ROI CASE STUDY MARKLOGIC CQ ROLL CALL THE BOTTOM LINE CQ Roll Call needed to accelerate updates of the comprehensive information database associated with CQ.com and maintain its leadership role in providing legislative information to the masses. Nucleus Research found that a MarkLogic deployment helped to reduce the time needed to support the Web site by more than 90 percent. ROI: 77% Payback: 1.3 years Average annual benefit: $456,808 THE COMPANY CQ Roll Call, an Economist Group business, is a core source of news, analysis, and coverage of elections and the politics of legislation. Since 1945, CQ Roll Call has provided analysis and information to increase the legislative influence of its clients. CQ Roll Call provides products in four major categories: news and analysis, legislative tracking, advocacy and engagement, and publications. THE CHALLENGE CQ Roll Call plays a fundamental role in providing citizens, companies, and interest groups with key data for every member of Congress. Through the CQ.com Web site, CQ Roll Call provides a comprehensive toolkit and information source for tracking legislative activity. However, CQ.com required a significant support investment and was maintained via a complicated and manual process to replace data in a traditional relational database. Prior to this project, the technical support for CQ.com took about 15 percent of their time for five IT employees, resulting in 40 man-weeks per year. Cost : Benefit Ratio 1 : 2.6 Nucleus Research Inc. 100 State Street Boston, MA 02109 Phone: +1 617.720.2000
THE STRATEGY In May of 2009, CQ Roll Call chose MarkLogic to improve the data infrastructure associated with CQ.com. This technology provided the flexibility and speed necessary for CQ Roll Call to synchronize content throughout the database in real-time rather than create a new schema or model associated with each type of data that needed to be analyzed. Over a five month period, this database was deployed, which also allowed CQ Roll Call to improve the search capabilities associated with finding content related to Congressional members and other key federal employees. The MarkLogic deployment resulted in a simplified user interface and a reduction in time for end users to find more relevant information for legislative and governmental research. MarkLogic dramatically improves the user s efficiency by making the searching process much simpler and more intuitive. The end user is more efficient because the solution reduces the number of cycles needed to find the correct information. Dennis Arndt, CTO and Sr. Vice President of Technology, CQ Roll Call KEY BENEFIT AREAS There were four major benefits associated with the CQ Roll Call deployment of MarkLogic, all of which were indirect based on productivity, reduced churn, and increased profits. First, CQ Roll Call achieved a 95 percent reduction in IT time spent on development from approximately 40 man-weeks to two man-weeks. This time reduction was adjusted with a productivity correction factor (Nucleus Research, c41 - Quantifying productivity returns, August 2002 ). Nucleus Research is the leading provider of value-focused technology research and advice. Page 2
CQ Roll Call also gained internal productivity benefits, since its employees use CQ.com to research their own articles. By improving the usability of the online product, CQ Roll Call estimated a 4 percent improvement in productivity for its 150 writers and researchers to publish articles more quickly. The improved CQ.com functionality also reduced customer churn by improving search results and information requests from paying customers. As a result, CQ.com was able to reduce the cost of acquiring customers and realized an increase in profits. Users can see the benefit associated with new functionality that MarkLogic provides and we see the benefits in a higher renewal rate. Dennis Arndt, CTO and Sr. Vice President of Technology, CQ Roll Call KEY COST AREAS On an ongoing basis, the support costs for this project were quickly eclipsed by the benefits. The most significant cost that CQ Roll Call faced was the cost of software. The initial software licenses cost $450,000 prior to deployment and CQ Roll Call then accrued additional maintenance fees on an annual basis. The MarkLogic deployment also required approximately $88,000 in consulting and personnel costs and server costs, estimated at $10,000. Other than the cost of software maintenance, the only other ongoing investment made to support the MarkLogic deployment was one-quarter of a full-time equivalent IT resource. BEST PRACTICES CQ Roll Call was able to achieve a payback time of 1.3 years on its MarkLogic investment because there were several business benefits associated with this project. CQ.com provides multiple value propositions to support internal operations and ongoing revenue streams. With this deployment, IT productivity rose substantially, line-of-business productivity improved, and customer revenues increased through the user experience provided. By identifying CQ.com as a corporate asset that provided quantifiable value throughout the organization and acquiring MarkLogic to fundamentally improve the performance and user experience for CQ.com, CQ Roll Call successfully deployed a data solution that provided substantial, meaningful, and quantifiable business value. Nucleus Research is the leading provider of value-focused technology research and advice. Page 3
As organizations seek to replace traditional relational databases with new database formats, they should take a similar approach to CQ Roll Call and see whether the end result will provide benefits to customers, line-of-business employees, and IT support staff. This win-win-win situation ensures that every part of the business participates in the success of the project. In contrast, it is more difficult to gain consensus for projects where one side of the business succeeds at the cost of another constituency, even if the ROI ends up being positive for the organization. CALCULATING THE ROI Nucleus quantified the initial and ongoing costs of software, hardware, consulting, personnel, and training to calculate CQ Roll Call s total investment in MarkLogic. Direct benefits quantified included a reduced legacy hardware footprint and reduced support for legacy software. Not quantified were the greater benefits CQ Roll Call will have as potential customers try out the CQ.com product. Typically, potential customers will use the product for a trial period prior to purchase. The improved performance and user experience associated with the MarkLogic product could lead to increased sales, but this potential benefit was not quantified in this analysis. Nucleus Research is the leading provider of value-focused technology research and advice. Page 4
FINANCIAL ANALYSIS MarkLogic Annual ROI: 77% Payback period: 1.3 years ANNUAL BENEFITS Pre-start Year 1 Year 2 Year 3 Direct 0 10,000 10,000 10,000 Indirect 0 729,000 729,000 729,000 Total per period 0 739,000 739,000 739,000 CAPITALIZED ASSETS Pre-start Year 1 Year 2 Year 3 Software 450,000 0 0 0 Hardware 10,000 0 0 0 Project consulting and personnel 0 0 0 0 Total per period 460,000 0 0 0 DEPRECIATION SCHEDULE Pre-start Year 1 Year 2 Year 3 Software 0 90,000 90,000 90,000 Hardware 0 2,000 2,000 2,000 Project consulting and personnel 0 0 0 0 Total per period 0 92,000 92,000 92,000 EXPENSED COSTS Pre-start Year 1 Year 2 Year 3 Software 0 72,000 72,000 72,000 Hardware 0 0 0 0 Consulting 50,000 0 0 0 Personnel 38,077 27,500 27,500 27,500 Training 0 0 0 0 Other 0 0 0 0 Total per period 88,077 99,500 99,500 99,500 FINANCIAL ANALYSIS Results Year 1 Year 2 Year 3 Net cash flow before taxes (548,077) 639,500 639,500 639,500 Net cash flow after taxes (508,442) 393,125 393,125 393,125 Annual ROI - direct and indirect benefits 77% 77% 77% Annual ROI - direct benefits only -2% -2% -2% Net Present Value (NPV) (508,442) (141,036) 202,335 523,242 Payback period 1.3 years Average Annual Cost of Ownership 548,077 647,577 373,538 282,192 3-Year IRR 58% 58% FINANCIAL ASSUMPTIONS All government taxes 45% Cost of capital 7.0% All calculations are based on Nucleus Research's independent analysis of the expected costs and benefits associated with the solution. Page 6
By the Numbers CQ Roll Call's deployment of MarkLogic Annual Return on Investment 1.3 Years 77% The total time to value, or payback period, for the MarkLogic project. THE PROJECT CQ Roll Call needed to accelerate the time to update the comprehensive information database associated with CQ.com and maintain its leadership role in providing legislative information to the masses. Nucleus Research found that a MarkLogic deployment helped to improve internal productivity and reduce website support time by over 90 percent. THE RESULTS Reduced IT support time by 95% Increased writer productivity by 4% Cost : Benefit Ratio $ 1 : 2.6 456,808 Average annual benefit Number of users: 5 Months 150 Total time for CQ Roll Call to deploy MarkLogic Users can see the benefit associated with new functionality that MarkLogic provides and we see the benefits in a higher renewal rate. Dennis Arndt, CTO and Sr. Vice President of Technology, CQ Roll Call Copyright 2012 Nucleus Research Inc. Nucleus Research Report M91 MarkLogic ROI Case Study: CQ Roll Call