Luminate Planning ROI

Methodology

BACKGROUND This interactive model is based upon the Forrester Consulting study, The Total Economic Impact of Blue Yonder Luminate Planning, commissioned by Blue Yonder. Working with Blue Yonder customers and with a focus on Blue Yonder Luminates’ demand planning, fulfillment and inventory optimization modules, Forrester identified and quantified key benefits of investing in Luminate Planning including:
  • Reduction in inventory carrying costs
  • Reduction in out of stock cost
  • Productivities for non-planner reporting and analysis
Default assumptions and input values represent data from the case study. For the study, Forrester conducted interviews with four Blue Yonder customers. Interviewed customers include the following:
Industry Region Interviewee Annual Revenue
Beverage Latin America Logistics Center of Excellence Manager > $25 Billion
Supply Chain Management Global Chief Technology Officer > $10 Billion
Supply Chain Service India Head of Supply Chain Planning > $20 Billion
Distributor United States Supply Chain > $10 Billion
TOOL METHODOLOGY Forrester used the following methodology to develop this tool:
  • Forrester gathered data from existing Forrester research relative to Blue Yonder Luminate Planning and the market in general.
  • Forrester interviewed Blue Yonder marketing and strategy personnel to fully understand the value proposition of Blue Yonder Luminate Planning.
  • Forrester constructed a financial model.
  • Forrester interviewed four Blue Yonder Luminate Planning customers as the basis for the data in this model.
  • Forrester constructed this calculator based on the model in the associated study and in accordance with Forrester and TEI standards. Forrester’s aim is to clearly show all calculations and assumptions used in the analysis.
DISCLAIMER Blue Yonder commissioned Forrester Consulting to develop this business case model in October 2020 using its proprietary Total Economic Impact™ methodology. The intent is for Blue Yonder to guide prospects through the questionnaire in order to solicit inputs specific to their business. Blue Yonder is not permitted to change the calculations or equations. Forrester believes that this analysis is representative of what companies may achieve based on the inputs provided and any assumptions made. Forrester does not endorse Blue Yonder or its offerings. Although great care has been taken to ensure the accuracy and completeness of this model, Blue Yonder and Forrester Research are unable to accept any legal responsibility for any actions taken on the basis of the information contained herein. The tool is provided ‘AS IS,’ and Forrester and Blue Yonder make no warranties of any kind.
DISCLOSURES The reader should be aware of the following:
  • This interactive tool is commissioned by Blue Yonder and delivered by the Forrester Consulting group.
  • Blue Yonder reviewed and provided feedback to Forrester, but Forrester maintains editorial control over the calculator and its equations and did not accept changes that contradicted Forrester’s findings or obscured the meaning of the calculations.
  • The customer names for the interviews in the associated study were provided by Blue Yonder.
  • Forrester interviewed four Blue Yonder Luminate Planning customers as the basis for the data in this model.
  • Forrester makes no assumptions as to the potential return on investment that organizations will receive. See the Disclaimer section.
  • This interactive tool is not meant to be used as a competitive product analysis.

TEL METHODOLOGY

TEI not only measures costs and cost reduction (areas that are typically accounted for within IT) but also weighs the enabling value of a technology in increasing the effectiveness of overall business processes. For this calculator, Forrester employed four fundamental elements of TEI in modeling the financial impact of producing a TEI study: 1) cost and cost reduction, 2) benefits to the entire organization, 3) risk, and 4) flexibility. Given the increasing sophistication of IT investment cost analyses, Forrester’s TEI methodology serves an extremely useful purpose by providing a complete picture of the total economic impact of purchase decisions.
GLOSSARY
Financial Discount Rate The interest rate used in cash flow analysis to take into account the time value of money. Companies set 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 organization 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 net present value of cash flows.
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.
Risk-adjusted Forrester risk-adjusts cost and benefit estimates to better reflect the level of uncertainty that exists in real-life business scenarios but not necessarily captured in traditional business cases. If a risk-adjusted ROI still demonstrates a compelling business case, it raises confidence that the investment is likely to succeed because the risks that threaten the project have been taken into consideration and quantified. In general, risks affect costs by raising the original estimates, and they affect benefits by reducing the original estimates.
Payback period The breakeven point for an investment. The point in time at which net benefits (benefits minus costs) equal initial investment or cost.