The Total Economic Impact™
Of The Gurobi Optimizer
Cost Savings And Business Benefits
Enabled By The Gurobi Optimizer
SEPTEMBER 2022

A FORRESTER TOTAL ECONOMIC IMPACT™ STUDY COMMISSIONED BY GUROBI

Table Of Contents
Executive Summary ................................................. 1

Consulting Team: Caro Giordano
Eric Hall

The Gurobi Optimizer Customer Journey ............. 7
Key Challenges ...................................................... 7
Solution Requirements/Investment Objectives ...... 8
Composite Organization ......................................... 9
Analysis Of Benefits .............................................. 10
Operational Cost Savings From MO-Driven
Productivities ........................................................ 10
Revenue Uplift From MO-Driven Productivities ... 12
Savings From Retiring Previous Commercial
Solver ................................................................... 14
Unquantified Benefits ........................................... 15
Flexibility ............................................................... 19
Analysis Of Costs .................................................. 21
Gurobi Licensing .................................................. 21
Deployment And Ongoing Maintenance .............. 22
Financial Summary ................................................ 25
Appendix A: Total Economic Impact ................... 26
Appendix B: Supplemental Material .................... 27
Appendix C: Endnotes .......................................... 27

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THE TOTAL ECONOMIC IMPACT™ OF THE GUROBI OPTIMIZERExecutive SummaryEnterprises of all sizes and in all industries have large, complex problems to solve whereminutes or even seconds of failed or extra resources can lead to gross overspending or
missed revenue opportunity. By embracing mathematical optimization, organizations canmaster the complexities of running a modern business and ultimately maximize profits
while minimizing operational costs. The Gurobi Optimizer enables better businessdecision-making in less time, saving organizations millions or billions of dollars.

The Gurobi Optimizer is an extremely fast andpowerful mathematical optimization (MO) solver

KEY STATISTICS

capable of solving highly complex problems
expressed in forms drawn from an array ofmathematical disciplines, including linear
programming, quadratic programming, quadraticallyconstrained programming, and mixed-integer
programming variants. Mathematical optimization is

Return on investment (ROI)

Net present value (NPV)

one of the decision intelligence technologies that518%

$3.60M

work with other such advanced analytics specialties
such as machine learning (ML). Gurobi enables users
to state highly complex business problems as

aggregated the interviewees’ experiences andmathematical models and then it automaticallycombined the results into a single composite

generates optimal solutions in exceptionally fastorganization, that is a global organization with various

times. The Gurobi Optimizer can be run in fully

revenue streams and business operations in several

autonomous mode to generate real-time insights forcountries and revenues of $10 billion per year. The

automated processes. It also assists decision-making

composite organization has an operations research

for recurring high-impact operational insights

function in place with several use cases employing

requiring immediate human-driven decisions.

mathematical optimization.

Gurobi commissioned Forrester Consulting toPrior to using the Gurobi Optimizer, the interviewees’

conduct a Total Economic Impact™ (TEI) study andorganizations had established operations research

examine the potential return on investment (ROI)

teams using a variety of open-source solvers, otherenterprises may realize by deploying the Gurobi

commercial solvers, and even spreadsheet-based

Optimizer.1 The purpose of this study is to provide

optimization tools to manually solve businessreaders with a framework to evaluate the potential

problems. However, these tools were not completely

financial impact of the Gurobi Optimizer on theireffective, unable to scale, unable to solve someorganizations.

problems with actionable time limits and, at times,

To better understand the benefits, costs, and risks

delivered solutions that were suboptimal or simply

associated with this investment, Forrester interviewed

wrong. To solve faster, some operations researchers

four representatives with experience using the Gurobi

resorted to simplifying or relaxing model constraints,

Optimizer. For the purposes of this study, Forrester

going against best practices and yielding suboptimal

THE TOTAL ECONOMIC IMPACT™ OF THE GUROBI OPTIMIZER

1

EXECUTIVE SUMMARY•

Revenue uplift from MO-driven productivities.
The composite organization applies the Gurobi“The tool itself enables quick
solves and fast development
times to give us really quick
proofs of concept that allow us
to seek value faster than what
another tool would provide.”

Optimizer to additional use cases focused onrevenue optimization, which increases grossrevenue by $3.7 million over three years andleads to a net margin increase of $169,300.
•

Savings from retiring previous commercial
solver. After adopting Gurobi, the composite
organization retires its previous commercial
solver, taking advantage of Gurobi’s more-flexible

Mine and process engineeringsystems lead, mining

licensing options to save money. The riskadjusted savings over three years come to$221,600.
Unquantified benefits. Benefits that provide value

solutions, and even this technique failed to solve

for the composite organization but are not quantified

certain complex problems within allowed timeframes.

in this study include:

The interviewees noted that after the investment in•Faster solving. Minutes and even seconds ofGurobi, their organizations’ operations researchers

failed or extra resources provisioned can lead towere able to solve problems several times faster thangross overspending. With the Gurobi Optimizer,

they were able to before. Gurobi was able to handle

the composite organization solves problems

larger, more complex problems involving trillions offaster, meets service level agreements forpossible outcomes and deliver high-quality solutions

problems with actionable time limits, and reaches

within the time required for the specific problem. As athresholds of optimality faster within set

result, the organizations were able to generate

timeframes. Solving problems faster is the

additional revenue and save incremental operational

biggest benefit accruing to organizations and acosts through the enhanced mathematical

key reason for selecting Gurobi.

optimization that Gurobi provided.
KEY FINDINGS•

Continuous improvement. Gurobi is committed
to continuous improvement of its products.

Quantified benefits. Three-year, risk-adjusted
present value (PV) quantified benefits for thecomposite organization include:•

Operational cost savings from MO-driven
productivities. After switching to the Gurobi
Optimizer for several use cases focused on
optimizing various aspects of its operations, thecomposite organization experiences performance
improvements averaging 0.4%, saving it $3.9
million over three years.

THE TOTAL ECONOMIC IMPACT™ OF THE GUROBI OPTIMIZER“The biggest improvement on
my team was that the results
were 10 times faster than
before.”Lead, operations research, fooddelivery2

EXECUTIVE SUMMARY

does not need to worry about bugs in the Gurobi
Optimizer the way it does when using open-“[Gurobi’s] vision is very clear.
There is broad corporatealignment around that vision. We
see this when we talk to different
people at different locations andat different times.”
Chief technical lead, transportation

source solvers.
•

Agile pricing and licensing model. The
composite organization takes advantage of
Gurobi’s flexible approach to pricing andlicensing, which allows it to easily scale up to add
new projects without undue administrative
burden.

•Minimal vendor lock-in. The composite
organization easily switches among solvers withminimal effort. In addition, Gurobi’s development
toolset supports both Python and .NET, providing

Performance in a number of areas, including

more options to OR and data science teamspresolve, heuristics, and MADlib — which is a

responsible for modeling.

standard industry benchmark for solving mixed
integer problems — has improved over time. The•

Breaking down silos. The composite

composite organization anticipates further

organization experiences improved coordination

performance improvements and featureand communication as a result of applying

enhancements in future updates.

optimization to use cases that span operations

Operations research (OR) team productivities.
Faster solving enables OR teams to recalibrate
and rerun models and explore more options in
the process of delivering better solutions.

••

Strong technical support and accountacross different departments and lines ofbusiness. This gives rise to the development of abroad community of OR subject-matter experts
within the organization, where different teams
share approaches, best practices, and ideas for
future projects.

management. The composite organization
experiences Gurobi’s world-class, PhD-led
technical support, and responsive accountmanagement. Gurobi Day events keep thecomposite organization closely connected withthe broader community of Gurobi users.
•

OR team satisfaction. The composite
organization’s OR team enjoys working with the
fast-solving Gurobi Optimizer as it makes theirwork more efficient and effective.

•

More robust than open-source solvers.
Interviewees said the Gurobi Optimizer is a

“I can tell you how it improves
the transparency of information[and] the transparency ofdecision making.”
Mine and process engineeringsystems lead, mining

stronger, more trustworthy product, with betterfeatures and fewer memory errors compared toopen-source solvers. The composite organization

THE TOTAL ECONOMIC IMPACT™ OF THE GUROBI OPTIMIZER

3

EXECUTIVE SUMMARY

Costs. Three-year, risk-adjusted PV costs for thecomposite organization include:•

Gurobi licensing. Gurobi’s commercial license
includes maintenance and access to Gurobi’s
world-class support for the term of the license
agreement. Software updates are at no additional
cost during the term of the license agreement.
Pricing is based on various factors, including
number of cores, number of applications, numberof users (depending on usage type), usage, andlicense type. The risk-adjusted costs of licensing
for the composite organization come to a NPV ofnearly $625,700 over three years.

•

Deployment and ongoing maintenance. The
composite organization has staff skilled inmathematical optimization, and it does not
require any additional training or professional
services to set up and use the Gurobi Optimizer.
As use cases are converted to Gurobi, somerequire adjustments to optimize performance, but
this is a fairly trivial matter and does not takemuch time. Updates are issued on a quarterly
basis and require an average of a day to install
and test. The three-year risk-adjusted PV for thecomposite organization deployment and ongoing
maintenance comes to $69,500.

The representative interviews and financial analysis
found that a composite organization that already has
a mathematical optimization solution in place before
deploying Gurobi experiences benefits of $4.3 million
over three years versus costs of $695,000, adding up
to a net present value (NPV) of $3.6 million and an
ROI of 518%. For organizations newly adopting
mathematical optimization, the ROI will likely besignificantly higher.

THE TOTAL ECONOMIC IMPACT™ OF THE GUROBI OPTIMIZER

4

EXECUTIVE SUMMARYROI

BENEFITS PV

NPVPAYBACK

518%

$4.3M

$3.6M

<6
monthsBenefits (Three-Year)

Operational cost savings
from MO-driven
productivities$3.9M

Revenue uplift from MOdriven productivities$169.3K

Savings from retiring
previous commercial solver$221.6K“Solving problems faster is themost important benefit we’regetting from Gurobi. Its
performance is much better thanother solvers we’ve used.”— Lead, operations research, technology
THE TOTAL ECONOMIC IMPACT™ OF THE GUROBI OPTIMIZER

5

EXECUTIVE SUMMARYTEI FRAMEWORK AND METHODOLOGY
From the information provided in the interviews,
Forrester constructed a Total Economic Impact™
framework for those organizations considering an

DUE DILIGENCE
Interviewed Gurobi stakeholders and Forrester
analysts to gather data relative to the Gurobi

investment in the Gurobi Optimizer.

Optimizer.

The objective of the framework is to identify the cost,benefit, flexibility, and risk factors that affect the

INTERVIEWSInterviewed four representatives atinvestment decision. Forrester took a multistep

organizations using the Gurobi Optimizer toapproach to evaluate the impact that the Gurobi

obtain data with respect to costs, benefits, andOptimizer can have on an organization.

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
issues and concerns of the interviewees.

Readers should be aware of the following:This study is commissioned by Gurobi and delivered byForrester Consulting. It is not meant to be used as acompetitive analysis.
Forrester makes no assumptions as to the potential ROI
that other organizations will receive. Forrester strongly
advises that readers use their own estimates within theframework provided in the study to determine theappropriateness of an investment in the Gurobi
Optimizer.
Gurobi reviewed and provided feedback to Forrester, but
Forrester maintains editorial control over the study and its
findings and does not accept changes to the study that
contradict Forrester’s findings or obscure the meaning of
the study.

CASE STUDY
Employed four fundamental elements of TEI inmodeling the investment impact: benefits, costs,
flexibility, and risks. Given the increasing
sophistication of ROI analyses related to IT
investments, Forrester’s TEI methodology
provides a complete picture of the total
economic impact of purchase decisions. Please
see Appendix A for additional information on the
TEI methodology.

Gurobi provided the customer names for the interviews
but did not participate in the interviews.

THE TOTAL ECONOMIC IMPACT™ OF THE GUROBI OPTIMIZER

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The Gurobi Optimizer Customer Journey
Drivers leading to the Gurobi Optimizer investment

Interviews
Role

Industry

Geography

Revenue

OR Team Size

Lead, operations research

Food delivery

Global$5B to $10B

7

Mine and process engineeringsystems lead

MiningGlobal$10B to $20B

7

Chief technical lead

Transportation

Global$10B to $20B

50

Lead, operations researchTechnology

Global>$50B

40

KEY CHALLENGES

that 10-minute threshold is very important. There

Prior to using the Gurobi Optimizer, the interviewees’

were times when the prior solver couldn’t find theorganizations had established operations researchbest solution in 10 minutes, while Gurobi always

teams using a variety of open-source solvers, otherfinds the best solution in less than 10 minutes

commercial solvers, and even spreadsheet-based

and most of the time in 5 minutes.”

optimization tools to manually solve business

The lead of operations research for the foodproblems.

delivery company confirmed the importance of

The interviewees noted how their organizations

speed in decision-making for their organization’s

struggled with common challenges, including:delivery operations. They said: “Our deliveries•

have latency constraints on them. We tried toInability to solve problems within actionable
time limits. Certain categories of data-driven
insights are ephemeral. If enterprises fail to act
on real-time insights for automated processes

relax the problem as much as possible so that we
could find a solution in a reasonable time, but[we] had to manipulate the model in order to haveit ready in that time. That’s normally not best

within a certain time frame, they are no longer
actionable and the opportunity to change thecourse of the business outcome will pass. The
windows for these can be measured in seconds
or even subseconds. The same can be true for
operational insights that involve humaninteraction but require solutions within hours oreven minutes.
The chief technical lead for the transportationcompany explained how critical speed is for
decision-making relating to business operationsin their industry. They said: “We had a major daily“Gurobi is a fantastic MIP (mixed
integer program) solver. MIPs arevery, very important to us, andbeing able to solve them better isvery important to us.”Lead, operations research,technology

job that took around 5 to 10 minutes. The
optimization is part of a sequence of events, so

THE TOTAL ECONOMIC IMPACT™ OF THE GUROBI OPTIMIZER

7

THE GUROBI OPTIMIZER CUSTOMER JOURNEY

was calling back and forth saying, ‘This is what I“Before signing up for an
unlimited contract, we checkedthat our heaviest workloads
would perform well. It turns outthat some of them were evenfaster to solve. That wasn’t arequirement, but it was an added
benefit that we were notexpecting to be so high.”got’ [and] ‘This is what I got.’ [With our previous
tool,] you’re not really optimizing. You’re justrunning calculations. What we observed at thatpoint was that the solutions presented were
oftentimes either nonoptimal or they wereincorrect because they were reliant on a single
point of failure to assess the optimal blend.”•

Other commercial solvers were not costeffective due to inflexible licensing andpricing models. One of the interviewees
discussed how moving optimization computations

Chief technical lead, transportation

to virtual machines negatively impacted what
their organization paid for its previous solver. The
chief technical lead for the transportationcompany said: “We were using more VMs (virtual

practice in operations research. With Gurobi, youmachines) than physical machines, and thecan solve problems with fewer relaxations.”•

Inability to scale. Several of the interviewees’

previous solution] in terms of the way [it was]organizations ran optimization models forcounting CPU time. … The pricing became very

operations in different markets around the world,

hard to manage and very costly.”each with their own unique inputs andconstraints, which led to the need for a solverthat could scale up to handle highly complex
models on a global basis. The lead of operations
research for the food delivery company explainedthat the open-source solver their organization
previously used was not up to this task. They
said: “When we started with some problems, we
tried to model them in a global way, but there
was no way to find a solution. It was impossible.
While there are some tricks to simplify or relax
the model in such a way that you can findsolutions, they are globally not optimal anymore.”•pricing and billing was getting crazy with [theSOLUTION REQUIREMENTS/INVESTMENTOBJECTIVESInterviewees said performance in terms of speed was
typically the most important criteria for evaluating
mathematical optimization solvers, but otherevaluation criteria included:•

Reliability and scalability.

•

Ability to handle heavy workloads.

•

Having a flexible pricing and licensing model.

The lead of operations research at the food delivery
company described how their organization made theManual processes yielded suboptimal or

business case for Gurobi. They said: “The originalincorrect solutions. One interviewee’s

use of Gurobi was initiated by an OR analyst whoorganization previously relied on a spreadsheet-joined the company fresh from university and had abased optimization tool and manual processes

strong background using Gurobi there. They had afor gathering inputs needed for supply-chain

quite difficult problem to solve and couldn't solve it

calculations before building its in-house OR

with an open-source solver, so they petitioned thecapabilities. The mine and process engineering

company to use Gurobi.”

systems lead for the mining company said: “It

THE TOTAL ECONOMIC IMPACT™ OF THE GUROBI OPTIMIZER

8

THE GUROBI OPTIMIZER CUSTOMER JOURNEY

Description of composite. The composite is a

“We organized a test license andran our model and found it was
10 times faster than our othersolver, so the business case wasvery easy to make. That’s how it
all started.”
Lead, operations research, fooddeliveryglobal, multibillion-dollar organization with various
revenue streams and business operations at
locations around the world. The organization employs
10 full-time OR specialists who work on mathematicaloptimization projects. There are seven existing use
cases for optimization: five focused on optimizing
operational costs and two focused on optimizing
revenue.
Deployment characteristics. After benchmarking a
Gurobi test license on several of the existing use
cases, the organization signs a three-year contract
and transitions the rest of the use cases over to

The lead of operations research at the technology
company noted that their organization had a Gurobi
license on a test machine used for benchmarking
purposes for several years, but it became a more
serious user as the performance of the solver

Gurobi. The OR team maintains the existing
optimization use cases in Year 1 and deploys six
additional use cases over the next two years: fourcases focused on optimizing operational costs andtwo focused on optimizing revenue.

improved over time. They said, “When we started
working with Gurobi, it was just playing around inside
our corporate environment [and] benchmarking things
for less-secure applications.”
The chief technical lead at the transportationcompany said their organization began using Gurobi
on some new projects and found it worked well and

Key Assumptions• Global organization• $10B in revenue

was less expensive. They also appreciated Gurobi’s• Grows 3% annuallyrelentless focus on continuous improvement. They

• 10 OR specialists

said: “We liked Gurobi’s strategy, which was toprovide a tool that was very efficient and [to] keep on
improving it to make it even more efficient for• Seven existing use
cases for optimization

complex computations. That was more of what wewere looking for.”
COMPOSITE ORGANIZATION
Based on the interviews, Forrester constructed a TEI
framework, a composite company, and an ROI
analysis that illustrates the areas financially affected.
The composite organization is representative of thefour interviewees, and it is used to present theaggregate financial analysis in the next section. The
composite organization has the following
characteristics:

THE TOTAL ECONOMIC IMPACT™ OF THE GUROBI OPTIMIZER

9Analysis Of Benefits
Quantified benefit data as applied to the composite

Total Benefits
Ref.

BenefitYear 1

Year 2

Year 3

Total

Present Value

Atr

Operational cost savings from
MO-driven productivities$1,105,000$1,593,410$2,110,130$4,808,540$3,906,785

Btr

Revenue uplift from MOdriven productivities$44,800$69,216$95,057$209,073$169,348

Ctr

Savings from retiring previous
commercial solver$85,000$89,250$93,925$268,175$221,600

Total benefits (risk-adjusted)$1,234,800$1,751,876$2,299,112$5,285,788$4,297,733

OPERATIONAL COST SAVINGS FROM MO-

organization achieved a 1% improvement in

DRIVEN PRODUCTIVITIES

performance for a particular operation, saving

Evidence and data. Operations research can be

many millions of dollars.

used to help improve the productivity of organizations•

The lead of operations research for the foodin many ways, including inventory control, productiondelivery company related their organization’smix, resource allocation, maintenance planning,

success applying optimization to menu planning,

office assignment, workforce planning, andwhich is a core element of its market offerings

scheduling. A single successful use case can easily

and is performed weekly for a number of brands

generate a home run for an organization, allowing it

and sub-brands in diverse markets around theto more than recoup the cost of the Gurobi

world. This was a combinatorically complex

investment. The interviewed representatives

problem balancing one prime objective, todescribed several use cases utilizing mathematicalmaximize customer satisfaction with menu

optimization to save operational costs in various

selections, against another, to minimize the costways. Improvements in performance ranged fromof that menu, subject to several constraints.

0.5% to as high as 5% depending on the operation

Initially, the organization used an open-source

and which solver, if any, was used prior to Gurobi.

solver to run the computations, and it achieved•

The lead of operations research at thesavings from 3% to 5% over manual methods,

technology company said their organization’s

but it was unable to scale its modeling without

initial use case was bin packing jobs in its datarelaxing constraints, which yielded suboptimal

centers. They said: “Figuring out the mostresults. By switching to Gurobi, the organization

effective packing of these jobs and services in

was able to solve these problems in a global way

our data centers is something very important toand achieve incremental cost savings from 0.1%

us. We had rolled our own and started

to 0.3%. This interviewee said: “The most gain

benchmarking solvers — commercial, open

you get is when you solve some problem withsource, internal, [and] external — to figure out

optimization in general. With Gurobi, you can

how we could do better, and Gurobi was thecome a little bit closer to the optimized solution.”best.” This interviewee estimated their

THE TOTAL ECONOMIC IMPACT™ OF THE GUROBI OPTIMIZER

10

ANALYSIS OF BENEFITS•The same interviewee said their organization was

savings from MO-driven productivities delivered byusing optimization in production planning as well

Gurobi include:

as line-haul planning involving the loading andscheduling of delivery trucks for the most efficientroute. For the production planning use case, theThe size and operating costs of the organization.

•

Whether the organization already has ainterviewee estimated their organization was able

mathematical optimization solution in place prior

to speed up its production lines as much as 4%

to deploying Gurobi. For organizations newly

to 5% through optimization, although the

adopting mathematical optimization, the ROI willinterviewee was unable to quantify the cost

likely be significantly higher.

savings from this improvement in performance.
•••

The organization’s ability to effectively apply

The mine and process engineering systems lead

optimization to factors that contribute tofor the mining company described a use case

operational costs.

centered around optimizing the scheduling androuting of haul trucks at the site. They said: “Oneof the biggest costs for our mines is the use andavailability of haul trucks. That’s the biggest cost.
If you can shave down a second or two of a haul

Results. To account for these risks, Forrester
adjusted this benefit downward by 15%, yielding athree-year, risk-adjusted total PV (discounted at 10%)of $3.9 million.

route, this is talking on the order of billions ofdollars in aggregate.” By combining machinelearning from other tools with optimization
powered by Gurobi, their organization was able
to predict and optimize haul truck distances,shaving off valuable time and saving many
millions of dollars.
Modeling and assumptions. Forrester assumes thefollowing about the composite organization:•

The composite organization’s operating costs are
65% of its revenue.

•

The composite organization has five existing use
cases focused on revenue optimization.

•

The organization adds two use cases in Year 2“Moving waste and/or coal is themost expensive thing at site. ...
A couple seconds equates tomillions of dollars in savings
from haul truck usage andincreased productivity because
you are really optimizing how
effective those trucks are being
used when they’re available.”
Mine and process engineeringsystems lead, mining

and two more use case in Year 3.
•

Prior to using Gurobi, each use case generated
operational cost savings of 1%.

•

Gurobi improves operational cost savings foreach use case by an additional 0.4%.

Risks. Organizational differences that may impact
the financial benefit associated with operational cost

THE TOTAL ECONOMIC IMPACT™ OF THE GUROBI OPTIMIZER

11

ANALYSIS OF BENEFITS

Operational Cost Savings From MO-Driven Productivities
Ref.

MetricSourceYear 1

Year 2

Year 3

A1

Annual revenue

Composite$10,000,000,000$10,300,000,000$10,609,000,000

A2

Cost of goods sold (percentage)

Composite

65%

65%

65%

A3

Operating costs

A1*A2$6,500,000,000$6,695,000,000$6,895,850,000

A4Operations affected by optimization (percentage)

Interviews

5%

7%

9%

A5

Operational cost savings from MO enabled by Gurobi(percentage)

Interviews

0.4%

0.4%

0.4%

At

Operational cost savings from MO-driven productivities

A3*A4*A5$1,300,000$1,874,600$2,482,506

Risk adjustment↓15%$1,105,000$1,593,410$2,110,130

Atr

Operational cost savings from MO-driven productivities(risk-adjusted)
Three-year total: $4,808,540

REVENUE UPLIFT FROM MO-DRIVEN

Three-year present value: $3,906,785•

The mine and process engineering systems lead

PRODUCTIVITIES

for the mining company described a use case forEvidence and data. Operations research can

optimization that involved product blending on-

similarly be applied to financial and investment

site. Optimizing blends across business units toscenarios to optimize revenue including capital

better meet customers’ needs positively impacted

budgeting, cash management, revenue optimization,

the organization’s ability to grow profitably.

portfolio optimization, fund cloning, and bondPreviously, the organization used spreadsheets

management. While few of the use cases given by

to set up schedules, collect customer information,

the interviewed representatives centered aroundand determine acceptable blend plans. This

revenue optimization, improvements in performanceinterviewee said: “From a process perspective,

followed similar lines to those achieved for costusing [spreadsheets] would take the whole week

optimization.
•

The chief technical lead at the transportationcompany noted multiple use cases for cost
optimization, mostly around staff scheduling andfuel minimization. But they also described amajor revenue optimization use case modifying
the pricing categories for tickets on a daily basis.
This interviewee said: “The revenue management
tool opens and closes pricing for each seatingclass. It is a daily process that considers
available seats on each [leg of the journey], as
well as the interrelationships across“We’ve been able to improve ourtotal revenues by using
optimization at the heart of therevenue management process. ...
We know we are able to sellmore tickets or obtain a better
average unit price per ticket.”Chief technical lead, transportation[connections].”

THE TOTAL ECONOMIC IMPACT™ OF THE GUROBI OPTIMIZER

12

ANALYSIS OF BENEFITS

to get a schedule set up [and] get all the

Risks. Organizational differences that may impact

integrations before you could even start blending.

the financial benefit associated with revenue uplift

One of our goals was to reduce that time. [Withfrom MO-driven productivities delivered by Gurobi

Gurobi,] we went from a one-week exercise andinclude:reduced it to a day or two to get a suitable blend
plan.”

following about the composite organization:••mathematical optimization solution in place prior
to deploying Gurobi. For organizations newly

are $10 billion and grow 3% annually with a net

adopting mathematical optimization, the ROI will

margin of 7%.

likely be significantly higher.
•cases focused on revenue optimization•

Whether the organization already has a

The composite organization’s annual revenues

The composite organization has two existing use•

The size of the organization in terms of revenue
and net margin.

Modeling and assumptions. Forrester assumes the••

The organization’s ability to effectively apply
optimization to factors that contribute to revenue.

The organization adds a third use case in Year 2

Results. To account for these risks, Forrester

and a fourth use case in Year 3.

adjusted this benefit downward by 20%, yielding a

Prior to using Gurobi, each use case generated athree-year, risk-adjusted total PV of $169,300.

revenue uplift of 1% of revenue.
•

Gurobi improves revenue uplift for each use caseby an additional 0.4%.

Revenue Uplift From MO-Driven Productivities
Ref.

MetricSourceYear 1

Year 2

Year 3

B1

Annual revenue

Composite$10,000,000,000$10,300,000,000$10,609,000,000

B2

Revenues affected by optimization (percentage)

Interviews

2%

3%

4%

B3

Revenue uplift from MO enabled by Gurobi (percentage)

Interviews

0.4%

0.4%

0.4%

B4

Revenue uplift from MO enabled by Gurobi (dollars)

B1*B2*B3$800,000$1,236,000$1,697,440

B5Net margin

Composite

7%

7%

7%

Bt

Revenue uplift from MO-driven productivities

B4*B5$56,000$86,520$118,821

Risk adjustment↓20%$44,800$69,216$95,057

Btr

Revenue uplift from MO-driven productivities (riskadjusted)
Three-year total: $209,073

THE TOTAL ECONOMIC IMPACT™ OF THE GUROBI OPTIMIZER

Three-year present value: $169,348

13

ANALYSIS OF BENEFITSSAVINGS FROM RETIRING PREVIOUS

Risks. Organizational differences that may impact

COMMERCIAL SOLVER

the financial benefit associated with savings fromEvidence and data. Prior to adopting Gurobi, theinterviewees’ organizations used a variety of opensource solvers, other commercial solvers, and evenretiring previous commercial solvers include theorganization’s use patterns as well as the licensing
and pricing models of other commercial solvers.

spreadsheet-based optimization tools to manually

Results. To account for these risks, Forrester

solve business problems.

adjusted this benefit downward by 15%, yielding a•

The chief technical lead for the transportation

three-year, risk-adjusted total PV of $221,600.

company described how moving optimization
computations to virtual machines negatively
impacted what their organization was paying forthan half compared to its previous solver.

“We use only [Gurobi], and weare confident in their strategy.
Their pricing is clear, simple, andcheaper than our prior solution
by over 50%, and their pricing
model makes us more agile.”

Modeling and assumptions. After switching toChief technical lead, transportation

its previous commercial solver, given the way
compute time was calculated. According to thisinterviewee, pricing became very hard to manage
and very costly. Gurobi’s pricing model was more
flexible and responsive to the organization’s
needs, which enabled it to cut its costs by more

Gurobi and discontinuing the use of anothercommercial solver, the composite organization saves
50% of the cost of its Gurobi license.

Savings From Retiring Previous Commercial Solver
Ref.

MetricSourceYear 1

Year 2

Year 3

C1

Savings from retiring previous commercial solver

Interviews$100,000$105,000$110,500

Ct

Savings from retiring previous commercial solver

C1$100,000$105,000$110,500

Risk adjustment↓15%$85,000$89,250$93,925

Ctr

Savings from retiring previous commercial solver (risk-adjusted)
Three-year total: $268,175

THE TOTAL ECONOMIC IMPACT™ OF THE GUROBI OPTIMIZER

Three-year present value: $221,600

14

ANALYSIS OF BENEFITSUNQUANTIFIED BENEFITS

would have taken maybe 100 hours or 10 weeks.

Interviewees mentioned the following additional

Gurobi was able to find a solution in a reasonable

benefits that their organizations experienced but wereamount of time.” Given that different use cases

not able to quantify:

have differing objectives, solving for optimality•

with a longer time window versus solving to get at
Faster solving. Being able to solve problems

a less optimal solution faster, the interviewee

faster was a critical factor for most of thesaid Gurobi’s faster solving made it “feasible forinterviewees’ organizations and a key reason for

us both ways.”selecting Gurobi. The lead of operations researchat the technology firm explained: “There’s a•

The mine and process engineering lead at thetrade-off where the longer you search, the closer

mining company confirmed Gurobi’s performance

to optimality you’re going to get. I can get totime savings. They said: “We indirectly compare

optimality, or I can get to within X% of optimality

Gurobi with another tool that uses dynamic

20% to 50% faster. In general, we care aboutprogramming, and that optimization engine is on

optimization problems that fall into that second

the order of days to solve. When we’re looking atclass, where we’re trying to solve problems

all the stuff that we have within Gurobi, we’refaster.”looking at minutes — seconds in general [and] atmost a couple of minutes.”

The same interviewee’s organization used anumber of commercial and open-source solvers,

•

•

•

Continuous improvement. The interviewees

and the interviewee noted: “When people

recognized and approved of Gurobi’s

benchmark [their open-source solver] against

commitment to continuous improvement of their

Gurobi, Gurobi is better 99% of the time. And the

products’ performance. The lead of operations

average performance improvement is probably

research at the technology company said:

20% to 50% faster in terms of solving problems.”“[Gurobi] has gotten better in every dimension. Its
performance on MADlib, which is a standard

The lead of operations research at the fooddelivery company echoed this sentiment. They
said: “It’s really just the speed improvement for
us. … In optimization, you can easily see if [aindustry benchmark for solving mixed integer
problems, has gotten better and better. [Gurobi’s]
presolve has improved. Their heuristics have

solution] is better or not. If you have 10 times
faster, you could either run it longer if you havemore time and have a solution that is closer to
optimality. Now we can solve with fewer
relaxations with Gurobi. It's still sometimes hard
to find a solution in the given time. But, before,[we] may have [had] to make 20 changes andwith Gurobi, [we make] maybe only three or fourchanges.”•

The same interviewee explained how faster
solving speed also made it possible to solve
delivery-scheduling problems that couldn’t besolved before due to actionable time limits. They

“We’ve never had a problem with
Gurobi performance.
Performance hasn’t really comeup with Gurobi because it’s
never been a problem for Gurobi
unlike other tools that otherteams are using.”
Mine and process engineeringsystems lead, mining

said: “Probably they were solvable before, but it

THE TOTAL ECONOMIC IMPACT™ OF THE GUROBI OPTIMIZER

15

ANALYSIS OF BENEFITS•

improved. It’s been actually quite pleasantly[we] had 20 hours to wait for a solution, and now

surprising to see how much better Gurobi has[we] have it in 2 hours. That’s something that will

gotten. I would say it has widened its lead over itschange your whole way of working, how youcompetitors over the past six years.”

formulate your model or what you try out in yournext test. If you have to wait 20 hours, you are

The mine and process engineering systems lead

thinking much longer about what to do, and youat the mining company supported this, saying:are frustrated if it doesn't work. With 1- or 2-hour“For the initial use case I talked about, it tookruns, you can do totally different things.”

about 10 minutes to solve at the beginning for
quadratic programming, and it’s been reduced to••within a minute or to 2 minutes. It’s a dramatic

calibrate its models better in terms of market

performance improvement that we’ve observing.”

needs. We did not change the delivery windows
for our menus. They still had the planning time of

The same interviewee noted the quadratic

two weeks. With or without Gurobi, it was twobilinear programming initiatives that Gurobi isweeks. But now [the team is] able to run multiple

pursuing now. They said: “I would say [Gurobi is]iterations to calibrate the model.”one of the leaders in linear optimization solvers.
This area of bilinear/quadratic programming is•

The same interviewee said: “[My team] can•

The mine and process engineering systems lead

relatively new in their product, and [from] whatat the mining company confirmed the value of

we’ve seen, I would say from the past year and amore time to explore options as a result ofhalf to two [years], is that [Gurobi has] a ruthless

Gurobi’s faster solving. They said: “If there’s one

focus on performance improvements because

thing [that encapsules] the value of Gurobi, it is

that’s one of the more challenging things to solve.

the idea of allowing for optionality. We’ve always,

We’ve been working with them, providing ourin a sense, optimized for or created plans to meetmodels that we create internally to assist witha deadline. Now, because of Gurobi, we are nottheir performance improvement objectives.”

stuck on setting up data. We are using that sametime to explore options, and that has provided

OR team productivities. While interviewees said

tremendous value. [Before,] we didn’t have time

faster solving didn’t reduce operations

to look at alternatives. All that stuff that allows

researchers’ time, it enabled more value-added

you to make a better decision, the tool indirectly

work. The lead of operations research at the foodor directly has allowed us to do.”'improvement on my team was that the results
were 10 times faster than before. Maybe [before]•

Strong technical support and accountrelationships. All of the interviewees praised
Gurobi’s strong technical service and support and“There aren’t that many people
who are world class in
combinatorial optimization, andGurobi has a lot of them.”
Lead, operations research,technology

THE TOTAL ECONOMIC IMPACT™ OF THE GUROBI OPTIMIZER

their close account relationships. The chief
technical lead for the transportation company
characterized their organization’s relationshipwith Gurobi as “quite transparent and simple.”
The lead of operations research for thetechnology company agreed, saying, “I’ve beenvery happy with the Gurobi relationship thatwe’ve had so far.”

16

ANALYSIS OF BENEFITS

connected with some community thinking. That’s
a thing that I like from a technical perspective.”“If there is something that
Gurobi provides that other tools
cannot or will not, it is thatexcellent engagement to workwith us to improve and actually
get the results that we arelooking for. From experience,
what they say they’ll do, they’ve
done. That has reallytremendously helped us in thesolutions that we built.”
Mine and process engineeringsystems lead, mining•

OR team satisfaction. The lead of operations
research at the food delivery company noted thepositive impact that working with Gurobi has hadon their organization’s OR team. They said: “[TheOR team members are] really happy and don’t
want to switch back anymore, at least for the big
problems. It’s the speed improvement for us andthe 10 times work we would have doneotherwise. Before, you had to run it over thewhole day. You switch it on in the evening or at
daytime, and the next day you have your results.
That makes it something. It’s the speed
improvement that brings something to the table.”•

More robust than open-source solvers. The
lead of operations research at the technology
company noted that Gurobi and other commercial
solvers are more robust than open-source•

The mine and process engineering systems leadsolvers. They said: “Because [the solver] is open

at the mining company went further to note: “Isource, we can look at the code, and we can seepolled my team before this, and if there’s one

that it’s not that well-written. [It] has memory

word to describe experience, it’s been ‘excellent.’

errors. And because of the way [it] is[Gurobi] is without a doubt the best vendor that
we work with in terms of features. And the levelof support and engagement that Gurobi provides

administered, it’s very hard to make changes to[it]. So it’s not the best experience. We do
abstract out a lot of that by having this wrapper

us … allows us to have input in the direction of

approach that allows us to swap in different

the tool. It’s been more than 10 years withsolvers. But, ultimately, we don't trust [it] as muchworking with the tool, and since the start to now,

as we trust commercial solvers.”

we have absolutely excellent communication withthe people involved at Gurobi.”•

The lead of operations research for the fooddelivery company was also positive about theirorganization’s Gurobi partnership and thecommunity found through attending Gurobi Day
events. They said: “The people are quite nice. I
think they are doing quite a good job on being
attractive. I’ve met some technical people there,
and they seem to be quite smart. [Gurobi] seems“[Gurobi’s] more robust, but
mostly it’s the best solver that’s
out there for our purposes.”Lead, operations research,technology

to be quite professional, and the product is

THE TOTAL ECONOMIC IMPACT™ OF THE GUROBI OPTIMIZER

17

ANALYSIS OF BENEFITS•

Agile pricing model. Two interviewees pointed

cases. Gurobi is code-agnostic from thatout how Gurobi’s pricing model contributed tostandpoint.”

their organizations’ agility. The chief technicallead at the transportation company said: “We can•

Gurobi, two of the interviewees discussed theprovision licenses in the same day. If you want toimpact that optimization had on improved

test anything for a new project, we have unlimited

coordination and communication between

token servers, technically speaking, that can

departments and enabled the breaking down ofallow us to easily start a new project. Previously,silos across their organizations. The lead of

we needed to pay for the license before getting it.

operations research at the food delivery company

It would take a month or more to go through ournoted: “With the adoption of an optimization tool,

ordering process, the vendor's billing process,we have created a global community wherethen our payment system. This saved our teamdifferent teams from all around the worldtime while expanding innovation toward creating

constantly share approaches, ideas, and best

new, valuable use cases.”•

The lead of operations research for thetechnology company said their organization also

practices to enhance our product further.”•organization’s largest initiative so far — one stillup Gurobi licenses on demand. They said: “Itin development — to optimize across the entire

took some effort to put that in place. But we makesupply chain their company spanned. They said:

good use of it, and we’re happy with it.”

“There were separate initiatives that tried to

Minimal vendor lock-in. Most of thetackle this, breaking down silos for financial

interviewees’ organizations used a framework

optimization benefits. Groups within theover the solver — an abstract layer thatorganization would try to solve things on theirvirtualizes the tool — making it easier to switch

own, but there never was an enterprise-level

between solvers and reducing the possibility ofthinking for optimization [or] for advanced

vendor lock-in. The lead of operations researchanalytics.”

at the technology company said: “We have auniform way of representing optimization
problems, so the choice of the underlying solver
is just a one-line code change. ... There’s no kindof relearning that people have to do because
people aren’t using Gurobi directly here.”•

The mine and process engineering systems leadat the mining company described their

had an agreement in place that enabled it to spin•

Breaking down silos. While not specific to•

The same interviewee said: “The key driver wasthat it fed into the bigger group of 300 data
scientists focused on optimization machinelearning initiatives. That’s what really kick-started
this specific initiative: that there was buy-in fromsenior management to pursue these types of

The mine and process engineering systems leadtools because they saw the benefit of it. We didat the mining company agreed, saying: “It’s a

proofs of concept for relatively low-hanging-fruit

fairly open developmental toolset. If you want to

optimization use cases, like process

use Python, you can. Within the teams that I

improvements, and then slowly expanded thehave worked with, there’s two paths. One group

portfolio, and this eventually encompassed ouruses Python for their constraint modeling or to

supply-chain optimization tool. With the newaccess Gurobi, and another team uses .NET, andparadigm shift, the mines will have visibility of

they both are quite supported by Gurobi. The

what customers are demanding, and they canliterature and the guides … are valid for both

optimize at the source of how much they need to

THE TOTAL ECONOMIC IMPACT™ OF THE GUROBI OPTIMIZER

18

ANALYSIS OF BENEFITS

produce in order to fulfill that demand. The

that you are doing something with math andexpected benefits are in the millions.”

algorithms. Can you help us?’ If it’s acomputational problem, then it’s on us, and we

FLEXIBILITY

are trying to help them.”

The value of flexibility is unique to each customer.
There are multiple scenarios in which a customer•

The same interviewee added: “[Thanks tomight implement the Gurobi Optimizer and later

Gurobi,] we scaled up somehow so we could do

realize additional uses and business opportunities,

more of what we did. We also had more time toincluding:think about other types of optimization problems.

•

Before, maybe one analyst could handle maybe
Future initiatives. All of the interviewees spoke

three markets. Now they can handle five markets.

of future initiatives, including projects centered

Before, they were only looking into menu

around sustainability. The lead of operations

planning. Now they have time to look into

research at the technology company mentioned

production or logistics planning. For menu

experimenting with energy-grid optimization,planning especially, we did more to improve thewhile the mine and process engineering systems

quality of the solutions itself, running multiple

lead at the mining company spoke of a drive toiterations. That was the biggest change I would

reduce consumables used in their production

say. Before, you could have maybe one trial in aplants. The latter said: “Cost is the main driver,day. Now you can have five or six trials in a day.”but we also want to be stewards of theenvironment, too. So another key driver is to••

The lead of operations research at the

reduce our carbon footprint. Reducing waste has

technology company said leads on new projects

tangible net benefits from both a financial

come from the business. They said: “Word of

perspective and an environmental perspective.”mouth is part of it. If someone knows they havean integer optimization problem or a linear

Interviewees described their processes for
initiating new projects. The chief technical lead at
the transportation company said: “Sometimes we
propose new ideas to our internal customers,

programming problem or a constraint
programming problem, [it’s] very easy to find. My
team acts as a consulting body and gives them
advice on how to model and solve their problem.”telling them we might be able to improve a
process by, say, 1% to 5%, depending on the
topic, thanks to optimization. We have three orfour new project per year. Thirty percent of timeis spent on new projects, [and] 70% of time isworking on existing projects, adding constraints,
or shaping the existing constraints based on
business learnings or changes.”•

The lead of operations research at the fooddelivery company also noted their organization’s
active involvement in developing new projects.
They said: “When we have the capacity, we are
jumping into the problems. But it could also be“Our approach was to try out
small cases, build knowledge ofwhat it takes, utilize the tool, andultimately see benefits quickly ornot, with the idea of failing fastor succeeding fast.”
Mine and process engineeringsystems lead, miningthat people are coming to us and say, ‘Hey, we
have here a problem. Can you help? We heard

THE TOTAL ECONOMIC IMPACT™ OF THE GUROBI OPTIMIZER

19

ANALYSIS OF BENEFITS•Advanced analytics. Even though mathematical

how to think, it helps to have seen the results of

optimization is an older science, relatively

past actions.”

speaking, interviewees view it as every bit as
exciting as other decision intelligence or•company said: “Most of the time, they areadvanced analytics specialties such as ML. The

working on different projects, but some projects

mine and process engineering systems lead atneed both competencies to solve the decision-

the mining company said: “We as an organization

making problem that we need to solve. Machine

are really pushing the advanced analytics front.

learning people are building models, and theWe have a program to utilize what we have andoutputs of the models are then inputs for thebuild on top of that in order to fully enter the

optimization engineers to do that job. Once orrealm of applying all types of technology to solve

twice, reinforcement learning approaches were

our current mining challenges. One of thecompared to optimization approaches, butcornerstones of that is optimization and machine

optimization was still better.”learning, and Gurobi fits a big picture into that.”•

The lead of operations research at the•organization was further behind on machine

optimization is continually changing. They said:learning, but they noted some promising results“We are constantly trying to add to ourlinking optimization to machine learning to both

optimization framework the ability to use morepredict and prescribe how best to operate a plant.

advanced features of solvers. Things like

They said: “Prescriptive analytics is something

callbacks and incrementalism that Gurobi andthat we have more knowledge of and more data

other first-tier solvers support. It’s not somethingin order to make better decisions. The realm of

we were able to do two years ago using ourmachine learning and AIs is emerging, but ininterface layer. As Gurobi and other commercial

order to get to that stage, the foundation needs tosolvers add more advanced features, we are

be improved. From an optimization standpoint,

continually evaluating them and figuring out

we are more mature to use those prescriptive

whether we want to support them from ouranalytics areas.”

framework.”
Interplay between MO and ML. Theinterviewees had interesting views on theinterplay between mathematical optimization andmachine learning. For example, the lead ofoperations research at the technology company
said they frequently saw ML and MO working
harmoniously together. They said: “Often, ML
generates the input to an optimization problem.
ML is about thinking and OR is about acting, andyou need to think before you can act. Often, we'll

The mine and process engineering systems leadat the mining company acknowledged theirtechnology company confirmed how the field of•

The chief technical lead at the transportation•

The lead of operations research at the foodprocessing company said operations research
was the more valuable art. They said: “Withmachine learning, you are looking into the future
based on historical information. If, due to the[COVID-19] pandemic, historical information is
not really accurate anymore for the future
because the whole world changed due to thisdisruptive thing, then your models are not really
helping you so much anymore.”

have a ML phase that goes on before we

Flexibility would also be quantified when evaluated as

construct the problem and hand it off to Gurobi topart of a specific project (described in more detail insolve. And you can have a nice virtuous feedback

Appendix A).

loop as well, where if you are trying to figure out

THE TOTAL ECONOMIC IMPACT™ OF THE GUROBI OPTIMIZER

20

Analysis Of Costs
Quantified cost data as applied to the composite

Total Costs
Ref.

Cost

InitialYear 1

Year 2

Year 3

Total

Present Value

Dtr

Gurobi licensing$0$240,000$252,000$265,200$757,200$625,695

Etr

Deployment andongoing maintenance$64,559$1,218$2,436$2,436$70,648$69,509

Total costs (riskadjusted)$64,559$241,218$254,436$267,636$827,848$695,204

GUROBI LICENSING•

The composite signs up for a commercial license

Evidence and data. Gurobi offers prospectivewith a three-year commitment. The

customers two options for experiencing the Optimizer

implementation starts with seven use cases inat no cost, which most of the interviewees’

Year 1, and it expands to add three more useorganizations took advantage of.

cases in Year 2 and to three more use cases inYear 3.

One is a free, time-unlimited trial license of a featurerestricted version of the Optimizer that’s limited to•Based on pricing provided by Gurobi for this

2,000 variables and 2,000 constraints. Another is a

scenario, the annual recurring license fees arefree 30-day evaluation license of the fully featured$200,000 in Year 1, $210,000 in Year 2, andOptimizer.

$221,000 in Year 3.

Gurobi’s commercial licenses, which all of the•Pricing may vary. Contact Gurobi for additional
details.

interviewees’ organizations eventually signed up for,includes maintenance and access to Gurobi’s world-

Risks. Organizational differences that may impact

class support for the term of the license agreement

the costs associated with Gurobi licensing include:

and is available both on-premises and in the cloud.
Pricing is based on various factors, such as thenumber of cores, number of applications, number ofusers (depending on usage type), usage, and license
type. Initial and expert training can be orderedseparately.

•

The size and scale of deployment.

•

The license type.

•

Global licensing agreements and other volume
discounts.

For added flexibility and agility, customers may

Results. To account for these risks, Forrester

negotiate additional contracts that allow them to spin

adjusted this cost upward by 20%, yielding a three-

up additional licenses on demand.

year, risk-adjusted total PV (discounted at 10%) ofnearly $625,700.

Modeling and assumptions. Forrester assumes thefollowing about the composite organization:

THE TOTAL ECONOMIC IMPACT™ OF THE GUROBI OPTIMIZER

21

ANALYSIS OF COSTS

Gurobi Licensing
Ref.

MetricSourceD1

Gurobi licensing

Dt

Dtr

InitialYear 1

Year 2

Year 3

Gurobi$200,000$210,000$221,000

Gurobi licensing

D1$200,000$210,000$221,000

Risk adjustment↑20%$240,000$252,000$265,200

Gurobi licensing (risk-adjusted)$0

Three-year total: $757,200

Three-year present value: $625,695

DEPLOYMENT AND ONGOING MAINTENANCE

set up. The interviewee explained that they

Evidence and data. The interviewees’ organizations

considered their company to be technically savvy

had staff skilled in mathematical optimization and didwith a lot of engineers. They said: “We had a

not require additional training or professional services

specific back-end engineer who’s veryin order to set up and use the Gurobi Optimizer. Most

experienced and, for him, the feedback was [thatof the organizations used connective interfaces that

Gurobi] was very, very easy to deploy. The basic

enabled solvers to be easily swapped in and out.

stuff was done in a day. There were a couple

While existing use cases required conversion from

more days for back-end work to set it up for us in

the previous solvers to Gurobi, most interviewees

a specific way, but it was running on the firstcharacterized this as a trivial matter involvingday.”

adjustments here and there to optimize performance.

•

The mine and process engineering systems lead

Ongoing maintenance was also minimal with one

at the mining company explained that theirmajor update and three minor updates delivered on aorganization initially used an interface thatquarterly basis throughout the year.
•

The chief technical lead at the transportationcompany described the transition to Gurobi as
quite easy. They said: “We had 15 to 20 use
cases that needed to be converted before we
could retire our previous solution. Some use
cases were done in a few days while others tookaround a month. We spread things out and weredone in less than a year. Performance was pretty
good from the start. There were only a few
projects that required tuning to improve
performance to the level we thought we could
achieve — not necessarily required performancelevels.”•The lead of operations research at the fooddelivery company confirmed Gurobi was easy to

THE TOTAL ECONOMIC IMPACT™ OF THE GUROBI OPTIMIZER“The transition to Gurobi wasquite easy. We modified thelayout a bit to do what was very
specific to Gurobi, but it wascentralized in a piece of code.
Afterwards, everybody just had
to use their already existing
code, and everything was
working fine. We basically ran atest, and it was done.”
Chief technical lead, transportation

22

ANALYSIS OF COSTS

allowed it to change the optimization engine

Modeling and assumptions. Forrester assumes theunderneath. When that tool was sunset by thefollowing about the composite organization:

vendor supporting it, the organization utilized
Gurobi’s guides to set up a direct interface.
••

per use case to migrate seven existing use cases

The lead of operations research for thetechnology company said their organization took
a more measured approach to deployment andto Gurobi.
••

around them. They said: “It took a couple person
years of work to move over to Gurobi, but that’s
not Gurobi’s fault. That was internal to ourcompany.”•

Discussing their organization’s cautious approach
to updates, the same interviewee explained: “We

previous release that’s out there.’ We won’t

The organization spends 8 hours per update to
install and test updates.

Risks. Organizational differences that may impact
the costs associated with deployment and ongoing
maintenance include:•

The organization and state of optimization
projects prior to deploying Gurobi.

always lag Gurobi. They’ll come out with a newrelease and say, ‘This is so much better than the

Gurobi releases one major and three minor
updates per year on a quarterly basis.

updates, given that optimization involved its data
centers, which needed an extra layer of security

The organization spends an average of 8 hours•

The efficiency of the OR team deploying andmaintaining the Gurobi Optimizer.

immediately roll it out, but [we] do our own testing

Results. To account for these risks, Forresteron our internal benchmarks so that we canadjusted this cost upward by 15%, yielding a three-become convinced there won’t be significant
regressions. We’re very conservative when it

year, risk-adjusted total PV of $69,500.

comes to adopting new versions of Gurobi — no
shade to Gurobi there.”

THE TOTAL ECONOMIC IMPACT™ OF THE GUROBI OPTIMIZER

23

ANALYSIS OF COSTS

Deployment And Ongoing Maintenance
Ref.

MetricSourceInitialYear 1

Year 2

Year 3E1Time to deploy Gurobi (hours)

Interviews

8

E2

Number of existing use cases migrated

Interviews

7

E3

Time spent migrating existing use cases (average hours per use case)Interviews

120

E4

Subtotal: Time spent on deployment and migration (hours)

E1+(E2*E3)

848

E5

Number of updates per year

Gurobi

2

4

4

E6

Time spent on updates (average hours per update)

Interviews

8

8

8

E7

Subtotal: Time spent on updates (hours)

E5*E6

16

32

32

E8

Fully burdened hourly compensation for operations research staff

TEI standard$66.20$66.20$66.20$66.20Et

Deployment and ongoing maintenance(E4+E7)*E8$56,138$1,059$2,118$2,118Risk adjustment↑15%$64,559$1,218$2,436$2,436

Etr

Deployment and ongoing maintenance (risk-adjusted)
Three-year total: $70,648

THE TOTAL ECONOMIC IMPACT™ OF THE GUROBI OPTIMIZER

Three-year present value: $69,509

24

Financial Summary
CONSOLIDATED THREE-YEAR RISK-ADJUSTED METRICS

Cash Flow Chart (Risk-Adjusted)
Total costs

Total benefits

Cumulative net benefits

Cash
flows

$5.0 M$4.0 M

The financial results calculated in the
Benefits and Costs sections can beused to determine the ROI, NPV, andpayback period for the composite
organization’s investment. Forrester
assumes a yearly discount rate of 10%
for this analysis.

$3.0 M

These risk-adjusted ROI,
NPV, and payback period
values are determined byapplying risk-adjustment
factors to the unadjusted
results in each Benefit andCost section.

$2.0 M$1.0 M-$1.0 M
InitialYear 1

Year 2

Year 3

Cash Flow Analysis (Risk-Adjusted Estimates)
InitialYear 1

Year 2

Year 3

Total

Present
Value($64,559)($241,218)($254,436)($267,636)($827,848)($695,204)

Total benefits$0$1,234,800$1,751,876$2,299,112$5,285,788$4,297,733

Net benefits($64,559)$993,582$1,497,440$2,031,476$4,457,940$3,602,529

Total costs

ROI
Payback period(months)

THE TOTAL ECONOMIC IMPACT™ OF THE GUROBI OPTIMIZER

518%
<6

25

Appendix A: Total Economic
ImpactTotal Economic Impact is a methodology developed

PRESENT VALUE (PV)by Forrester Research that enhances a company’s

The present or current value oftechnology decision-making processes and assists(discounted) cost and benefit estimatesvendors in communicating the value proposition of

given at an interest rate (the discounttheir products and services to clients. The TEIrate). The PV of costs and benefits feed

methodology helps companies demonstrate, justify,

into the total NPV of cash flows.

and realize the tangible value of IT initiatives to bothsenior management and other key businessstakeholders.

NET PRESENT VALUE (NPV)TOTAL ECONOMIC IMPACT APPROACH

The present or current value ofBenefits represent the value delivered to the(discounted) future net cash flows given

business by the product. The TEI methodology

an interest rate (the discount rate). A

places equal weight on the measure of benefits andpositive project NPV normally indicatesthe measure of costs, allowing for a full examinationthat the investment should be madeof the effect of the technology on the entire

unless other projects have higher NPVs.

organization.
Costs consider all expenses necessary to deliver the

RETURN ON INVESTMENT (ROI)

proposed value, or benefits, of the product. The cost
category within TEI captures incremental costs overA project’s expected return inthe existing environment for ongoing costs

percentage terms. ROI is calculated byassociated with the solution.

dividing net benefits (benefits less costs)
by costs.

Flexibility represents the strategic value that can beobtained for some future additional investmentbuilding on top of the initial investment already made.

DISCOUNT RATE

Having the ability to capture that benefit has a PV
that can be estimated.

The interest rate used in cash flow
analysis to take into account theRisks measure the uncertainty of benefit and costtime value of money. Organizations

estimates given: 1) the likelihood that estimates will

typically use discount rates between

meet original projections and 2) the likelihood that

8% and 16%.

estimates will be tracked over time. TEI risk factors
are based on “triangular distribution.”
PAYBACK PERIOD
The initial investment column contains costs incurred at “time0” or at the beginning of Year 1 that are not discounted. Allother cash flows are discounted using the discount rate at theend of the year. PV calculations are calculated for each total
cost and benefit estimate. NPV calculations in the summary
tables are the sum of the initial investment and thediscounted cash flows in each year. Sums and present value
calculations of the Total Benefits, Total Costs, and Cash Flowtables may not exactly add up, as some rounding may occur.

THE TOTAL ECONOMIC IMPACT™ OF THE GUROBI OPTIMIZER

The breakeven point for an investment.
This is the point in time at which net
benefits (benefits minus costs) equal
initial investment or cost.

26

Appendix B: Supplemental Material
Related Forrester Research“Specialized Infrastructure Is Creating New Industry Insights,” Forrester Research, Inc., September 28, 2021
“Navigate Trump-Era Uncertainty With The Compass Of Customer Obsession,” Forrester Research, Inc., June 8,
2017“Prescriptive Analytics: The Black Belt Of Digital Decisions,” Forrester Research, Inc., January 10, 2017
“Applying Advanced Analytics To Your Supply Chain,” Forrester Research, Inc., October 12, 2016
“Perishable Insights — Stop Wasting Money On Unactionable Analytics,” Forrester Research, Inc., August 11, 2016

Appendix C: Endnotes
1 Total Economic Impact is a methodology developed by Forrester Research that enhances a company’s

technology decision-making processes and assists vendors in communicating the value proposition of theirproducts and services to clients. The TEI methodology helps companies demonstrate, justify, and realize thetangible value of IT initiatives to both senior management and other key business stakeholders.

THE TOTAL ECONOMIC IMPACT™ OF THE GUROBI OPTIMIZER

27

THE TOTAL ECONOMIC IMPACT™ OF THE GUROBI OPTIMIZER

28