How to justify the economic value of your data investment
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This document discusses methods for calculating the return on investment (ROI) and other metrics to justify data investments. It provides an example of using an interactive value assessment to gather key metrics from a manufacturing customer, such as downtime hours and production units. The assessment then calculates the potential costs avoided and benefits realized, such as reduced downtime and faulty units, to determine the cost-benefit ratio and payback period of investing in data and Splunk technology. The document emphasizes that value assessments are one part of developing an overall data strategy and roadmap to optimize investments for the future.
How to justify the economic value of your data investment
- 1. © 2019 SPLUNK INC. How to Justify the Economic Value of Your Data Investment? Methods to calculate ROI, Break even point and other Ingrid Jeannot, Sr. Business Value Consultant June 23,2020
- 2. During the course of this presentation, we may make forward-looking statements regarding future events or the expected performance of the company. We caution you that such statements reflect our current expectations and estimates based on factors currently known to us and that actual events or results could differ materially. For important factors that may cause actual results to differ from those contained in our forward-looking statements, please review our filings with the SEC. The forward-looking statements made in this presentation are being made as of the time and date of its live presentation. If reviewed after its live presentation, this presentation may not contain current or accurate information. We do not assume any obligation to update any forward-looking statements we may make. In addition, any information about our roadmap outlines our general product direction and is subject to change at any time without notice. It is for informational purposes only and shall not be incorporated into any contract or other commitment. Splunk undertakes no obligation either to develop the features or functionality described or to include any such feature or functionality in a future release. Splunk, Splunk>, Listen to Your Data, The Engine for Machine Data, Splunk Cloud, Splunk Light and SPL are trademarks and registered trademarks of Splunk Inc. in the United States and other countries. All other brand names, product names, or trademarks belong to their respective owners. © 2019 Splunk Inc. All rights reserved. Forward- Looking Statements © 2019 SPLUNK INC.
- 3. © 2019 SPLUNK INC. Who am I? Ingrid Colette Jeannot MSEE (Dipl Ing.) | MBA Software Development | IT Operations | Agile Manufacturing | Automotive South Africa | Switzerland | United States Traveling | Group Exercise & Fitness Some ”fun” facts about your presenter today
- 4. © 2019 SPLUNK INC. Business Value Consulting @ Splunk … are part of an independent department in Splunk belonging to the Industry and Specialist organization … 26 worldwide, 11 EMEA, 2 DACH … have a background in technology and business Business Value Consultants Business Value Consulting Facts and Figures ... helps customers to document the projected and already realized business value of making machine data accessible, usable and valuable. … delivers CFO ready business case, adoption roadmaps and maturity assessment, customer and use case benchmarks. … performed 3,000+ engagements since 2013
- 5. © 2019 SPLUNK INC. How can we help? • IT Operations • IT Security • OT Security • Financial Services Prescriptive Value Path Interactive Value Assessment Total Cost Of Ownership Success Stories Supporting our customers to create, understand and show the value • IT Operations • IT Security • Manufacturing • Splunk Cloud vs. • Public Cloud vs. • On-premise
- 6. © 2019 SPLUNK INC. “Data is the lifeblood of any organization. It’s what drives customer engagement, boosts employee productivity, streamlines operations and, in some cases, even transforms age-old companies into digital powerhouses. “ https://www.splunk.com/pdfs/data-maturity/what-is-your-data-really-worth.pdf
- 7. © 2019 SPLUNK INC. Agility and Resilience are of Great Value The Value of Tapping All Your Data 91% “Of organizations believe that given the right data, their organization is in a strong position to compete and succeed in its markets over the next few years.” *Research conducted by the Enterprise Strategy Group (ESG), 1,350 respondents Key Findings* Organizations that place strong strategic emphasis on data see the following achievements - Increase in annual gross profit by + 12.5% (through revenue increase and operation cost decrease) - 20% of new offerings contribute to revenue growth - 93% feel they tend to make better, faster decisions than competitors using data
- 8. © 2019 SPLUNK INC. Importance of Data - cont’d Driving Profit Better utilizing more data Improving operations Maintain a competitive edge In Summary…. 13% of their gross profit comes from smarter use of data 78% have improved product/service quality by uncovering and better utilizing dark data 88% use data to support most/all activities and processes associated with manufacturing operations 61% believe their organization is ahead of the competition when developing and launching new products and services
- 9. © 2019 SPLUNK INC. How can the Economic Value be Calculated? Interactive Value Assessment Quantify the business value currently being realized with your Splunk deployment and / or to be realized with further adoption of Splunk with your environment. Revenue added over 12-month period due to improved data utilization Assumed gross margin percentage Costs reduced over 12-month period due to improved data utilization Approximate economic value created per 12- month period due to improved data utilization Calculation Economic Value
- 10. © 2019 SPLUNK INC. Deep Dive Economic Value with OEE Top Value Drivers for Manufacturing Key Value Drivers of Splunk ✔ Reduce business impact with Shorter and Fewer Production Outages ✔ Fast Time to Value by being highly flexible and therefore minimize the risk ✔ Better detection using your correlated production environment data & machine learning capabilities ✔ Faster investigation (MTTI), Resolution & Improved MTBF through rapid log search and correlated investigation conducted side-by-side by different teams (everyone looks at the same data) ✔ Faster and more comprehensive root cause analysis to prevent incident from recurring through a permanent fix or better alerting and better triage dashboards made available to relevant staff ✔ Reduce Labor Cost and Increase Output Productivity improves through increased production time leading to reduction in labor cost to improvements in QA process through automation
- 11. © 2019 SPLUNK INC. Translating Value Drivers Anticipated Improvements: Splunk Customer Success Benchmark 50% to 75% Reduction of costs of unplanned production outages and failures 10% to 30% Reduction of planned outages 30% to 50% Reduce costs from faulty units 10% to 30% Reduce cost related to process quality 30% to 50% Reduction in business impact Availability Performance Quality
- 12. © 2019 SPLUNK INC. Sample Use Case
- 13. © 2019 SPLUNK INC. Interactive Value Assesment Customer / BVC BVC Customer / BVC Compute Present results Gather information How does it work?
- 14. © 2019 SPLUNK INC. Gather Information and Compute. 60 – 90 minutes Interview. incidents / week investigated = 14 incidents affecting production / week = 3 downtime a year = 200hours Units produced / day = 23,000 Faulty units = 3% Maintenance cycles / year = 3,000 Time per cycle = 30 min Platform Cost Cost per unit + €3 Business impact / hour downtime - €10,000 Implementation Time
- 15. © 2019 SPLUNK INC. Results Cost Benefit Ratio Payback Analysis Cost-Benefit Ratio and Payback Analysis
- 16. © 2019 SPLUNK INC. Summary ✔ The trend is going towards flexibility, agility and innovation and the value behind ✔ We can support you to present a “Management Ready” business case that helps you “justifying” investing in the Future of Data ✔ Efficient proofed and tested framework for business case analysis delivers ✔ Value assessments are one part of a bigger picture: ✔ Build / Create a data strategy as part of your investment into the future ✔ Prescriptive Value Path (Maturity Assessment / Roadmap creation) etc.
- 17. © 2019 SPLUNK INC. Thank You! Ingrid Jeannot ijeannot@splunk.com