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The Total Economic Impact™ Of Red Hat OpenShift Cloud Services Cost Savings And Business Benefits Enabled By Red Hat JANUARY 2022 A FORRESTER TOTAL ECONOMIC IMPACT™ STUDY COMMISSIONED BY RED HAT Table Of Contents Consulting Team: Julia Fadzeyeva Mbenoye Diagne Executive Summary ................................................. 1 Red Hat OpenShift Cloud Services Customer Journey ..................................................................... 6 Key Challenges ...................................................... 6 Solution Requirements ........................................... 7 Composite Organization ......................................... 7 Analysis Of Benefits ................................................ 9 Development Velocity ............................................. 9 Offloaded Infrastructure Management ................. 10 Operational Efficiency .......................................... 12 Unquantified Benefits ........................................... 13 Flexibility ............................................................... 14 Analysis Of Costs .................................................. 15 Red Hat Fees ....................................................... 15 Labor Costs For OpenShift Training .................... 16 Dedicated Program Lead ..................................... 17 Financial Summary ................................................ 19 Appendix A: Total Economic Impact ................... 20 Appendix B: Endnotes .......................................... 21 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. © 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 RED HAT OPENSHIFT CLOUD SERVICES Executive Summary Modern-day companies are expected to have the capabilities, skills, and tools to support evolving customer demand. As a result, development organization leaders seek container-centric, application developer platforms that can support their business process. As Forrester Research noted, “Container-based cloud-native technologies help firms build, run, and manage scalable applications with resiliency and observability in public and private cloud environments.”1 Red Hat OpenShift cloud services is an enterprise- grade application development platform that is hosted KEY STATISTICS and managed by Red Hat and public cloud providers. Red Hat OpenShift cloud services enables application developers to build, deploy, and run traditional and cloud-native applications at scale. This enables enterprise IT organizations to deliver innovative applications and business value much Return on investment (ROI) Net present value (NPV) faster. 468% $4.08M Red Hat commissioned Forrester Consulting to conduct a Total Economic Impact™ (TEI) study and examine the potential return on investment (ROI) time, while additional DevOps resources were enterprises may realize by working with Red Hat assigned to manage the associated infrastructure. OpenShift cloud services.2 The purpose of this study These processes led to lack of agility and slow is to provide readers with a framework to evaluate the upgrades due to the time and cost associated with potential financial impact of Red Hat OpenShift cloud new releases, ultimately slowing the organizations’ services on their organizations. innovation and time-to-market. Organizations struggled to respond to ever-changing business To better understand the benefits, costs, and risks demands and incurred rising operational and associated with this investment, Forrester interviewed infrastructure costs driven by their legacy six customers with experience using Red Hat architecture. OpenShift cloud services. For the purposes of this study, Forrester aggregated the experiences of the After the investment in Red Hat OpenShift cloud interviewed customers and combined the results into services, the customers cut down on operational a single composite organization. overhead while gaining new flexibility from introducing containerization and the ongoing Prior to using Red Hat OpenShift cloud services, management of clusters and tools. Key results from some customers already operated in the cloud, while the investment include having a scalable, more several customers worked with on-premises, reliable application platform, without customers monolithic architectures. Developers at these needing to invest in the core infrastructure or skills organizations had to manually create and manage needed to maintain the platform. The reduced time- their environments, which meant allocating extra to-market and increased developer productivity THE TOTAL ECONOMIC IMPACT™ OF RED HAT OPENSHIFT CLOUD SERVICES 1 EXECUTIVE SUMMARY means organizations that use Red Hat OpenShift extensive testing in a very limited timeline and cloud services can do more with less. the need to respond to fire drills once in production. KEY FINDINGS Quantified benefits. Risk-adjusted present value • Security and reduced risk. Interviewees shared (PV) quantified benefits include: how Red Hat OpenShift cloud services automated certain features and security updates, • Improved development velocity. Using Red eliminating the need for manual maintenance Hat OpenShift cloud services allows while still ensuring that their environment is organizations to shorten their development cycle secure. by up to 70%. Waiting time is reduced and lines of code are shorter. The platform empowers • Reliability. Interviewees noted that using Red teams to push a project along the process. Over Hat OpenShift cloud services made their three years and a cumulative total of 300 application platform more reliable over the long applications, the shorter development cycle is run, as there are fewer outages or system worth more than $1.5 million to the composite failures, even with an expanding environment. organization. • Portability and business continuity. • Twenty percent of developer time is Interviewees also noted that Red Hat OpenShift recaptured from infrastructure maintenance cloud services ensured business continuity and work. Interviewees noted that Red Hat OpenShift assisted with their disaster recovery strategy due cloud services eliminated the need for developers to its portability, scalability, and flexibility. to maintain the application development Costs. Risk-adjusted PV costs include: infrastructure, allowing them to fully focus on building the product or solution. Over three years, • Red Hat fees. The fees paid to Red Hat consist of the cost of consulting services, cluster cost, this developer time recapture is worth more than and cost of developer training. Over three years, $2.3 million. accounting for year-to-year growth, the risk- • Improved operational efficiency by 50 adjusted PV of Red Hat fees is less than percent. Since Red Hat OpenShift cloud services $526,000. is a managed service, interviewees noted that using the solution meant they can reassign 50% • Labor costs of $96,000 for OpenShift training. Thirty-five developers participated in several days of DevOps employees who were previously of training for the OpenShift platform during responsible for managing the infrastructure to implementation of the platform. other work that is more productive. Over three years, this increased operational efficiency is • Ongoing administration of Red Hat OpenShift worth more than $1.3 million. cloud services. The composite organization assigns two FTEs to manage OpenShift. The Unquantified benefits. Benefits that are not project owner dedicates 40% of their time to quantified for this study include: leading the project and serving as the day-to-day • Developer satisfaction and retention. contact for Red Hat. This represents $251,000 in Interviewees highlighted that developers costs to the organization. benefited from Red Hat OpenShift cloud services The customer interviews and financial analysis found by allowing them to break down updates into that a composite organization experiences benefits of smaller pieces, reducing the pressure of THE TOTAL ECONOMIC IMPACT™ OF RED HAT OPENSHIFT CLOUD SERVICES 2 EXECUTIVE SUMMARY $4.95M over three years versus costs of $872,000, adding up to a net present value (NPV) of $4.08M and an ROI of 468%. THE TOTAL ECONOMIC IMPACT™ OF RED HAT OPENSHIFT CLOUD SERVICES 3 EXECUTIVE SUMMARY ROI BENEFITS PV NPV PAYBACK 468% $4.95M $4.08M 6 months Benefits (Three-Year) Development velocity $1.5M Offloaded infrastructure $2.1M management Operational efficiency $1.3M THE TOTAL ECONOMIC IMPACT™ OF RED HAT OPENSHIFT CLOUD SERVICES 4 EXECUTIVE SUMMARY TEI FRAMEWORK AND METHODOLOGY DUE DILIGENCE From the information provided in the interviews, Interviewed Red Hat stakeholders and Forrester Forrester constructed a Total Economic Impact™ analysts to gather data relative to Red Hat framework for those organizations considering an OpenShift cloud services. investment in Red Hat OpenShift cloud services. The objective of the framework is to identify the cost, CUSTOMER INTERVIEWS benefit, flexibility, and risk factors that affect the Interviewed seven decision-makers at six investment decision. Forrester took a multistep organizations using Red Hat OpenShift cloud approach to evaluate the impact that Red Hat services to obtain data with respect to costs, OpenShift cloud services can have on an organization. benefits, and risks. COMPOSITE ORGANIZATION Designed a composite organization based on characteristics of the interviewees’ organizations. FINANCIAL MODEL FRAMEWORK Constructed a financial model representative of the interviews using the TEI methodology and DISCLOSURES risk-adjusted the financial model based on Readers should be aware of the following: issues and concerns of the decision-makers. This study is commissioned by Red Hat and delivered by Forrester Consulting. It is not meant to be used as a competitive analysis. CASE STUDY Forrester makes no assumptions as to the potential ROI Employed four fundamental elements of TEI in that other organizations will receive. Forrester strongly modeling the investment impact: benefits, costs, advises that readers use their own estimates within the flexibility, and risks. Given the increasing framework provided in the study to determine the appropriateness of an investment in OpenShift sophistication of ROI analyses related to IT Dedicated. investments, Forrester’s TEI methodology Red Hat reviewed and provided feedback to Forrester, provides a complete picture of the total but Forrester maintains editorial control over the study economic impact of purchase decisions. Please and its findings and does not accept changes to the study that contradict Forrester’s findings or obscure the see Appendix A for additional information on the meaning of the study. TEI methodology. Red Hat provided the customer names for the interviews but did not participate in the interviews. THE TOTAL ECONOMIC IMPACT™ OF RED HAT OPENSHIFT CLOUD SERVICES 5 Red Hat OpenShift Cloud Services Customer Journey Drivers leading to the Red Hat OpenShift cloud services investment Interviewed Decision-Makers Number Of Applications Interviewee Industry Region On OpenShift IT innovation manager HQ in Germany, operational in Nonprofit education 12+ IT system manager 100 countries Director of engineering Conglomerate HQ in US, operational worldwide Hundreds Director for operations and HQ in Canada, operational in Telecom 300 infrastructure Canada HQ in Chile, operational in the 2 large applications with multiple Project coordinator Higher education Americas components and subprocesses HQ in Europe, operational 4 large applications with 40 Developer for IT product and sourcing Apparel worldwide components HQ in Argentina, operational in IT infrastructure manager Logistics 30 to 35 Brazil and Uruguay • Lack of in-house knowledge and experience KEY CHALLENGES with containers. While professionals Forrester There are variations in what a prior environment interviewed wanted to explore the microservice looks like for Red Hat OpenShift cloud services architecture and its benefits to their business, customers. Some had monolithic applications and they did not have the necessary skills in-house or supporting servers that required manual would rather dedicate those resources to other management. Others were already starting to move differentiating activities. towards microservices and hybrid cloud strategies. Nonetheless, the interviewees all struggled with common challenges, including: “One of our pain points is we • Monolithic applications were costly and time- don't want to do infrastructure. consuming to maintain and upgrade. We just want to focus on Interviewed customers noted that the operational building great experiences. We overhead to maintain and upgrade their prior wanted to find somebody who monolithic architecture was too costly and time- could manage this for us, so we consuming. The director of engineering at a didn't have to.” conglomerate shared: “[We had] a ton of applications running on our environment, which Director for operations and had to go through various test and validation infrastructure, telecom sequences. Our environment had to be updated every quarter, so we were constantly upgrading. Eventually, it became very expensive and time- consuming to keep upgrading. From an • Long application lifecycle and lack of agility. operational standpoint, [we wanted] to give that With their legacy monolithic applications and ball to someone else.” THE TOTAL ECONOMIC IMPACT™ OF RED HAT OPENSHIFT CLOUD SERVICES 6 THE RED HAT OPENSHIFT MANAGED SERVICES CUSTOMER JOURNEY processes, organizations struggled to support add and remove capacity depending on demand global and ever-changing business requirements. — something that can grow when our business grows or reduce capacity when it’s not needed.” • Speed of implementation and ease of use. The innovation manager in non-profit education said, “For us, the direction is to be “There was a need for a platform that developers fully supported by a partnership could easily use. Something they can interact [with Red Hat OpenShift cloud with and be productive with their applications services], so we can concentrate from the beginning.” on the core of our business. Our • Cost-effectiveness and ability to reduce core is education. And education operational overhead. Finally, interviewed is supported by infrastructure, customers noted cost as a key factor when but I’m not in the business of the comparing Red Hat OpenShift cloud services technology.” with other alternatives. The director of engineering at a conglomerate explained, “With Project coordinator, higher OpenShift [cloud services], we are saving education hundreds of thousands of dollars in operational overhead in the process.” SOLUTION REQUIREMENTS While searching for a solution to address the “We wanted to improve quality. challenges noted above, the interviewed decision- We want to shorten release makers conducted due diligence and developed a list cycles and we wanted to avoid of functional and nonfunctional requirements with downtimes.” which to evaluate vendors. The interviewees searched for a solution that fit the following criteria: Developer for IT product and • A managed service with robust support so sourcing, apparel they can focus on build. Interviewed customers said they specifically looked for solutions that were externally managed. The developer at an COMPOSITE ORGANIZATION apparel firm shared: “We needed to have support because it was a fresh start, a new technology. Based on the interviews, Forrester constructed a TEI We had to have someone who we can lean on, framework, a composite company, and an ROI and that’s why we picked the managed version analysis that illustrates the areas financially affected. and the support.” The composite organization is representative of the six companies that Forrester interviewed and is used • Flexibility and scalability. Interviewees to present the aggregate financial analysis in the next described looking for a solution that can adapt to section. The composite organization has the following their specific business needs, which can change characteristics: over time. The IT infrastructure manager in logistics said, “[We looked for] the capability to THE TOTAL ECONOMIC IMPACT™ OF RED HAT OPENSHIFT CLOUD SERVICES 7 THE RED HAT OPENSHIFT MANAGED SERVICES CUSTOMER JOURNEY Description of composite. The organization has an annual revenue of $10 billion to $15 billion. It has a global operation with 20,000 employees. Its development team has 70 developers working with containers and 10 DevOps professionals supporting this effort. The organization uses both Amazon Web Key assumptions • 20,000 employees Services (AWS) and Microsoft Azure clouds and has basic knowledge of containers. The organization has • $10 billion+ in annual a cloud-first strategy for the future and is revenue implementing a combination of migrating and • Global organization replatforming applications to Kubernetes and creating • 70 developers new cloud-native applications. • 10 DevOps professionals Deployment characteristics. The organization starts with 100 applications on OpenShift in Year 1, and it builds more applications in Years 2 and 3. Implementation of Red Hat OpenShift cloud services involves training. THE TOTAL ECONOMIC IMPACT™ OF RED HAT OPENSHIFT CLOUD SERVICES 8