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The Total Economic Impact™ of IBM Watson Natural Language Processing (NLP) Solutions The Total Economic Impact™ Of IBM Watson Natural Language Processing (NLP) Solutions Cost Savings And Business Benefits Enabled By IBM Watson Natural Language Processing (NLP) Solutions FEBRUARY 2021 A FORRESTER TOTAL ECONOMIC IMPACT™ STUDY COMMISSIONED BY IBM Table Of Contents Consulting Team: Sarah Musto Connor Maguire Executive Summary ................................................. 1 Knowledge Worker Definition ................................. 5 Key Challenges ...................................................... 5 IBM Natural Language Processing Solutions ........ 6 Composite Organization ......................................... 7 Analysis Of Benefits ................................................ 8 Knowledge Worker Productivity ............................. 8 Incremental Profit ................................................. 10 Prior Tool Cost Avoidance.................................... 11 Unquantified Benefits ........................................... 12 Flexibility ............................................................... 12 Analysis Of Costs .................................................. 14 IBM License Costs ............................................... 14 Use Case Development And Management .......... 15 User Training ........................................................ 16 Financial Summary ................................................ 18 Appendix A: Total Economic Impact ................... 19 Appendix B: Supplemental Material .................... 20 Appendix C: Endnotes .......................................... 20 ABOUT FORRESTER CONSULTING Forrester Consulting provides independent and objective research-based consulting to help leaders succeed in their organizations. For more information, visit forrester.com/consulting. © 2021, Forrester Research, Inc. All rights reserved. Unauthorized reproduction is strictly prohibited. Information is based on the best available resources. Opinions reflect judgment at the time and are subject to change. Forrester®, Technographics®, Forrester Wave, RoleView, TechRadar, and Total Economic Impact are trademarks of Forrester Research, Inc. All other trademarks are the property of their respective companies. THE TOTAL ECONOMIC IMPACT™ OF IBM WATSON NATURAL LANGUAGE PROCESSING (NLP) SOLUTIONS Executive Summary Knowledge workers need fast access to information. Given the voluminous amount of data stored by enterprises, often in disparate systems, as well as the complex documents that knowledge workers must peruse, finding this information is often akin to searching for a needle in a haystack. Enterprises can leverage natural language processing (NLP) solutions that include cognitive search, text analytics, and machine learning capabilities to help knowledge workers make faster and smarter decisions. Enterprises can benefit by collecting and storing vast amounts of unstructured data, but what is the true KEY STATISTICS value of this data and its insights if both are difficult to find and understand? Natural language processing (NLP) solutions can help organizations turn unstructured data into insights and make information easy for customers and knowledge workers to access and understand, improving knowledge worker Return on investment (ROI) Net present value (NPV) efficiency, boosting business growth, and increasing 383% $4.86M knowledge worker and customer satisfaction. Intelligent search solutions — also referred to as AI- powered search, enterprise search, or cognitive Text analysis solutions, like IBM Natural Language search — like IBM Watson Discovery, deliver Understanding, extract metadata from text (such as information, such as factoids, passages, and tables, keywords, concepts, and sentiment) and transform it from within enterprise content (such as contracts, into actionable insights. Organizations can use these RFPs, and technical manuals) in response to user tools to interpret customer feedback, optimize queries. Unlike traditional search tools, organizations marketing efforts, quickly understand current events, can train Watson Discovery to understand the and analyze the latest market data at scale. domain-specific structure of documents, linguistic semantics, intent, and context so query responses IBM commissioned Forrester Consulting to conduct a include the most relevant and accurate answers. Total Economic Impact™ (TEI) study and examine the potential return on investment (ROI) enterprises Additionally, Watson Discovery includes the ability to may realize by deploying the IBM Watson Natural mine content — also referred to as content mining, Language Processing (NLP) portfolio of solutions, text analytics, or texting mining — that identifies which includes IBM Watson Discovery and IBM trends, patterns, and anomalies in real time and/or Watson Natural Language Understanding. The from historical data. Organizations can use tools like purpose of this study is to provide readers with a Watson Discovery to augment knowledge workers’ framework to evaluate the potential financial impact intelligence and their efficiency in searching through of implementing these solutions. complex documents, providing self-service access to common questions, and surfacing expert advice to them while interacting with customers. THE TOTAL ECONOMIC IMPACT™ OF IBM WATSON NATURAL LANGUAGE PROCESSING (NLP) SOLUTIONS 1 EXECUTIVE SUMMARY To better understand the benefits, costs, and risks of this investment, Forrester interviewed four customers Annual increase in revenue with experience using the IBM NLP solutions, which generated by workers using include both Watson Discovery and Watson Natural IBM NLP tools Language Understanding. For the purposes of this study, Forrester aggregated the experiences of the 5% interviewed customers and combined the results into a single composite organization. Unquantified benefits. Benefits that are not quantified for this study include: KEY FINDINGS • The accuracy and speed of results delivered Quantified benefits. Risk-adjusted present value via the IBM NLP solutions increase work (PV) quantified benefits include: quality. Organizations’ NLP applications enable knowledge workers to review a higher volume of • Knowledge workers that previously spent documents in a similar time frame, increasing the 20% of their time on text analysis/search quality and thoroughness of their work. tasks reduce that time by 50%. The IBM NLP solutions help knowledge workers more quickly • Applications built with IBM NLP solutions find important information within large documents improve knowledge worker and customer and across many documents, increasing their satisfaction. By providing applications that can efficiency in these tasks by 50% and enabling streamline information-gathering and search them to focus on delivering a higher quality and processes, the frustration that’s associated with higher volume of work. these formerly time-intensive tasks is reduced. Costs. Risk-adjusted PV costs include: Reduction in time spent on • IBM license costs. The interviewed information-gathering tasks organizations incurred license costs for the IBM solutions used in their internal NLP applications. 50% • Developer and subject matter expert (SME) time to build and train the organizations’ NLP • Legacy tools can be replaced by the IBM NLP applications. Developers spend time building solutions, saving $150,000 per year. the NLP application before its release, and they Traditional commercial or homegrown text provide application maintenance on an ongoing analytics or search tools are replaced by the basis. SMEs help to train the application both applications built using the IBM NLP solutions. before its release and with ongoing feedback. • The efficiency and accuracy of IBM NLP tools • Training for the NLP application users. deliver an additional 5% in business growth Knowledge workers who use and benefit from the per year. Whether its repurposing staff time for NLP applications spend 2 hours on training. more valuable work or leveraging efficiencies to The analysis found that a composite organization keep prices competitive, organizations see experiences benefits of $6.13M over three years additional growth in parts of the business where versus costs of $1.27M, adding up to a net present their IBM NLP solutions are used. value (NPV) of $4.86M and an ROI of 383%. THE TOTAL ECONOMIC IMPACT™ OF IBM WATSON NATURAL LANGUAGE PROCESSING (NLP) SOLUTIONS 2 EXECUTIVE SUMMARY ROI BENEFITS PV NPV PAYBACK 383% $6.13M $4.86M 13 months Benefits (Three-Year) Knowledge worker productivity $3.3M Incremental profit $2.5M Prior tool cost avoidance $289.6K THE TOTAL ECONOMIC IMPACT™ OF IBM WATSON NATURAL LANGUAGE PROCESSING (NLP) SOLUTIONS 3 EXECUTIVE SUMMARY TEI FRAMEWORK AND METHODOLOGY From the information provided in the interviews, DUE DILIGENCE Interviewed IBM stakeholders and Forrester Forrester constructed a Total Economic Impact™ analysts to gather data relative to two IBM NLP framework for those organizations considering an investment in IBM Watson Natural Language solutions. Processing (NLP) solutions. CUSTOMER INTERVIEWS The objective of the framework is to identify the cost, Interviewed four decision-makers at benefit, flexibility, and risk factors that affect the organizations using the IBM NLP solutions to investment decision. Forrester took a multistep obtain data with respect to costs, benefits, and approach to evaluate the impact that the IBM NLP risks. solutions can have on an organization. COMPOSITE ORGANIZATION Designed a composite organization based on characteristics
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