A Forrester Total Economic Impact™ Study Commissioned By Dell Technologies, November 2022
Dell’s PC as a Service (PCaaS) enables organizations to save valuable and increasingly scarce IT personnel productivity by reducing the required device lifecycle management tasks while also reducing hardware costs. Users are enabled with the latest devices improving productivity through reduced downtime and better performing applications. Dell PCaaS customers also realize hiring, budget, and project flexibility for the IT organization, enabling better support for an increasingly hybrid workforce.
With an increase in the variety of devices available to organizations and the workstyles of the employees who use them, management of the device lifecycle is more complicated and expensive than it has ever been, especially in light of the recent global trend of remote or flexible work. IT organizations must support a wide range of device and technology options to an increasingly dispersed and mobile workforce while maintaining low user disruption, all amid cost uncertainty. The rise of subscription services for traditional IT categories, such as devices, known to Forrester as device as a service (DaaS), shifts employee device purchasing from a one-time fixed cost to a continuous expenditure, an initiative that can improve digital employee experience while offering budget, hiring, and project flexibility to the IT organization.1
Dell Technologies commissioned Forrester Consulting to conduct a Total Economic Impact™ (TEI) study and examine the potential return on investment (ROI) enterprises may realize by deploying Dell PCaaS.2 The purpose of this study is to provide readers with a framework to evaluate the potential financial impact of Dell PCaaS on their organizations.
Reduced device lifecycle support costs
33.5%
Return on investment (ROI)
28%
Net present value (NPV)
$1.84M
To better understand the benefits, costs, and risks associated with this investment, Forrester interviewed twelve representatives with experience using Dell PCaaS. For the purposes of this study, Forrester aggregated the interviewees’ experiences and combined the results into a single composite organization, which is an industry-agnostic organization with 4,000 users and devices.
After the investment in Dell PCaaS, the interviewees highlighted the cost savings their organizations accrued by moving valuable IT talent off of device lifecycle management tasks and onto high-impact IT projects, avoiding labor and hiring costs. Organizations also reported hardware savings, shipping expenditure savings, and user impact. Increasingly hybrid users leverage newer, faster devices and lose less productivity to downtime.
Quantified benefits. Three-year, risk-adjusted present value (PV) quantified benefits for the composite organization include:
Lifecycle services | Without Dell PCaaS (FTE hours only) | Dell PCaaS (Dell fees and FTE hours) |
---|---|---|
Procurement | $102.14 | $71.50 |
Imaging, Installation, final preparation | $154.92 | $163.85 |
Systems management | $306.42 | $288.04 |
Support | $346.70 | $86.90 |
Retrieval/retirement | $32.11 | $16.50 |
Total per device cost (36 months) | $942.27 | $626.78 |
Total per device cost (monthly) | $26.17 | $17.41 |
Reduction in device-related support tickets
25% - 40%
Unquantified benefits. Benefits that provide value for the composite organization but are not quantified for this study include:
Costs. Three-year, risk-adjusted PV costs for the composite organization include:
The representative interviews and financial analysis found that a composite organization experiences benefits of $8.5 million over three years versus costs of $6.7 million, adding up to a net present value (NPV) of $1.8 million and an ROI of 28%.
Return on investment (ROI)
Benefits PV
Net present value (NPV)
Payback
“Dell PCaaS means less overall IT management for us. We can standardize our device lifecycle while improving our ability to refresh and change devices out based on current technology needs — all this while giving ourselves cost predictability in
monthly pricing.”
VP of cloud architecture, financial services
From the information provided in the interviews, Forrester constructed a Total Economic Impact™ framework for those organizations considering an investment in Dell PCaaS.
The objective of the framework is to identify the cost, benefit, flexibility, and risk factors that affect the investment decision. Forrester took a multistep approach to evaluate the impact that Dell PCaaS can have on an organization.
Interviewed Dell stakeholders and Forrester analysts to gather data relative to PCaaS.
Interviewed six representatives at organizations using Dell PCaaS and six representatives at organizations managing the device lifecycle internally to obtain data with respect to costs, benefits, and risks.
Designed a composite organization based on characteristics of the interviewees’ organizations.
Constructed a financial model representative of the interviews using the TEI methodology and risk-adjusted the financial model based on issues and concerns of the interviewees.
Employed four fundamental elements of TEI in modeling 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.
Readers should be aware of the following:
This study is commissioned by Dell Technologies and delivered by Forrester Consulting. It is not meant to be used as a competitive 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 the framework provided in the study to determine the appropriateness of an investment in PC As A Service.
Dell 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.
Dell provided the customer names for the interviews but did not participate in the interviews.
Consulting Team:
Richard Cavallaro
Zahra Azzaoui
Role | Industry | Number Of Users/Devices |
---|---|---|
VP, CIO | Professional services | ~17,000 |
Head of computer architecture | Finance technology | ~20,000 |
CTO | Technology | <100 |
VP of cloud architecture | Financial services | ~25,000 |
Global CIO | Energy | ~1,500 |
CIO | Healthcare | ~1,000 |
Role | Industry | Number Of Users/Devices |
---|---|---|
CIO | Healthcare | ~2,000 |
CIO | Legal services | ~400 |
VP of IT | CPG | ~5,000 |
CTO | Construction | ~1,500 |
Managing director and CTO | Financial services | ~200 |
CIO | Manufacturing | ~11,000 |
The above set of interviews was conducted in 2022, building off of eight interviews (four PCaaS customers and four non-PCaaS customers) conducted for the 2020 version of this report.
The interviewees noted how their organizations struggled with common challenges, including:
The interviewees’ organizations searched for a solution that could:
CIO and VP, professional services
“We were spending too much time and money having [devices] shipped to headquarters, imaging them, and then shipping them somewhere else, which makes no sense at all. And then, of course, on the support side, we’re trying to troubleshoot device issues remotely, which was next to impossible for us to do effectively.”
CIO and VP, professional services
These include:
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 the six (Dell PCaaS) interviewees, and it is used to present the aggregate financial analysis in the next section. The composite organization has the following characteristics.
Description of composite. The composite organization is a global organization with 4,000 total employees across the user and device profiles noted on the table below. Given the heterogenous industries of the interviewed companies, the composite is an industry-agnostic organization, Before moving to Dell PCaaS, the composite financed end-user devices from various vendors, with an average refresh cycle of three years. The organization supported its end users’ devices with internal IT resources exclusively. In recent years, the organization has been shifting to hybrid work models as more users work remotely or on-the-go more frequently than before.
Worker Type | Description | Number | Primary Device | Peripherals |
---|---|---|---|---|
Builder | Constantly connects via several devices across multiple work spaces; works from office 2 days per week on average | 400 | Laptop | 1 display, 1 docking station |
Connector | Assists in sharing and connecting people and information; works from office 2.3 days per week on average | 800 | Laptop | 1 display, 1 docking station |
Specialist | Generates focused work and performs detailed analysis; works from office 1.7 days per week on average | 600 | 50% desktop, 50% workstation | 2 displays |
Producer (mobile and fixed) | Focuses on productivity to deliver desired outcomes; works from office 2.8 days per week on average | 2,200 (1,400 mobile; 800 fixed) | Laptop (mobile); desktop (fixed) | 1 display, 1 docking station (mobile); 2 displays (fixed) |
Total | 4,000 | |||
Ref. | Benefit | Year 1 | Year 2 | Year 3 | Total | Present Value |
---|---|---|---|---|---|---|
Atr | Avoided device lifecycle services (annual) | $1,193,352 | $1,193,352 | $1,193,352 | $3,580,056 | $2,967,690 |
Btr | Avoided device acquisition and refresh costs | $1,858,788 | $1,858,788 | $1,858,788 | $5,576,364 | $4,622,531 |
Ctr | Avoided IT personnel hires through re-skilling | $208,050 | $208,050 | $208,050 | $624,150 | $517,390 |
Dtr | Avoided user productivity losses due to device access | $79,800 | $79,800 | $79,800 | $239,400 | $198,451 |
Etr | Avoided shipping costs | $87,400 | $87,400 | $87,400 | $262,200 | $217,351 |
Total benefits (risk-adjusted) | $3,427,390 | $3,427,390 | $3,427,390 | $10,282,170 | $8,523,413 | |
Evidence and data. Interviewees shared several specific results related to elimination of support and management effort for their organization’s device lifecycle with Dell PCaaS:
On aggregate, by leveraging Dell PCaaS, the interviewed organizations reduced or eliminated the IT FTE labor associated with specific tasks along the device lifecycle. Forrester analyzed the average amount of working time spent on each core device lifecycle activity as reported by interviewees. Forrester used this result to estimate the average monthly device lifecycle costs an organization avoided (measured in internal FTE resource hours) for the delivery of these services once it transitioned to Dell PCaaS.
The avoided costs displayed represent each stage of the lifecycle on broken down by average FTE labor cost (active labor) per stage on a per-device basis. These stages include the following.
“With Dell PCaaS, we’re reducing our [device] lifecycle costs because we have fewer people allocated to solve this problem. And on top of this, we’re constantly getting the newest stuff in terms of devices and updates.”
Head of computer architecture, financial technology
Procurement (one-time). Tasks on which time was saved by using Dell Premier Connect included vendor and catalog management, negotiations, invoice management, and device search.
Imaging (one-time). This included:
Physical device setup (one-time). This included:
Support (annual). This included:
Retirement/recovery (one-time). This included the following:
Modeling and assumptions. For the composite organization, Forrester makes the following assumptions:
Risks. These avoided costs can vary among organizations based on:
Results. To account for these risks, Forrester adjusted this benefit downward by 5%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $3 million.
A note on device services costs. Future state costs in the preceding bar chart included cost estimations from Dell for PCaaS capabilities and Forrester-sourced calculations for tasks that will still have to be carried out by internal resources. These tasks include initial device procurement processes through Dell, the creation and management of a central image, and systems management. However, these calculations demonstrate an FTE time saves of just over 6 hours per device over the composite organization’s three-year device cycle.
Ref. | Metric | Source | Year 1 | Year 2 | Year 3 |
---|---|---|---|---|---|
A1 | Number of users/devices | Composite | 4,000 | 4,000 | 4,000 |
A2 | Procurement | Interviews & Forrester data | $2.84 | $2.84 | $2.84 |
A3 | Imaging services | Interviews & Forrester data | $2.22 | $2.22 | $2.22 |
A4 | Physical installation and basic set up | Interviews & Forrester data | $0.89 | $0.89 | $0.89 |
A5 | Final preparation and migration | Interviews & Forrester data | $1.19 | $1.19 | $1.19 |
A6 | Systems management | Interviews & Forrester data | $8.51 | $8.51 | $8.51 |
A7 | Support | Interviews & Forrester data | $9.63 | $9.63 | $9.63 |
A8 | Asset retirement/disposal | Interviews & Forrester data | $0.89 | $0.89 | $0.89 |
A9 | Monthly device lifecycle cost per device | A2+A3+A4+A5+A6+ A7+A8 | $26.17 | $26.17 | $26.17 |
At | Avoided device lifecycle services (annual) | A1*A9*12 months | $1,256,160 | $1,256,160 | $1,256,160 |
Risk adjustment | ↓5% | ||||
Atr | Avoided device lifecycle services (annual) (risk-adjusted) | $1,193,352 | $1,193,352 | $1,193,352 | |
Three-year total: $3,580,056 | Three-year present value: $2,967,690 |
Evidence and data. Before investing in Dell PCaaS, most interviewed organizations refreshed end-user devices on an ongoing basis every three to five years on average. Some organizations only refreshed devices on an as-needed basis, exceeding five years between device refreshes. Organizations avoided the cost of owned devices as they began to refresh devices with those leased through Dell. This also allowed organizations to move capital expenditure to operating expenditure, better aligning with organizational cost reduction initiatives.
Modeling and assumptions. For the composite organization, Forrester makes the following assumptions.
Risks. This benefit may vary among organizations based on:
Results. Though variances exist, Forrester did not risk-adjust this benefit because it is matched in the costs section, yielding a three-year total PV of $4.6 million.
Type Of Device | Number Deployed | Three-Year Cost To Organization |
---|---|---|
Desktops | 1,100 | $870,100 |
Workstations | 300 | $614,700 |
Laptops | 2,600 | $2,974,400 |
Docking stations | 2,600 | $434,200 |
Displays | 5,400 | $1,350,000 |
Total (devices and peripherals) | 12,000 (4,000 devices; 8,000 peripherals) | $6,243,400 |
Ref. | Metric | Source | Year 1 | Year 2 | Year 3 | |
---|---|---|---|---|---|---|
B1 | Previous (non-Dell PCaaS) hardware cost of all end-user devices | Composite | $4,459,200 | $4,459,200 | $4,459,200 | |
B2 | Previous hardware costs of all peripherals | Composite | $1,784,200 | $1,784,200 | $1,784,200 | |
B3 | Total previous hardware costs | B1+B2 | $6,243,400 | $6,243,400 | $6,243,400 | |
B4 | Average monthly financing costs for end-user devices | Lease formula (Residual value: 20%. Annual interest rate: 5%. Duration: 36 months) | $154,899 | $154,899 | $154,899 | |
Bt | Avoided device acquisition and refresh costs | B4*12 | $1,858,788 | $1,858,788 | $1,858,788 | |
Risk adjustment | ↓0% | |||||
Btr | Avoided device acquisition and refresh costs (risk-adjusted) | $1,858,788 | $1,858,788 | $1,858,788 | ||
Three-year total: $5,576,364 | Three-year present value: $4,622,531 |
Evidence and data. Both Dell PCaaS and non-Dell PCaaS interviewees told Forrester that IT talent was in short supply and high demand in their organizations. Given the business-critical aspect of employee devices, IT resources were assigned to lifecycle management tasks despite their relative tedium. This forced additional hires to complete the other high-impact work for IT. By working with Dell to manage the device lifecycle through PCaaS, interviewees told Forrester that many of these IT resources were allocated to staff other IT projects, saving the organization additional hires and onboarding costs.
Modeling and assumptions. For the composite organization, Forrester makes the following assumptions:
Risks. This benefit will vary among organizations based on:
Results. To account for these risks, Forrester adjusted this benefit downward by 5%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $517,000.
Ref. | Metric | Source | Year 1 | Year 2 | Year 3 | |
---|---|---|---|---|---|---|
C1 | Annual re-skilled device support personnel | Interviews | 3 | 3 | 3 | |
C2 | Yearly rate per person | Assumption | $73,000 | $73,000 | $73,000 | |
Ct | Avoided IT personnel hires through re-skilling | C1*C2 | $219,000 | $219,000 | $219,000 | |
Risk adjustment | ↓5% | |||||
Ctr | Avoided IT personnel hires through re-skilling (risk-adjusted) | $208,050 | $208,050 | $208,050 | ||
Three-year total: $624,150 | Three-year present value: $517,390 |
“Six people were reassigned to other areas of our IT business. We don’t even have the concept of a ‘PC Depot’ anymore.”
CIO, Professional services
Evidence and data. Across the organizations interviewed for this report, interviewees spoke to the impact of device issues or failures that required replacement. In many cases, remote users were without their device for several business days as it was sent off for repair or replacement. Interviewees whose organizations migrated to Dell PCaaS noted the user productivity benefit of flexible repair or replacement options for devices that experience issues, the value of improved support, and the avoidance of issues altogether through a newer fleet of devices.
Modeling and assumptions. For the composite organization, Forrester makes the following assumptions:
Risks. This benefit will vary among organizations based on:
Results. To account for these risks, Forrester adjusted this benefit downward by 5%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $200,000.
Ref. | Metric | Source | Year 1 | Year 2 | Year 3 |
---|---|---|---|---|---|
D1 | Number of users/devices | Composite | 4,000 | 4,000 | 4,000 |
D2 | Percentage of users experiencing critical device-related issues (annually) | Composite | 5% | 5% | 5% |
D3 | Business days without device before Dell PCaaS (annually) | Interviews | 4 | 4 | 4 |
D4 | Business days without device on Dell PCaaS (annually) | Interviews | 1 | 1 | 1 |
D5 | Reduction of days without device with Dell PCaaS | D3-D4 | 3 | 3 | 3 |
D6 | Productivity without device | Assumption | 50% | 50% | 50% |
D7 | Average fully loaded FTE daily rate | TEI standard | $280 | $280 | $280 |
Dt | Avoided user productivity losses due to device access | D1*D2*D3*D4*D5 | $84,000 | $84,000 | $84,000 |
Risk adjustment | ↓5% | ||||
Dtr | Avoided user productivity losses due to device access (risk-adjusted) | $79,800 | $79,800 | $79,800 | |
Three-year total: $239,400 | Three-year present value: $198,451 |
Users access devices 18 months newer on average.
““[Before PCaaS], IT was running around with device-related support tickets and couldn’t support the users’ business needs. Now we can all be a little more business-minded. We are developing subject matter experts that support our users’ most-used applications. We’re really starting to fulfill IT’s true purpose — supporting the business. This has been a byproduct of [Dell] PCaaS.”
CIO, healthcare
Evidence and data. Prior to adopting Dell PCaaS, organizations faced many situations that drove shipping costs up, including:
Dell PCaaS (ProDeploy) gave organizations the ability to image and provision devices without a central IT location for device provisioning, reducing at least one shipping instance versus the before state. Fewer issues requiring repair or replacement resulting from a newer device fleet drove additional savings because less was spent on off-cycle shipping.
Modeling and assumptions. For the composite organization, Forrester makes the following assumptions:
Risks. This benefit will vary among organizations based on:
Results. To account for these risks, Forrester adjusted this benefit downward by 5%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $217,000.
Ref. | Metric | Source | Year 1 | Year 2 | Year 3 | |
---|---|---|---|---|---|---|
E1 | Number of devices | Composite | 4,000 | 4,000 | 4,000 | |
E2 | Devices refreshed annually (average) | 1/3 of total | 1,333 | 1,333 | 1,333 | |
E3 | Devices repaired or replaced via shipping annually (average) | E1*D2 | 200 | 200 | 200 | |
E4 | Devices shipped annually | E2+E3 | 1,533 | 1,533 | 1,533 | |
E5 | Average annual two-way shipping cost per device | Assumption | $120 | $120 | $120 | |
E6 | Shipping avoidance with Dell PCaaS | Interviews | 50% | 50% | 50% | |
Et | Avoided shipping costs | E1*E2*E3 | $92,000 | $92,000 | $92,000 | |
Risk adjustment | ↓5% | |||||
Etr | Avoided shipping costs (risk-adjusted) | $87,400 | $87,400 | $87,400 | ||
Three-year total: $262,200 | Three-year present value: $217,351 |
“In an emergency, we’d be paying [our shipping vendor] next day. So we’re paying $200 per device instead of $75 now.”
CIO, professional services
Additional benefits that customers experienced but were not able to quantify include:
The value of flexibility is unique to each customer. There are multiple scenarios in which a customer might implement Dell PCaaS and later realize additional uses and business opportunities.
Flexibility would also be quantified when evaluated as part of a specific project (described in more detail in Appendix A).
Ref. | Cost | Initial | Year 1 | Year 2 | Year 3 | Total | Present Value |
---|---|---|---|---|---|---|---|
Ftr | Lifecycle service costs (from other spreadsheet) | $0 | $877,464 | $877,464 | $877,464 | $2,632,392 | $2,182,123 |
Gtr | Leasing of devices (from other spreadsheet) | $0 | $1,786,020 | $1,786,020 | $1,786,020 | $5,358,060 | $4,441,567 |
Htr | Switching costs | $56,018 | $0 | $0 | $0 | $56,018 | $56,018 |
Total costs (risk-adjusted) | $56,018 | $2,663,484 | $2,663,484 | $2,663,484 | $8,046,470 | $6,679,708 | |
Evidence and data. Interviewees reported that they leveraged Dell PCaaS to reduce the burden on IT personnel with respect to the device lifecycle, while reducing costs and providing a better support experience to users.
Dell ProDeploy is an end-to-end service to get new devices from the factory to the user up and running. Dell provides 24/7 onsite installation; migration of data to the new system, wiping it from the legacy system; and 30-day post-deployment support. Dell ProSupport enables priority access to support, damage repair, and proactive monitoring for automatic issue prevention and resolution. Dell ProDeploy and ProSupport are paid on a per-user per-month basis of the term of the device lease/refresh cycle.
Modeling and assumptions. For the composite organization, Forrester makes the following assumptions:
Lifecycle service | Without Dell PCaaS (FTE hours only) | Dell PCaaS (Dell fees and FTE hours) | |
---|---|---|---|
Procurement | $2.84 | $1.99 | |
Imaging services | $2.22 | $1.62 | |
Physical installation and basic set up | $0.89 | $1.79 | |
Final preparation and migration | $1.19 | $1.13 | |
Systems management | $8.51 | $8.01 | |
Support | $9.63 | $2.41 | |
Asset retirement/disposal | $0.89 | $0.46 | |
Total per device cost (monthly) | $26.17 | $17.41 | |
Risks. This cost will vary based on:
Results. To account for these risks, Forrester adjusted this cost upward by 5%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $2.2 million.
Ref. | Metric | Source | Initial | Year 1 | Year 2 | Year 3 | |
---|---|---|---|---|---|---|---|
F1 | Number of users | Composite | 4,000 | 4,000 | 4,000 | ||
F2 | Dell PCaaS cost per user per month | Blended average of Dell service prices on a per-device, per-month basis | $17.41 | $17.41 | $17.41 | ||
Ft | Lifecycle service costs with Dell PC as a Service | F1*F2*12 months | $0 | $835,680 | $835,680 | $835,680 | |
Risk adjustment | ↑5% | ||||||
Ftr | Lifecycle service costs with Dell PC as a Service) (risk-adjusted) | $0 | $877,464 | $877,464 | $877,464 | ||
Three-year total: $2,632,392 | Three-year present value: $2,182,123 |
Evidence and data. Most of the organizations interviewed for this report (both the non-Dell PCaaS organizations as well as the “before state” of the Dell PCaaS customers) multi-sourced devices for their organizations from several device vendors or resellers. This required vendor relationships with several different organizations and often limited the scope of bulk discounting. Based on conversations with all 12 interviewees, Forrester conservatively assumed that the average prices for Dell-leased devices were roughly 4% lower than the average per-device spend for the incumbent devices. Some interviewees reported per-device spending that was higher than 4% of the Dell leasing price for comparable hardware.
Type Of Device | Number Deployed | Three-Year Cost To Organization |
---|---|---|
Desktops | 1,00 | $836,000 |
Workstations | 300 | $591,000 |
Laptops | 2,600 | $2,860,000 |
Docking stations | 2,600 | $416,200 |
Displays | 5,400 | $1,296,000 |
Total (devices and peripherals) | 12,000 | $5,999,000 |
Modeling and assumptions. For the composite organization, Forrester makes the following assumptions:
Risks. This cost can vary among organizations based on:
Results. Though variances may exist, blended Dell-list pricing was used for this analysis. Therefore, Forrester did not risk-adjust this cost upward, yielding a three-year total PV of $4.4 million.
Ref. | Metric | Source | Initial | Year 1 | Year 2 | Year 3 | |
---|---|---|---|---|---|---|---|
G1 | Total costs for end-user devices | Composite | $0 | $4,287,000 | |||
G2 | Total costs for peripherals | Composite | $0 | $1,712,000 | |||
G3 | Total hardware costs | G1+G2 | $0 | $5,999,000 | |||
G4 | Average monthly device costs for end-user devices with Dell PCaaS | Lease formula (Residual value: 20%. | $0 | $148,835 | $148,835 | $148,835 | |
Gt | Financing of devices through Dell PCaaS | G4*12 | $0 | $1,786,020 | $1,786,020 | $1,786,020 | |
Risk adjustment | ↑0% | ||||||
Gtr | Leasing of devices (risk-adjusted) | $0 | $1,786,020 | $1,786,020 | $1,786,020 | ||
Three-year total: $5,358,060 | Three-year present value: $4,441,567 |
Evidence and data. Switching a B2B provider is rarely cost-neutral — organizations must create new processes and build new relationships. Interviewees indicated that their IT staff needed to invest time to maximize effectiveness of the Dell PCaaS tools within their organizations. In addition, companies may need to continue contracts with incumbent device and/or support providers in the short term to medium term before completely discontinuing service.
Modeling and assumptions. For the composite organization, Forrester makes the following assumptions:
Risks. This cost may vary among organizations based on:
Results. To account for these risks, Forrester adjusted this cost upward by 5%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $56,000.
Ref. | Metric | Source | Initial | Year 1 | Year 2 | Year 3 | |
---|---|---|---|---|---|---|---|
H1 | Number of devices | Composite | 4,000 | ||||
H2 | Assumed switching cost per 100 devices | 100 * $11.34 (rounded) | $1,133.75 | ||||
Ht | Switching costs | H1*(H2/100) | $53,350 | ||||
Risk adjustment | ↑5% | ||||||
Htr | Switching costs (risk-adjusted) | $56,018 | |||||
Three-year total: $56,018 | Three-year present value: $56,018 |
The financial results calculated in the Benefits and Costs sections can be used to determine the ROI, NPV, and payback period for the composite organization’s investment. Forrester assumes a yearly discount rate of 10% for this analysis.
These risk-adjusted ROI, NPV, and payback period values are determined by applying risk-adjustment factors to the unadjusted results in each Benefit and Cost section.
Initial | Year 1 | Year 2 | Year 3 | Total | Present Value | |
---|---|---|---|---|---|---|
Total costs | ($56,018) | ($2,663,484) | ($2,663,484) | ($2,663,484) | ($8,046,470) | ($6,679,708) |
Total benefits | $0 | $3,427,390 | $3,427,390 | $3,427,390 | $10,282,170 | $8,523,413 |
Net benefits | ($56,018) | $763,906 | $763,906 | $763,906 | $2,235,701 | $1,843,705 |
ROI | 28% | |||||
Payback period (months) | <6 | |||||
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 their products and services to clients. The TEI methodology helps companies demonstrate, justify, and realize the tangible value of IT initiatives to both senior management and other key business stakeholders.
Benefits represent the value delivered to the business by the product. The TEI methodology places equal weight on the measure of benefits and the measure of costs, allowing for a full examination of the effect of the technology on the entire organization.
Costs consider all expenses necessary to deliver the proposed value, or benefits, of the product. The cost category within TEI captures incremental costs over the existing environment for ongoing costs associated with the solution.
Flexibility represents the strategic value that can be obtained for some future additional investment building on top of the initial investment already made. Having the ability to capture that benefit has a PV that can be estimated.
Risks measure the uncertainty of benefit and cost estimates given: 1) the likelihood that estimates will meet original projections and 2) the likelihood that estimates will be tracked over time. TEI risk factors are based on “triangular distribution.”
The present or current value of (discounted) cost and benefit estimates given at an interest rate (the discount rate). The PV of costs and benefits feed into the total NPV of cash flows.
The present or current value of (discounted) future net cash flows given an interest rate (the discount rate). A positive project NPV normally indicates that the investment should be made unless other projects have higher NPVs.
A project’s expected return in percentage terms. ROI is calculated by dividing net benefits (benefits less costs) by costs.
The interest rate used in cash flow analysis to take into account the time value of money. Organizations typically use discount rates between 8% and 16%.
The breakeven point for an investment. This is the point in time at which net benefits (benefits minus costs) equal initial investment or cost.
The initial investment column contains costs incurred at “time 0” or at the beginning of Year 1 that are not discounted. All other cash flows are discounted using the discount rate at the end 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 the discounted cash flows in each year. Sums and present value calculations of the Total Benefits, Total Costs, and Cash Flow tables may not exactly add up, as some rounding may occur.
1 Source: “Research Overview: Modern Technology Operations,” Forrester Research, Inc., August 3, 2020.
2 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 their products and services to clients. The TEI methodology helps companies demonstrate, justify, and realize the tangible value of IT initiatives to both senior management and other key business stakeholders.
3 Source: “Enhance Digital Employee Experience With Device-As-A-Service (DaaS),” Forrester Research, Inc., January 23, 2020.
Forrester provides independent and objective research-based consulting to help leaders deliver key transformation outcomes. Fueled by our customer-obsessed research, Forrester’s seasoned consultants partner with leaders to execute on their priorities using a unique engagement model that tailors to diverse needs and ensures lasting impact. For more information, visit forrester.com/consulting.
© Forrester Research, Inc. All rights reserved. Unauthorized reproduction is strictly prohibited. Information is based on best available resources. Opinions reflect judgment at the time and are subject to change. Forrester®, Technographics®, Forrester Wave, and Total Economic Impact are trademarks of Forrester Research, Inc. All other trademarks are the property of their respective companies.
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