

Avoided Costs From Reduced Risk Event Issues — Calculation Table

REF. METRIC CALCULATION YEAR 1 YEAR 2 YEAR 3

A1 Annual revenue (millions) $700

A2 Number of airports — primary service 2

A3 Number of airports — secondary service 21

A4 Revenue (per hour per location) $23,973

A5 Estimated revenue per hour — peak time at primary location

$95,890

A6 Estimated revenue per hour — slow time at primary location

$11,986

A7 Estimated revenue per hour — secondary location (at any time)

$2,854

A8 Chance an airport-closing event is during peak time

80%

A9 Chance an airport-closing event is during slow time or at secondary location

20%

A10 Chance any airport-closing event happens in a day

1.00%

A11 Airport-closing events per year across all locations

84

A12 Average time of each closing event (hours) 2

A13 Percentage of events that could be avoided with better planning and management

10%

A14 Reduction in time or frequency of events affected by ACL

50%

A15 Regulatory fines or fees as a result of avoidable airport shutdown

$80,000

A16 Estimated additional marketing cost to recover from avoidable airport shutdown

$40,000

At Reduced cost of risk event issues with ACL TBD $199,625 $199,625 $199,625

Risk adjustment ↓10%

Atr Reduced cost of risk event issues with ACL (risk-adjusted)

$179,663 $179,663 $179,663


$652,799

Three-year

benefit

Improved decisions

To account for these risks, Forrester adjusted this benefit downward by

10%, yielding an annual benefit of $179,663. Over the three-year

analysis period, the risk-adjusted present value of this benefit is

$446,794.

ACL Helps Improve Business Decision-Making With

Real-Time Data Access And Improved Analysis And

Visualization Tools The organization manages airports, terminals, and airport retail

operations at a number of locations around the world. Periodic reporting

was a manual and time-intensive process for a variety of reasons. It was

difficult to track ongoing operations as data is captured by different

systems, measured at different times, and valued with different

currencies. That meant any monthly review would be looking at

information that was days or weeks old. Managers and executives made

decisions, but often the issue to be dealt with had become more severe

or the opportunity had been missed.

With ACL, the organization is able to connect to data sources to set up

real-time monitoring, and also use that data to feed reports and

dashboards for executive and management review. The organization is

able to deal with issues and take advantage of opportunities more

quickly, saving costs and increasing revenue. While the exact increase in

revenue specifically as a result of ACL is hard to measure, given the

many influences and activities that can affect revenue, the organization

feels the following is a credible approximation of ACL’s improvement:

› Total annual revenue of $700 million across all operations.

› A 0.05% improvement in total revenue due to better data monitoring

and reporting with ACL.

As already mentioned, it is difficult to estimate the exact impact that

better data monitoring and reporting with ACL has on total revenue.

Refer to Appendix A for more details, but changes in assumptions that

can affect this benefit are:

› Revenue will likely vary from year to year.

› The impact of ACL may be overestimated.


25%, for a risk-adjusted annual benefit of $262,500. Over the three-year

analysis period, the present value of this benefit is $652,799.

Audit-Related Cost Savings With ACL Before ACL, the organization conducted annual in-person audits at most

main and international locations. Local audits were easy enough to

schedule and manage. An international audit would regularly take four

weeks onsite to review the books, review process documentation and

Reduction In Software Integration Development Expense — Calculation Table


B1 Total annual income (millions) $700 $700 $700

B2 Improvement in income as a result of ACL 0.05% 0.05% 0.05%

Bt New income as a result of better decisions B1*B2 $350,000 $350,000 $350,000


Btr New income as a result of better decisions (risk-adjusted)

$262,500 $262,500 $262,500


$422,015

Three-year

benefit

Faster and lesscostly audits

metrics, and prepare an audit summary report. That meant a lot of lost

productivity, airline tickets, and hotel rooms.

Also, ACL process documents were previously stored in a secure online

repository, but they were reviewed on an ad hoc basis and were

sometimes hard to find. This meant not every employee had easy access

to process documentation to be able to reference as part of completing

his or her job effectively.

Easy data connection with ACL, integrated with real-time monitoring and

reporting, provides the tools to quickly focus on key financial and process

metrics. This means that audits are quicker to complete, and some (if not

all tasks) for an audit can be completed remotely. Process

documentation is stored within the ACL Platform, for easy access as well

as management tools to review and update these regularly. The

organization is also able to complete more audits with the same number

or fewer people on the team — meaning they can work with more

business groups that may have been less of a priority in the past (also

reflected in the better business decisions benefit in the previous section).

Comparing the before- and after-ACL audit team performance, the

organization found:

› Before ACL, 32 audits were completed each year, and now it is up to

48.

› Half of all audits are at the main location, while the other half are

spread out across international locations.

› Audits before ACL would take four weeks, and now they take two.

Audits may be conducted by more than one person, but essentially

they averaged one full-time equivalent (FTE) working at about 85%

before ACL. Now, they average one FTE working at about 65%.

› International-location audits before ACL were conducted fully at that

location; today only half the time is spent onsite.

› All audits used to be on a one-year cycle, but now they can be

completed once every two or three years (though the increase in total

audits reflects the ability to review more departments across the

organization — many of which were not a focus before ACL when

resource constraints were more of an issue).

› Since all international audits are completed onsite, and they are now

conducted less often than before, there is a reduction in airline ticket

costs.

› Since all international-location audits now take less time onsite, much

fewer hotel nights are required.

Given the amount of inputs driving the total financial impact of this

benefit, there is a lot of opportunity for variance. Refer to Appendix A for

more details, but changes in assumptions that can affect this benefit are:

› Overestimated airfare or hotel costs.

› Too high or low estimates for resource cycle or work time estimates.

› Overestimated number of audits possible in future years with the

slightly smaller audit team.


10%, for an annual benefit of $169,698, which adds up to a three-year

risk-adjusted present value of $422,015.

Before: one audit per year

per international location

Now: one audit every

three years per

international location


$547,107

Three-year

benefit

Avoided resourcecosts

Saved And Avoided Resource Costs With ACL In addition to the audit process productivity savings, the organization is

able to conduct audits with fewer employees, meaning current

employees can be reallocated to other tasks (such as ongoing process

monitoring), and/or planned future hires can be avoided.

With ACL, the organization has reduced the size of the audit team by two

people, while still completing as many (and even more) audits at a higher

level of quality.

While a 0% risk adjustment has been applied to the organization’s

estimate, refer to Appendix A for more details, and note that other

organizations may apply a risk adjustment if salaries are not known and

thus could be overestimated.

The annual benefit is $220,000, adding up to a three-year risk-adjusted

present value of $547,107.

Faster And Less Costly Audits, Including Reduced Airfare And Hotel Costs — Calculation Table


C1 Internal audits per year before ACL 32

C2 Internal audits per year with ACL 48 48 48

C3 Weeks spent on each audit before ACL 4

C4 Weeks spent on each audit with ACL 2 2 2

C5 Percent of time spent specifically on audits before ACL

85%

C6 Percent of time spent specifically on audits with ACL

65% 65% 65%

C7 Hours spent on each audit before ACL 136

C8 Hours spent on each audit since ACL 52 52 52

C9 Hours spent on audits each year before ACL 4,352

C10 Hours spent on audits each year with ACL 2,496 2,496 2,496

C11 Audit team FTE salary (fully burdened, per FTE) $110,000 $110,000 $110,000

C12 Audit team audit process time savings with ACL (per year)

$98,154 $98,154 $98,154

C13 Flights required to complete audits (per year) before ACL

16

C14 Flights required to complete audits (per year) with ACL

8 8 8

C15 Hotel nights required to complete audits (per year) before ACL

448

C16 Hotel nights required to complete audits (per year) with ACL

56 56 56

C17 Average airfare cost (per round trip) $1,500

C18 Average hotel cost (per night) $200

C19 Airfare and hotel savings (per year) $90,400 $90,400 $90,400

Ct Audit team audit process time and cost avoidance with ACL

C12 + C19 $188,554 $188,554 $188,554


Ctr Audit team audit process time and cost avoidance with ACL (risk-adjusted)

$169,698 $169,698 $169,698


Unquantified Benefits The organization was not able to quantify all benefits enabled by ACL.

Some benefits are related to a variety of process changes, technology

tools, and employee training — in addition to the implementation of ACL.

Some benefits that the organization has identified but not quantified are:

› It may see improvements related to nonshutdown issues, such as

reducing stockouts in the retail stores and duty free shops, improving

bag check and security procedures, and others.

› The audit department is a relatively small team within the large

organization. It focuses on more than just traditional finance and

accounting auditing, and other departments benefit from its help. For

example, faster and reduced audits also mean that people on the

teams being reviewed spend less time on audit tasks. They can also

benefit from the guidance provided by the audit team as well as data

available in ACL, such as when an executive or manager reviews the

audit risk management information and targets a new business

opportunity (potentially improving revenue as detailed above), which

may also lead to team-specific cost savings or productivity benefits.

Flexibility The value of flexibility is clearly unique to each customer, and the

measure of its value varies from organization to organization. There

are multiple scenarios in which a customer might choose to implement

the ACL Platform and later realize additional uses and business

opportunities. For the organization this includes:

› There are many departments that could benefit from a focused ACL

implementation. As mentioned, the audit department is a relatively

small team within the large organization. The security department,

for example, has its own set of (often very confidential) data and

processes that it needs to track to ensure quality and compliance. ACL

is already being considered for expansion to that team and others.

Flexibility would be quantified when evaluated as part of a specific

project (described in more detail in Appendix A).

Flexibility, as defined by TEI, represents an investment in additional capacity or capability that could be turned into business benefit for a future additional Investment. This provides an organization with the "right" or the ability to engage in future initiatives but not the obligation to so.

Reduction In Software Integration Development Expense — Calculation Table


D1 Audit team FTE salary (fully burdened) $110,000 $110,000 $110,000

D2 Audit FTE hires avoided or reallocated to other valued tasks

2 2 2

Dt Audit team salary cost avoided with ACL D1 * D2 $220,000 $220,000 $220,000

Risk adjustment 0%

Dtr Audit team salary cost avoided with ACL (risk-adjusted)

$220,000 $220,000 $220,000


Deployment And Implementation Costs To implement ACL, the organization was able to get ACL up and running

extremely quickly, though some IT and audit resource time was required

at each location to connect data sources and develop standard reports

and dashboards.

Additionally, the organization needed to deliver training to many people

in its main airports as well as in international locations, to understand

new data monitoring processes, learn how to use and read new ACL

reports, and know what would be needed (or not needed anymore) for

upcoming audits. The organization estimated:

› About 750 hours of planning, data setup, and ACL implementation.

› About 2,000 hours of training across all its locations.

Forrester risk-adjusted implementation costs by 0%, but refer to

Appendix A for more information about Forrester’s approach to risk

adjustment.

The organization estimates an initial cost of $140,000.

ACL Licensing And Ongoing Resource Costs The organization only needs a few ACL licenses for its audit team. As a

service, ongoing subscription costs are applied, along with some new

tasks associated with creating and managing reports and dashboards,

monitoring new data sources, and managing ACL features. (However,

note that while some ACL-specific task time is included here, overall task

time related to audits is greatly reduced, as covered in the Benefits

section.)

Given that third-party consulting and internal resource costs may vary

over time, Forrester adjusted this benefit by 15%. Refer to Appendix A

for more information about Forrester’s approach to risk adjustment.

The organization estimates ongoing costs are $109,250 per year, adding

up to a risk-adjusted, three-year present value of $271,689.

Total Costs

Total of all costs across the areas listed below, as well as present values (PVs) discounted at 10%. Over three years, the organization expects risk-adjusted total costs to be a PV of less than $415,000.

Two months

Total deployment time

Two weeks

ACL implementation time

Implementation risk is the risk that a proposed investment in the ACL Platform may deviate from the original or expected requirements, resulting in higher costs than anticipated. The greater the uncertainty, the wider the potential range of outcomes for cost estimates.

REF. COST INITIAL YEAR 1 YEAR 2 YEAR 3 TOTAL PRESENT

VALUE

Etr Deployment and implementation costs

$140,000 $0 $0 $0 $140,000 $140,000

Ftr Ongoing licensing and resource costs

$0 $109,250 $109,250 $109,250 $327,750 $271,689

Total costs (risk-adjusted) $140,000 $109,250 $109,250 $109,250 $467,750 $411,689

Deployment And Implementation Costs — Calculation Table

REF. METRIC CALCULATION INITIAL YEAR 1 YEAR 2 YEAR 3

E1 Implementation resource costs $40,000

E2 Training/change management costs $100,000

Et Deployment and implementation costs

E1 + E2 $140,000 $0 $0 $0

Risk adjustment 0%

Etr Deployment and implementation costs (risk-adjusted)

$140,000 $0 $0 $0


Ongoing Costs — Calculation Table

REF. METRIC CALCULATION INITIAL YEAR 1 YEAR 2 YEAR 3

F1 ACL subscription costs $20,000 $20,000 $20,000

F2 Internal net-new ACL task resource costs

$50,000 $50,000 $50,000

F3 Additional third-party consulting $25,000 $25,000 $25,000

Ft Ongoing costs F1+F2+F3 $95,000 $95,000 $95,000

Risk adjustment ↑15%

Ftr Ongoing costs (risk-adjusted) $0 $109,250 $109,250 $109,250


Financial Summary

CONSOLIDATED THREE-YEAR RISK-ADJUSTED METRICS

Cash Flow Chart (Risk-Adjusted)

The financial results calculated in the Benefits and Costs sections can be used to determine the ROI and NPV for the organization's investment in the ACL Platform. Forrester assumes a yearly discount rate of 10% for this analysis.

These risk-adjusted ROI

and NPV values are

determined by applying

risk-adjustment factors to

the unadjusted results in

each benefit and cost

section.

Cash Flow Table (Risk-Adjusted)

INITIAL YEAR 1 YEAR 2 YEAR 3 TOTAL PRESENT

VALUE

Total costs ($140,000) ($109,250) ($109,250) ($109,250) ($467,750) ($411,689)

Total benefits $0 $831,861 $831,861 $831,861 $2,495,583 $2,068,715

Net benefits ($140,000) $722,611 $722,611 $722,611 $2,027,833 $1,657,027

ROI 402%

-$0.5M

$0.5M

$1.0M

$1.5M

$2.0M

$2.5M

INITIAL YEAR 1 YEAR 2 YEAR 3

Total benefits

Total costs

Cumulative total

Cash


ACL Platform: Overview

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

or its offerings.

ACL Services provides GRC technology solutions to approximately 8,000 supported customers from nearly 140 countries around the world, including close to 90% of the Fortune 500 list companies. Founded in 1987 and headquartered in Vancouver, Canada, ACL employs 280 professionals across the globe, with offices in North America, Europe, and Asia.

ACL’s integrated family of products — including a cloud-based GRC solution and data analytics products — supports all key components of the GRC process and is designed to integrate risk management activities between all levels of the organization, from the C-suite to front-line audit and risk professionals to the business managers they interact with.

Through a combination of software tools and related domain content, accumulated over nearly 30 years of experience, ACL provides the software solutions that enable risk management professionals to identify and mitigate risk, protect company profits, and improve business performance by:

APPROACHING RISK MANAGEMENT INTELLIGENTLY IN ALIGNMENT WITH STRATEGIC OBJECTIVES

ACL software provides users with an integrated platform for assessing risk, managing projects, continuously monitoring transactional data, and collaborating with the business to create better visibility and reporting of organizational risk performance. Using ACL, risk management professionals can provide risk intelligence to their organizations by linking strategic risks to enterprise objectives and centrally tracking their risk events. Executives can gain visibility into strategic risk performance with one-click reports and dashboards that indicate significant movements in their risk environment.

PROVIDING ACTIONABLE DATA-DRIVEN INSIGHTS AND DECISION SUPPORT FOR EXECUTIVE MANAGEMENT

ACL is the only GRC platform vendor with the integrated ability to collect data from any enterprise data source, transform it in any way necessary, exercise powerful analytic capability (ranging from deep data mining to predictive analysis), and visualize it in an interactive format for powerful storytelling. Furthermore, ACL is the only vendor that integrates the results of such "data-driven" capability directly into the GRC management process, thereby enabling GRC professionals to objectively track those risks that affect their organization the most and trigger appropriate corrective actions. It’s the data-driven risk management solution.

FOCUSING ON WHAT MATTERS WITH A MODERN, COLLABORATIVE RISK MANAGEMENT AND DATA ANALYTICS PLATFORM

The broad landscape of risk management and electronic work paper platforms is largely built on legacy technology by vendors with antiquated approaches to software development. This created an opportunity for ACL to put the customer back at the center of the software design process by focusing on user interface (UI) design and user experience first. ACL UIs are beautiful, simple, and easy to use, leading to rapid customer adoption. This customer experience aspect of ACL is difficult for competitors to match.

ACL's intuitive design and user interface enables GRC professionals to easily facilitate communication between team members and business owners, send notifications for incident analysis and remediation, perform risk assessment surveys, and manage attestations. In addition, social collaboration capabilities allow users to seamlessly manage workflow and content, author and approve documents, store supporting evidence, and perform risk mitigation action planning.

REALIZING VALUE QUICKLY

Leveraging true SaaS delivery along with a simple design and mobile app capability, ACL solutions deliver value in two to three months of implementation (not six months or one to two years down the road after a lengthy customization process). Moreover, customers can access online self-help resources and quick-start guides to start onboarding quickly and evolve to full GRC process automation.

SUPPORTING A VARIETY OF USE CASES

ACL technology was architected to accommodate a variety of GRC use cases with domain-specific support. ACL uses a domain model architecture, a "one objective, risk, and control"-oriented framework that spans across different use cases. Customers are able to leverage a fully integrated platform that not only provides flexibility across various use cases but also “future proofs” their technology choice when partnering with ACL.

Learn more about ACL’s integrated family of products at http://www.acl.com.

http://www.acl.com/


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 in years 1

through 3 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.

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.

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.

RETURN ON INVESTMENT (ROI)

A project’s expected return in percentage terms. ROI is calculated by dividing net benefits (benefits less costs) by costs.

DISCOUNT RATE

The interest rate used in cash flow analysis to take into account the time value of money. Forrester assumes a yearly discount rate of 10% for this analysis. Organizations typically use discount rates between 8% and 16%.

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.

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