A Forrester New Technology Projected Total Economic Impact™ Study Commissioned By Microsoft, April 2024
Generative AI is viewed as a disruptive business technology on par with the adoption of the internet. Microsoft Copilot for Microsoft 365 is one of the first enterprise-grade generative AI solutions. Interviewees from early adopters are already achieving user time savings and moving toward business transformation. Based on interviews and survey responses, Copilot for Microsoft 365 is expected to transform all aspects of a business, including go to market, operations, and people and culture.
Copilot for Microsoft 365 is a workers’ generative AI assistant that helps them make better use of all the solutions within Microsoft 365. Interviewees from organizations that are using Copilot for Microsoft 365 have noted both early successes and great future potential to address challenges. The early successes include decreasing information overload and worker fatigue, compressing time frames for innovation, and managing companies’ ever-increasing competitive landscape.
Microsoft commissioned Forrester Consulting to conduct a Total Economic Impact™ (TEI) study and examine the potential return on investment (ROI) enterprises may realize by deploying Copilot for Microsoft 365.1 The purpose of this study is to provide readers with a framework to evaluate the potential financial impact of Copilot for Microsoft 365 on their organizations.
Projected return on investment (PROI)
112% to 457%
Projected net present value (PNPV)
$19.1 million to $77.4 million
To better understand the benefits, costs, and risks associated with this investment, Forrester interviewed eight representatives with early experience using Copilot for Microsoft 365. Forrester also surveyed 351 decision-makers from companies considering implementation of generative AI solutions like Copilot for Microsoft 365 and who have thought about the implications for their organizations. For the purposes of this study, Forrester aggregated the interviewees and survey respondents expectations and combined the results into a single composite organization. The composite organization is a 25,000-person, US-based company with an extensive presence in North America and Europe and with sales operations across the world. Annual revenues are $6.25 billion. The organization’s goal is to achieve business transformation, not just low-hanging labor efficiencies. Copilot for Microsoft 365 is rolled out to 3,000 users in Year 1, an additional 3,000 in Year 2, and an additional 4,000 in Year 3. This totals 10,000 workers, which represents 40% of the total workforce. Future rollouts are dependent on success over the first three years.
Interviewees and survey respondents said that prior to using Copilot for Microsoft 365, their organizations were awash with data and tools, but they lacked the ability to bring it all together and unlock the potential value. Previous attempts to unlock the value of their data and people yielded limited success, leaving them with frustrated employees, lagging innovation and agility, and excessive costs. All of this contributed to employee burnout, customer dissatisfaction, and diminished financial performance.
After the investment in Copilot for Microsoft 365, the interviewees and survey respondents noted their organizations leveraged internal data, people, materials, and processes to achieve business transformation across three pillars: go to market, operations, and people and culture. Collectively, these transformations increased revenues, lowered internal and external operating costs, and improved employee experience and company culture.
The Copilot for Microsoft 365 benefits, both already realized and anticipated, are shown in the figure below as part of the three business transformation pillars: go to market, operations, and people and culture. In addition to the examples of quantified benefits, this New Tech TEI also discusses drivers contributing to the benefits and how the benefits are expected to expand and evolve over time.
Quantified projected benefits. Copilot for Microsoft 365 was released in November of 2023, so this study includes quantified benefits for each of the transformation pillars as well as a discussion of other benefits that could not yet be quantified. The three-year, risk-adjusted present value (PV) quantified benefits for the composite organization include:
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:
Forrester modeled a range of projected low-, medium-, and high-impact outcomes based on evaluated risk and the extent of business transformation achieved. This financial analysis projects that the composite organization accrues the following three-year, risk-adjusted projected net present value (PNPV) for each scenario by enabling Microsoft Copilot for Microsoft 365:
Three-year increase in net income due to increased revenues and decreased costs
2.9% up to 7.6%
“There’s really no future without this kind of technology. This is the direction that work will go. It will be part of every single application you use in the future. It’s not if you should, it’s when you should and at what point on the adoption curve you want to be. The longer you wait, the further behind you will be.”
Account lead, professional services
Projected return on investment (PROI):
Projected benefits PV:
Projected net present value (PNPV):
Total costs PV:
From the information provided in the interviews and survey, Forrester constructed a New Technology: Projected Total Economic Impact™ (New Tech TEI) framework for those organizations considering an investment in Copilot for Microsoft 365.
The objective of the framework is to identify the potential cost, benefit, flexibility, and risk factors that affect the investment decision. Forrester took a multistep approach to evaluate the projected impact that Copilot for Microsoft 365 can have on an organization.
Interviewed Microsoft stakeholders and Forrester analysts to gather data relative to Copilot for Microsoft 365.
Interviewed eight representatives at organizations using Copilot for Microsoft 365 as part of the Early Adopter Program and surveyed 351 respondents from organizations that are considering the use of generative AI solutions, such as Copilot for Microsoft 365, to obtain data about projected costs, benefits, and risks.
Designed a composite organization based on characteristics of the interviewees’ and survey respondents’ organizations.
Constructed a projected financial model representative of the interviews and survey using the New Tech TEI methodology and risk-adjusted the financial model based on issues and concerns of the interviewees.
Employed four fundamental elements of New Tech TEI in modeling the investment’s potential 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 Microsoft 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 Copilot for Microsoft 365.
Microsoft 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.
Microsoft provided the customer names for the interviews but did not participate in the interviews.
Forrester fielded the double-blind survey using a third-party survey partner.
Consulting Team:
Nahida Nisa
Jonathan Lipsitz
Forrester interviewed eight representatives with experience using Copilot for Microsoft 365 at their organizations and surveyed an additional 351 decision-makers from organizations considering the use of Copilot for Microsoft 365. For more details on these individuals and the organizations they represent, see Appendix B.
Many decision-makers and employees are considering how generative AI will transform their work, their company, and their industry. Forrester research found that 92% of decision-makers believe generative AI is already having a high impact on their investment decision.3 The high interest and expectations in generative AI is largely driven by the current environment in which information and processes are disjointed and employees struggle to harness their organizations’ intellectual assets to create value.
The interviewees and survey respondents noted how their organizations struggled with common challenges, including the following:
“We have a very complicated company with several organizations and with segregated IT. We wanted to build a single platform for employees. The decision to use Copilot as a part of this platform was quite easy for us because we saw it as an advantage for our workers.”
Global head of IT workplace, conglomerate
The interviewees’ and survey respondents’ organizations searched for a solution that could:
Base: 351 decision-makers with responsibility or influence over their organization’s AI solutions strategy
Source: A commissioned study conducted by Forrester Consulting on behalf of Microsoft, January 2024
“I just completed a task in Word that took five seconds versus spending all day trying to find the time to put words on paper. I no longer needed to carve out a 90-minute block to create something from scratch. People find it much easier to react to something, and that’s one of the big benefit of Copilot. It gets us from a blank page to something we can react to.”
Experience lead, professional services
Based on the interviews and survey, 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 eight interviewees and 351 survey respondents, and it is used to present the aggregate financial analysis in the next section. The composite organization has the following characteristics:
Description of composite. A global company headquartered in the United States. It has extensive operations across North America and Europe, as well as sales and service operations around the globe. The composite company has $6.25 billion in annual revenues, which is held constant for model simplicity. It also has 25,000 employees.
Deployment characteristics. The composite organization had previously moved to Microsoft 365 and was well down its cloud-migration journey with many information repositories already migrated to SharePoint Online. The objective of deploying Copilot for Microsoft 365 was to achieve business transformation in addition to quick-win labor productivity gains. Copilot for Microsoft 365 was a phased rollout over three years: 3,000 knowledge workers are onboarded in Year 1, with an additional 3,000 onboarded in Year 2 and an additional 4,000 in Year 3. These users cross all departments and are prioritized based on use-case value.
Projected Benefits | Year 1 | Year 2 | Year 3 | Total | Present Value |
---|---|---|---|---|---|
Total projected benefits (low) | $3,003,650 | $14,362,845 | $28,518,181 | $45,884,676 | $36,026,842 |
Total projected benefits (mid) | $10,866,485 | $24,965,655 | $45,423,475 | $81,255,615 | $64,638,724 |
Total projected benefits (high) | $18,854,145 | $36,152,413 | $63,041,400 | $118,047,958 | $94,382,096 |
Evidence and data. Interviewees and survey respondents noted several go-to-market benefits with Copilot for Microsoft 365, including improved sales, marketing, and customer experiences, which could result in increased revenue growth. Interviewees and survey respondents shared many examples of how their organizations achieved early successes and how they expected revenue to grow in the future:
Base: 351 decision-makers with responsibility or influence over their organization’s AI solutions strategy
Source: A commissioned study conducted by Forrester Consulting on behalf of Microsoft, January 2024
Modeling and assumptions. Based on the interviews and survey, Forrester assumes the following for the financial analysis as applied to the composite organization:
Results. This yields a three-year projected PV ranging from $7.5 million (low) to $35.6 million (high).
Up to 2.9%
Increase in net revenue
“It’s always a benefit if you are quicker than your competitors when interacting with customers. Otherwise, you have the potential of losing business. Copilot is already helping in this area by preparing answers in Outlook.”
Global head of IT workplace, conglomerate
Ref. | Metric | Source | Year 1 | Year 2 | Year 3 | |
---|---|---|---|---|---|---|
A1 | Baseline revenues | Composite | $6,250,000,000 | $6,250,000,000 | $6,250,000,000 | |
A2Low | 0.0% | 0.5% | 1.5% | |||
A2Mid | Increased revenues from improved revenue generation and customer experience | Interviews | 1.0% | 2.0% | 3.0% | |
A2High | 2.0% | 3.0% | 4.0% | |||
A3Low | $0 | $31,250,000 | $93,750,000 | |||
A3Mid | Subtotal: Revenue from improved revenue generation | A1*A2 | $62,500,000 | $125,000,000 | $187,500,000 | |
A3High | $125,000,000 | $187,500,000 | $250,000,000 | |||
A4 | Baseline net margin | TEI standard | 7.80% | 7.80% | 7.80% | |
AtLow | $0 | $2,437,500 | $7,312,500 | |||
AtMid | Business transformation: Go to market | A3*A4 | $4,875,000 | $9,750,000 | $14,625,000 | |
AtHigh | $9,750,000 | $14,625,000 | $19,500,000 | |||
Three-year projected total: $9,750,000 to $43,875,000 | Three-year present value: $7,508,452 to $35,601,052 |
Evidence and data. Interviewees and survey respondents said they expected their organizations to achieve significant internal and external efficiencies, operational process improvements, and improved supply chain optimization. A major component of this transformation pillar was employee time savings. Examples of how Copilot for Microsoft 365 saved the interviewees’ and survey respondents’ employees time were shared in this section, and they were also illustrated in much more detail in Appendix C. The ways Copilot for Microsoft 365 saved time for people across many roles was well documented, including within the Forrester Research report on how to build a business case for Copilot for Microsoft 365.5 Interviewees also noted that Copilot for Microsoft 365 also created opportunities to reduce external spend in many areas, such as outsourced labor and other software licenses. External cost reductions were important because they contributed directly to bottom-line financial performance improvements. Examples of how interviewees and survey respondents achieved early successes in transforming operations to reduce costs and how they expected this to improve in the future include the following:
Modeling and assumptions. Based on the interviews and survey, Forrester assumes the following for the financial analysis as applied to the composite organization:
Results. This yields a three-year projected PV ranging from $27.6 million (low) to $56.7 million (high). From a net-margin perspective, the baseline 7.80% net margin increases from 8.12% (low) to 8.45% (high).
Up to 0.7%
Reduction in total expenditures
“Copilot has a labor savings element, but it is about more than that. It’s about not having to wait two days for a process to complete. Everything just gets done faster.”
Experience lead, professional services
“As an IT department, we know that retail systems and logistics are the two biggest areas where we can add value. Copilot should help a lot in both of these areas. I can’t quantify it now, but the improvements could be huge.”
Project manager, retail
“We buy a lot of software and hardware for data analytics initiatives. I believe that in a couple of years we won’t need this, and that we will be able to achieve the same or better results with Copilot for Microsoft 365.”
Global head of IT workplace, conglomerate
Ref. | Metric | Source | Year 1 | Year 2 | Year 3 | ||||
---|---|---|---|---|---|---|---|---|---|
B1Low | $6,250,000,000 | $6,281,250,000 | $6,343,750,000 | ||||||
B1Mid | Total revenues | A1+A3 | $6,312,500,000 | $6,375,000,000 | $6,437,500,000 | ||||
B1High | $6,375,000,000 | $6,437,500,000 | $6,500,000,000 | ||||||
B2Low | $5,762,500,000 | $5,791,312,500 | $5,848,937,500 | ||||||
B2Mid | Total pre-Copilot for Microsoft 365 expenses | B1*(100%-7.80% baseline net margin) | $5,820,125,000 | $5,877,750,000 | $5,935,375,000 | ||||
B2High | $5,877,750,000 | $5,935,375,000 | $5,993,000,000 | ||||||
B3 | Baseline net margin | A4 | 7.80% | 7.80% | 7.80% | ||||
B4Low | 0.05% | 0.20% | 0.35% | ||||||
B4Mid | Percent decrease in expenses due internal and external efficiencies | Interviews | 0.10% | 0.25% | 0.50% | ||||
B4High | 0.15% | 0.35% | 0.70% | ||||||
B5Low | $2,881,250 | $11,582,625 | $20,471,281 | ||||||
B5Mid | Reduced expenses | B2*B4 | $5,820,125 | $14,694,375 | $29,676,875 | ||||
B5High | $8,816,625 | $20,773,813 | $41,951,000 | ||||||
B6Low | 7.85% | 7.98% | 8.12% | ||||||
B6Mid | Resultant net margin (rounded) | 1-(B2-B5)/B1 | 7.89% | 8.03% | 8.26% | ||||
B6High | 7.94% | 8.12% | 8.45% | ||||||
BtLow | $2,881,250 | $11,582,625 | $20,471,281 | ||||||
BtMid | Business transformation: Operations | B5 | $5,050,000 | $5,820,125 | $14,694,375 | ||||
BtHigh | $8,816,625 | $20,773,813 | $41,951,000 | ||||||
Three-year projected total: $34,935,156 to $71,541,438 | Three-year present value: $27,572,112 to $56,701,961 |
Evidence and data. Interviewees noted that Copilot for Microsoft 365 improved employee satisfaction by reducing or eliminating tedious, repetitive tasks. It also improved company culture through increased employee empowerment. In the short term, this reduced the time required to onboard new hires. Although too early to quantify, interviewees noted that longer-term benefits may include increased employee retention and job performance, as well as a reduced reliance on specialized employees. Specific examples of how interviewees and survey respondents saw Copilot for Microsoft 365 transforming people and culture include the following:
Modeling and assumptions. Based on the interviews and survey, Forrester assumes the following for the financial analysis as applied to the composite organization:
Results. This yields a three-year projected PV ranging from $946,000 (low) to $2.1 million (high).
Ref. | Metric | Source | Year 1 | Year 2 | Year 3 | ||
---|---|---|---|---|---|---|---|
C1 | Number of workers using Copilot for Microsoft 365 | Composite | 3,000 | 6,000 | 10,000 | ||
C2 | Percentage of employees that are new hires | Composite | 20% | 20% | 20% | ||
C3 | Days for onboarding prior to Copilot for Microsoft 365 | Interviews | 45 | 45 | 45 | ||
C4Low | 10% | 15% | 20% | ||||
C4Mid | Acceleration in new employee onboarding due to Copilot for Microsoft 365 | Composite | 15% | 20% | 25% | ||
C4High | 20% | 25% | 30% | ||||
C5Low | 5 | 7 | 9 | ||||
C5Mid | Days saved per new employee onboarded (rounded) | C3*C4 | 7 | 9 | 11 | ||
C5High | 9 | 11 | 14 | ||||
C6 | New employee average hourly fully burdened cost | TEI standard | $34 | $34 | $34 | ||
C7 | Productivity of new hire during ramp | Interviews | 30% | 30% | 30% | ||
C8 | Time recaptured | TEI standard | 50% | 50% | 50% | ||
C9Low | $122,400 | $342,720 | $734,400 | ||||
C9Mid | Subtotal: Acceleration of new employee onboarding | C1*C2*C5*8 hours*C6*C7*C8 | $171,360 | $440,640 | $897,600 | ||
C9High | $220,320 | $538,560 | $1,142,400 | ||||
C10Low | 0.00 | 0.00 | 0.00 | ||||
C10Mid | Days saved for managers per new employee onboarded | Interviews | 0.00 | 0.30 | 0.50 | ||
C10High | 0.50 | 0.80 | 1.00 | ||||
C11 | Manager of new employee hourly fully burdened cost | TEI standard | $56 | $56 | $56 | ||
C12 | Time recaptured | TEI standard | 50% | 50% | 50% | ||
C13Low | $0 | $0 | $0 | ||||
C13Mid | Subtotal: Easier new employee onboarding for managers | C1*C2*C10*8 hours*C11*C12 | $0 | $80,640 | $224,000 | ||
C13High | $67,200 | $215,040 | $448,000 | ||||
CtLow | $122,400 | $342,720 | $734,400 | ||||
CtMid | Business transformation: People and culture | C9+C13 | $171,360 | $521,280 | $1,121,600 | ||
CtHigh | $287,520 | $753,600 | $1,590,400 | ||||
Three-year projected total: $1,199,520 to $2,631,520 | Three-year present value: $946,278 to $2,079,083 |
Up to 30%
Acceleration in new-hire onboarding time.
“Onboarding new employee is very hard. It requires HR, IT, and many other teams. We are using Copilot with Power Automate to streamline the information sharing and coordination required to make this better.”
Manager, professional services
Interviewees and survey respondents mentioned the following additional benefits that their organizations experienced but were not able to quantify:
The value of flexibility is unique to each customer. There are multiple scenarios in which a customer might implement Copilot for Microsoft 365 and later realize additional uses and business opportunities. These scenarios include:
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 |
---|---|---|---|---|---|---|---|
Dtr | Copilot for Microsoft 365 licenses | $0 | $1,134,000 | $2,268,000 | $3,780,000 | $7,182,000 | $5,745,259 |
Etr | Implementation and management | $2,160,000 | $1,356,000 | $1,356,000 | $1,356,000 | $6,228,000 | $5,532,171 |
Ftr | Training and employee discovery | $25,200 | $1,823,760 | $2,107,440 | $2,997,360 | $6,953,760 | $5,676,811 |
Total costs (risk adjusted) |
$2,185,200 | $4,313,760 | $5,731,440 | $8,133,360 | $20,363,760 | $16,954,241 | |
Evidence and data. Interviewees noted that Copilot for Microsoft 365 required users to first have either a Microsoft 365 E3 or an E5 license with Azure Active Directory access. Copilot for Microsoft 365 then cost an additional $30 per user per month.
Interviewees for this analysis evaluated Copilot for Microsoft 365 as a part of Microsoft’s Early Access Program. While these interviewed IT and business decision-makers did not pay for licenses to test Copilot for Microsoft 365, they evaluated their plans for future expansion based on a nondiscounted license cost of $30 per user per month. Similarly, survey respondents were not yet paying for Copilot for Microsoft 365 as their interest and evaluation was based on a potential investment. However, future use cases and internal business cases were built on the cost of $30 per user per month.
Specific examples of how interviewees and survey respondents viewed the license costs for Copilot for Microsoft 365 include the following:
Modeling and assumptions. Based on the interviews and survey, Forrester assumes the following for the financial analysis as applied to the composite organization:
Risks. Results may not be representative of all experiences and the cost will vary between organizations depending on the following factors:
Results. To account for these risks, Forrester adjusted this cost upward by 5% yielding a three-year, risk-adjusted total PV (discounted at 5%) of $5.7 million.
“Saving a day a month pays for the Copilot license quite easily because we’re assuming it’s going to be around about €30 per user per month for Copilot. … An hour a month would probably cover the cost of the Copilot license.”
Head of workplace technology, utilities
Ref. | Metric | Source | Initial | Year 1 | Year 2 | Year 3 |
---|---|---|---|---|---|---|
D1 | Number of employees using Copilot for Microsoft 365 | Composite | 3,000 | 6,000 | 10,000 | |
D2 | Cost of Copilot for Microsoft 365 per user per month | Interviews | $30 | $30 | $30 | |
Dt | Copilot for Microsoft 365 licenses | D1*D2*12 months | $1,080,000 | $2,160,000 | $3,600,000 | |
Risk adjustment | ↑5% | |||||
Dtr | Copilot for Microsoft 365 licenses (risk-adjusted) | $1,134,000 | $2,268,000 | $3,780,000 | ||
Three-year total: $7,182,000 | Three-year present value: $5,745,259 |
Evidence and data. Interviewees noted that their employees view Copilot for Microsoft 365 as a transformational technology allowing for a new way of working. However, transforming a business with a new technology required a thorough integration and realignment of internal processes, resources, and strategies. There was also much effort around data management — cleaning up internal data, ensuring that data permissions were set correctly, and excluding certain data from Copilot for Microsoft 365 indexing.
Modeling and assumptions. Based on the interviews and survey, Forrester assumes the following for the financial analysis as applied to the composite organization:
Risks. Results may not be representative of all experiences, and the cost will vary between organizations depending on the following factors:
Results. To account for these risks, Forrester adjusted this cost upward by 20%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $5.5 million.
Ref. | Metric | Source | Initial | Year 1 | Year 2 | Year 3 | |||
---|---|---|---|---|---|---|---|---|---|
E1 | Professional services | Interviews | $500,000 | $350,000 | $350,000 | $350,000 | |||
E2 | Number of IT FTEs involved in technical integration and change management | Interviews | 10 | 6 | 6 | 6 | |||
E3 | Annual fully burdened cost | Interviews | $130,000 | $130,000 | $130,000 | $130,000 | |||
E4 | Subtotal: Technical integration and process reengineering costs | E2*E3 | $1,300,000 | $780,000 | $780,000 | $780,000 | |||
Et | Implementation and management costs | E1+E4 | $1,800,000 | $1,130,000 | $1,130,000 | $1,130,000 | |||
Risk adjustment | ↑20% | ||||||||
Etr | Implementation and management costs (risk-adjusted) | $2,160,000 | $1,356,000 | $1,356,000 | $1,356,000 | ||||
Three-year total: $6,228,000 | Three-year present value: $5,532,171 |
Evidence and data. Interviewees note that end users required both formal training and informal training/discovery to effectively change the way they worked with Copilot for Microsoft 365. Trainers and facilitators also needed to spend time to develop learning materials and lead training sessions. The required labor was expected to be more than marginally incremental technologies where users only needed to make small changes to their work.
Modeling and assumptions. Based on the interviews and survey, Forrester assumes the following for the financial analysis as applied to the composite organization:
Risks. Results may not be representative of all experiences, and the cost will vary between organizations depending on the following factors:
Results. To account for these risks, Forrester adjusted this cost upward by 20% yielding a three-year, risk-adjusted total PV (discounted at 10%) of $5.7 million.
“It’s essential to show how [Copilot for Microsoft 365] can really be used in a valuable and meaningful way in a work context. So not just showing functionality but use cases and giving people ideas about what they can do with it.”
VP of employee IT, industrial
Ref. | Metric | Source | Initial | Year 1 | Year 2 | Year 3 |
---|---|---|---|---|---|---|
F1 | Hours for learning and development content creation | Composite | 600 | 120 | 120 | 120 |
F2 | Average hourly fully burdened cost | TEI standard | $35 | $35 | $35 | $35 |
F3 | Subtotal: Cost for learning and development content creation | F1*F2 | $21,000 | $4,200 | $4,200 | $4,200 |
F4 | Number of Copilot for Microsoft 365 users | Composite | 0 | 3,000 | 6,000 | 10,000 |
F5 | Number of new Copilot for Microsoft 365 users | F4-F4PY | 0 | 3,000 | 3,000 | 4,000 |
F6 | Hours per year per employee for new employee training | Interviews | 8 | 8 | 8 | 8 |
F7 | Total hours of training for initial employees | F5*F6 | 0 | 24,000 | 24,000 | 32,000 |
F8 | Additional hours per employee per year for ongoing training | Interviews | 2 | 2 | 2 | 2 |
F9 | Total hours of training for ongoing employee training | F8*F4PY | 0 | 0 | 6,000 | 12,000 |
F10 | Number of employees per training sessions | Interviews | 25 | 25 | 25 | 25 |
F11 | Subtotal: Cost for trainers to lead training sessions | F2*(F7+F9)/F10 | $0 | $33,600 | $42,000 | $61,600 |
F12 | Total hours per year for employee training | F7+F9 | 0 | 24,000 | 30,000 | 44,000 |
F13 | Additional hours per year per new Copilot for Microsoft 365 user for discovery | Interviews | 5 | 5 | 5 | 5 |
F14 | Total hours per year for employee discovery | F5*F13 | 0 | 15,000 | 15,000 | 20,000 |
F15 | Average hourly fully burdened cost | TEI standard | $38 | $38 | $38 | $38 |
F16 | Subtotal: Cost for employees to train and discover | (F12+F14)*F15 | $0 | $1,482,000 | $1,710,000 | $2,432,000 |
Ft | Training and employee discovery | F3+F11+F16 | $21,000 | $1,519,800 | $1,756,200 | $2,497,800 |
Risk adjustment | ↑20% | |||||
Ftr | Training and employee discovery (risk-adjusted) | $25,200 | $1,823,760 | $2,107,440 | $2,997,360 | |
Three-year total: $6,953,760 | Three-year present value: $5,676,811 |
The financial results calculated in the Benefits and Costs sections can be used to determine the PROI and projected NPV for the composite organization’s investment. Forrester assumes a yearly discount rate of 10% for this analysis.
These risk-adjusted PROI and projected NPV 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 | ($2,185,200) | ($4,313,760) | ($5,731,440) | ($8,133,360) | ($20,363,760) | ($16,954,241) |
Total benefits (low) | $0 | $3,003,650 | $14,362,845 | $28,518,181 | $45,884,676 | $36,026,842 |
Total benefits (mid) | $0 | $10,866,485 | $24,965,655 | $45,423,475 | $81,255,615 | $64,638,724 |
Total benefits (high) | $0 | $18,854,145 | $36,152,413 | $63,041,400 | $118,047,958 | $94,382,096 |
Net benefits (low) | ($2,185,200) | ($1,310,110) | $8,631,405 | $20,384,821 | $25,520,916 | $19,072,601 |
Net benefits (mid) | ($2,185,200) | $6,552,725 | $19,234,215 | $37,290,115 | $60,891,855 | $47,684,483 |
Net benefits (high) | ($2,185,200) | $14,540,385 | $30,420,973 | $54,908,040 | $97,684,198 | $77,427,855 |
PROI (low) | 112% | |||||
PROI (mid) | 281% | |||||
PROI (high) | 457% | |||||
New Technology: Projected Total Economic Impact (New Tech TEI) 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 New Tech TEI methodology helps companies demonstrate and justify the projected tangible value of IT initiatives to both senior management and other key business stakeholders.
Projected Benefits represent the projected value to be delivered to the business by the product. The New Tech TEI methodology places equal weight on the measure of projected benefits and the measure of projected costs, allowing for a full examination of the effect of the technology on the entire organization.
Projected Costs consider all expenses necessary to deliver the proposed value, or benefits, of the product. The projected cost category within New Tech 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 projected 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 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.
Role | Industry | Geography | Employees |
---|---|---|---|
Account lead | Professional services | North America HQ, global operations | 50,000 |
Global head of IT workplace | Conglomerate | EMEA HQ, global operations | 10,000 |
Head of workplace technology | Utilities | EMEA HQ, global operations | 25,000 |
Experience lead | Professional services | North America HQ, global operations | >500,000 |
VP of employee IT | Industrial | EMEA HQ, global operations | 95,000 |
Manager | Professional services | Global operations | 15,000 |
Project manager | Retail | EMEA | 70,000 |
Client success specialist, Manager of digital workplace | Financial services | Canada | 1,000 |
Base: 351 decision-makers with responsibility or influence over their organization’s AI solutions strategy
Source: A commissioned study conducted by Forrester Consulting on behalf of Microsoft, January 2024
Ref. | Metric | Source | Year 1 | Year 2 | Year 3 | |||
---|---|---|---|---|---|---|---|---|
XX1 | Number of Copilot for Microsoft 365 users | Composite | 3,000 | 6,000 | 10,000 | |||
XX2 | Hours spent per employee reading large numbers of emails per week (without Copilot for Microsoft 365) | Interviews | 2.0 | 2.0 | 2.0 | |||
XX3Low | 20% | 20% | 20% | |||||
XX3Mid | Reduction in time to read large numbers of emails with Copilot for Microsoft 365 | Interviews | 40% | 40% | 40% | |||
XX3High | 60% | 60% | 60% | |||||
XX4Low | 0.4 | 0.4 | 0.4 | |||||
XX4Mid | Saved hours per worker reading large numbers of per week | XX2*XX3 | 0.8 | 0.8 | 0.8 | |||
XX4High | 1.2 | 1.2 | 1.2 | |||||
XX5 | Percentage of Copilot for Microsoft 365 users reading large numbers of emails per week | Interviews | 40% | 50% | 60% | |||
XX6Low | 23,040 | 57,600 | 115,200 | |||||
XX6Mid | Subtotal: Total hours saved by Copilot for Microsoft 365 users writing large numbers of emails per year | XX1*XX4*XX5*48 weeks | 46,080 | 115,200 | 230,400 | |||
XX6High | 69,120 | 172,800 | 345,600 | |||||
XX7 | Number of hours spent taking meeting notes per week (without Copilot for Microsoft 365) | Interviews | 2.0 | 2.0 | 2.0 | |||
XX8Low | 30% | 30% | 30% | |||||
XX8Mid | Reduction in time to take meeting minutes using Copilot for Microsoft 365 | Interviews | 50% | 50% | 50% | |||
XX8High | 70% | 70% | 70% | |||||
XX9Low | 0.6 | 0.6 | 0.6 | |||||
XX9Mid | Saved time per worker regularly taking meeting notes per week | XX7*XX8 | 1.0 | 1.0 | 1.0 | |||
XX9High | 1.4 | 1.4 | 1.4 | |||||
XX10 | Composite organization | 5% | 6% | 7% | ||||
XX11Low | 8,640 | 20,736 | 40,320 | |||||
XX11Mid | Subtotal: Total hours saved by Copilot for Microsoft 365 users regularly taking meeting notes per year | XX1*XX9*XX10*48 weeksC4 | 14,400 | 14,400 | 34,560 | |||
XX11High | 20,160 | 48,384 | 94,080 | |||||
XX12Low | 31,680 | 78,336 | 155,520 | |||||
XX12Mid | Subtotal: Total hours saved per year by Copilot for Microsoft 365 users summarizing information | XX6+XX11 | 60,480 | 60,480 | 149,760 | |||
XX12High | 89,280 | 221,184 | 439,680 | |||||
XX13 | Time recaptured | TEI standard | 50% | 50% | 50% | |||
XX14 | Average hourly fully burdened cost | TEI standard | $38 | $38 | $38 | |||
XXtLow | $601,920 | $1,488,384 | $2,954,880 | |||||
XXtMid | Saved labor from summarizing information | XX12*XX13*XX14 | $1,149,120 | $2,845,440 | $5,654,400 | |||
XXtHigh | $1,696,320 | $4,202,496 | $8,353,920 | |||||
Ref. | Metric | Source | Year 1 | Year 2 | Year 3 | |
---|---|---|---|---|---|---|
YY1 | Number of Copilot for Microsoft 365 users | Composite organization | 3,000 | 6,000 | 10,000 | |
YY2Low | 30% | 30% | 30% | |||
YY2Mid | Reduction in time to draft new documents using Copilot for Microsoft 365 | Interviews | 45% | 45% | 45% | |
YY2High | 60% | 60% | 60% | |||
YY3 | Hours spent per employee writing large numbers of emails per week (without Copilot for Microsoft 365) | Composite organization | 4 | 4 | 4 | |
YY4Low | 1.2 | 1.2 | 1.2 | |||
YY4Mid | Hours saved per employee writing large numbers of emails per week (with Copilot for Microsoft 365) | YY2*YY3 | 1.8 | 1.8 | 1.8 | |
YY4High | 2.4 | 2.4 | 2.4 | |||
YY5 | Percentage of Copilot for Microsoft 365 users writing large numbers of emails per week | Composite organization | 40% | 50% | 60% | |
YY6Low | 69,120 | 172,800 | 345,600 | |||
YY6Mid | Subtotal: Total hours saved by Copilot for Microsoft 365 users writing large numbers of emails per year | YY1*YY4*YY5*48 weeks | 103,680 | 259,200 | 518,400 | |
YY6High | 138,240 | 345,600 | 691,200 | |||
YY7 | Hours spent per employee writing sales proposals per week (without Copilot for Microsoft 365) | Composite organization | 15 | 15 | 15 | |
YY8Low | 4.5 | 4.5 | 4.5 | |||
YY8Mid | Subtotal: Hours saved per employee writing sales proposals per week (with Copilot for Microsoft 365) | YY2*YY7 | 6.8 | 6.8 | 6.8 | |
YY8High | 9.0 | 9.0 | 9.0 | |||
YY9 | Percentage of Copilot for Microsoft 365 users writing sales proposals per week | Composite organization | 6% | 8% | 10% | |
YY10Low | 38,880 | 103,680 | 216,000 | |||
YY10Mid | Subtotal: Total hours saved by Copilot for Microsoft 365 users writing sales proposals per year | YY1*YY8*YY9*48 weeks | 58,752 | 156,672 | 326,400 | |
YY10High | 77,760 | 207,360 | 432,000 | |||
YY11 | Hours spent per employee writing job descriptions and interview questions per week (without Copilot for Microsoft 365) | Composite organization | 8 | 8 | 8 | |
YY12Low | 2.4 | 2.4 | 2.4 | |||
YY12Mid | Hours saved per employee writing job descriptions and interview questions per week (with Copilot for Microsoft 365) | YY2*YY11 | 3.6 | 3.6 | 3.6 | |
YY12High | 4.8 | 4.8 | 4.8 | |||
YY13 | Percentage of Copilot for Microsoft 365 users writing job descriptions and interview questions per week | Composite organization | 3% | 4% | 5% | |
YY14Low | 10,368 | 27,648 | 57,600 | |||
YY14Mid | Subtotal: Total hours saved by Copilot for Microsoft 365 users writing job descriptions and interview questions per year | YY1*YY12*YY13*48 weeks | 15,552 | 41,472 | 41,472 | |
YY14High | 20,736 | 55,296 | 55,296 | |||
YY15 | Hours spent per employee writing legal document drafts per week (without Copilot for Microsoft 365) | Composite organization | 10 | 10 | 10 | |
YY16Low | 3.0 | 3.0 | 3.0 | |||
YY16Mid | Hours saved per employee writing legal document drafts per week (with Copilot for Microsoft 365) | YY2*YY15 | 4.5 | 4.5 | 4.5 | |
YY16High | 6.0 | 6.0 | 6.0 | |||
YY17 | Percentage of Copilot for Microsoft 365 users writing legal document drafts per week | Composite organization | 2% | 3% | 4% | |
YY18Low | 8,640 | 25,920 | 57,600 | |||
YY18Mid | Subtotal: Total hours saved by Copilot for Microsoft 365 users writing legal document drafts per year | YY1*YY16*YY17*48 weeks | 12,960 | 38,880 | 86,400 | |
YY18High | 17,280 | 51,840 | 115,200 | |||
YY19 | Number of employees planning and running workshops per week (with Copilot for Microsoft 365) | Composite organization | 10 | 10 | 10 | |
YY20Low | 3.0 | 3.0 | 3.0 | |||
YY20Mid | Hours saved per employee planning and running workshops per week (with Copilot for Microsoft 365) | YY2*YY19 | 4.5 | 4.5 | 4.5 | |
YY20High | 6.0 | 6.0 | 6.0 | |||
YY21 | Percentage of Copilot for Microsoft 365 users planning and running workshops per week | Composite organization | 1% | 2% | 2% | |
YY22Low | 4,320 | 17,280 | 28,800 | |||
YY22Mid | Subtotal: Total hours saved by Copilot for Microsoft 365 users planning and running workshops per year | YY1*YY20*YY21*48 weeks | 6,480 | 25,920 | 43,200 | |
YY22High | 8,640 | 34,560 | 57,600 | |||
YY23Low | 131,328 | 347,328 | 705,600 | |||
YY23Mid | Subtotal: Total hours saved per year by Copilot for Microsoft 365 users drafting new documents and emails per year | YY6+YY10+YY14+YY18+YY22 | 197,424 | 522,144 | 1,060,800 | |
YY23High | 262,656 | 694,656 | 1,411,200 | |||
YY24 | Time recaptured | TEI standard | 50% | 50% | 50% | |
YY25 | Average hourly fully burdened cost | TEI standard | $38 | $38 | $38 | |
YYtLow | $2,495,232 | $6,599,232 | $13,406,400 | |||
YYtMid | Saved labor from drafting new documents and email | YY23*YY24*YY25 | $3,751,056 | $9,920,736 | $20,155,200 | |
YYtHigh | $4,990,464 | $13,198,464 | $26,812,800 | |||
Related Forrester Research
“Predictions 2024: Tech Leadership,” Forrester Research, Inc., September 8th, 2023.
“The State Of Generative AI, 2024,” Forrester Research, Inc., January 26th, 2024.
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 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.
2 Source: How to Drive Employee Productivity With Generative AI, Forrester Research, Inc., March 11, 2024.
3 The percentages referenced in this paragraph are based on 239 worldwide IT decision-makers with a generative AI strategy responding to the question, “How much of an impact has generative AI had on your other AI investment plans?”; Source: Forrester’s July 2023 AI Pulse Survey.
4 Source: Margins by sector, NYU Stern School of Business, January 2024.
5 Source: Build Your Business Case For Microsoft 365 Copilot, Forrester Research, Inc., October 24, 2023.
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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