GUEST BLOG: Forrester’s Total Economic Impact Study of Red Hat CloudForms

Author’s note: The following blog details a recent Total Economic Impact (TEI) study conducted by Forrester Consulting centered around Red Hat CloudForms. The results of that study can be viewed here.

The Red Hat Management portfolio has seen significant upgrades, including the latest release of Red Hat CloudForms 4.1, and has delivered efficiency and costs savings to worldwide customers. This is confirmed by analysts research and testimonials from customers like Cox Automotive, who saved almost 10 years of time and almost $5 million in soft savings. Moreover, because CloudForms supports a wide variety of platforms, including three of the largest public clouds – Amazon Web Service, Microsoft Azure and Google Cloud Platform, CloudForms is well-suited for enterprises seeking to manage various stages of virtualization and cloud deployments, as well as containers. The following blog, written by Forrester Consulting, provides an example of the economic impact CloudForms could have on your business.

Red Hat commissioned Forrester Consulting to conduct a Total Economic Impact (TEI) study to examine the value that Red Hat CloudForms customers could achieve by deploying Red Hat CloudForms. We spoke with a large US software company about the benefits, costs, risks, and flexibility of Red Hat CloudForms and cloud management platforms. This company has roughly $4B in annual revenue, 7,500 staff, and sells its software to both businesses and consumers.

Prior to Red Hat CloudForms, this customer had developed and maintained an internal, “homegrown” solution. 45 people from different teams regularly worked on this solution to both “keep the lights on” and make incremental improvements. However, with growing and more frequent requests from the business and staff turnover challenges, the company found it difficult to continue using its homegrown solution.

The company then embarked on a selection process to evaluate different vendor technologies that could replace the internal solution. After researching 10 vendors and narrowing down to 6 for technical assessments and conceptual discussions, the customer offered a 2-week POC opportunity to 2 vendors. The POC would consist of proving out the vendor’s performance and capability in completing the company’s 140 use-case test. While the alternative vendor was unable to complete all the use cases given an extended 6 week timeline, Red Hat was able to complete more than 140 use cases in 1.5 weeks.

Readers should also consider running similar tests that relate a conceptual POC to scenarios that are more realistic and frequent to your environments. Some example use cases that the company mentioned were:

• Due to the company’s heavy security constraints, apply different provisioning restrictions to different groups and adjust them uniquely and under a single tenant.
• Integrate with Active Directory (AD) to have the same message groups.
• Apply single sign-on (SSO).

After setting deployment goals, the company began to introduce Red Hat CloudForms into its environment. The two main benefits that the company experienced were unified service management efficiency and unified service delivery efficiency.

Unified service management efficiency focuses on the reduction in labor and effort to develop, maintain, and upgrade the internally built solution. The company was able to reduce 45 allocated resources to 10 resources in the first year of deploying Red Hat CloudForms. This 10-person team was reduced to 8 in Year 2 and 7 by Year 3. This allowed the customer to reallocate resources to other business enabling and future-thinking custom projects. This can be interpreted as either an approximately 80% efficiency improvement or that the previous state was 4.5x less efficient.

Unified service delivery efficiency centers on the reduction in labor and effort to provision and answer business user requests during the organization’s three-month peak season. In past peak seasons, a group of 100 internal resources from different departments and 30 contractors would be co-located for three months to answer all business unit requests. After the first year of deploying Red Hat CloudForms, the customer was able to provision 50% quicker with the same volume of staff.

By the second year, the customer was able to provision 91.7% quicker and did not need any of the 30 contractors anymore. After accounting for initial and recurring costs, risk-adjusting for realistic and conservative estimates, and the future value and scalability of Red Hat CloudForms, we found that the interviewed company experienced a 97% ROI, $ 5.95M net present value, and 6.8 month payback period over a three-year model. In addition to reallocating 35-38 resources to more value-add activities, the company avoided $900K-$1.8M in peak-season contractor costs by engaging a more efficient platform.

For more information on the full June 2016 case study, The Forrester Total Economic Impact of Red Hat CloudForms, please reach out to your Red Hat representative.