A Forrester Total Economic Impact™ Study Commissioned By Microsoft, June 2024
Microsoft Dynamics 365 Business Central empowers small to medium-sized organizations to modernize enterprise resource planning (ERP) in the cloud, which may allow them to avoid the costs associated with scaling on-premises infrastructure, support, custom integrations, and partner fees. Finance, operations, and sales staff can utilize capabilities to support better decision-making based on real-time information, and this may create additional opportunities to support customers and employees, drive additional revenue, and increase profitability.
Microsoft Dynamics 365 Business Central is a cloud-based business management solution for small to medium-sized businesses. Microsoft commissioned Forrester Consulting to conduct a Total Economic Impact™ (TEI) study and examine the potential return on investment (ROI) enterprises may realize by migrating from an on-premises Microsoft ERP solution to Dynamics 365 Business Central.1 The purpose of this study is to provide readers with a framework to evaluate the potential financial impact of a Dynamics 365 Business Central migration for their organizations.
Return on investment (ROI)
265%
Net present value (NPV)
$529K
To better understand the benefits, costs, and risks associated with this investment, Forrester interviewed four representatives of organizations that recently migrated from an on-premises Microsoft solution to Dynamics 365 Business Central. To provide additional context, Forrester also fielded a survey of 160 decision-makers from organizations that recently migrated to Dynamics 365 Business Central. For the purposes of this study, Forrester aggregated the interviewees’ and survey respondents’ experiences and combined the results into a single composite organization that has 150 employees and annual revenue of $15 million.
Interviewees and survey participants noted that prior to using Business Central, their organizations struggled to scale ERP capabilities with the ever-increasing demands of their business. The organizations’ on-premises Microsoft tools did not always support real-time visibility and interoperability of data across the organization, which hindered decision-making across finance, sales, and operations functions. The cost to extend the life of these on-premises solutions and grow with the business also swelled as infrastructure costs, support costs, and partner fees increasingly outweighed the perpetual licenses.
The interviewees and survey respondents noted that after migrating to Dynamics 365 Business Central, their organizations saw improvements to productivity across finance, operations, and sales users while supporting decision-making that unlocked additional revenue opportunities and profitability. Cloud-based ERP solutions allow organizations to scale in the cloud at the current demand level of the business without overprovisioning infrastructure, support resources, or partner consulting hours.
Quantified benefits. 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:
The representative interviews and financial analysis found that a composite organization experiences benefits of $729,000 over three years versus costs of $200,000, adding up to a net present value (NPV) of $529,000 and an ROI of 265%.
Operations staff productivity improvement
12.5%
“Before moving to [Dynamics 365] Business Central in the cloud, our customer data was scattered across multiple on-prem environments. With centralized customer data, we’re now able to quickly access information to create and test new features that better serve our customers and unlock business growth.”
Global CIO, financial services
Return on investment (ROI)
Benefits PV
Net present value (NPV)
Payback
From the information provided in the interviews, Forrester constructed a Total Economic Impact™ framework for those organizations considering a migration to Microsoft Dynamics 365 Business Central.
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 Dynamics 365 Business Central can have on an organization.
Interviewed Microsoft stakeholders and Forrester analysts to gather data relative to Dynamics 365 Business Central.
Interviewed four representatives and surveyed 160 representatives of organizations that recently migrated to Dynamics 365 Business Central to obtain data about costs, benefits, and risks.
Designed a composite organization based on characteristics of the interviewees’ and survey respondents’ 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 and survey respondents.
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 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 Dynamics 365 Business Central. For the interactive functionality using Configure Data/Custom Data, the intent is for the questions to solicit inputs specific to a prospect's business. Forrester believes that this analysis is representative of what companies may achieve with Dynamics 365 Business Central based on the inputs provided and any assumptions made. Forrester does not endorse Microsoft or its offerings. Although great care has been taken to ensure the accuracy and completeness of this model, Microsoft and Forrester Research are unable to accept any legal responsibility for any actions taken on the basis of the information contained herein. The interactive tool is provided ‘AS IS,’ and Forrester and Microsoft make no warranties of any kind.
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:
Richard Cavallaro
Zahra Azzaoui
The interviewees and survey respondents noted how their organizations struggled with common challenges, including:
Base: 160 decision-makers with experience using Dynamics 365 Business Central at their organization
Source: A commissioned TEI study conducted by Forrester Consulting on behalf of Microsoft, June 2024
The interviewees’ organizations searched for a solution that:
“We chose Business Central because it will grow with us as our business continues to grow.”
Global CIO, financial services
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 four interviewees and 160 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. The composite organization is a $15 million organization with 150 employees. It primarily operates within the region of its headquarters, but it has customers and suppliers around the globe.
Prior to deploying Microsoft Dynamics 365 Business Central, the composite organization maintained an on-premises deployment of Microsoft Dynamics NAV.2 As the organization continued to grow, its on-premises deployment limited its ability to scale due to infrastructure constraints. Budget did not allow for the overprovisioning of infrastructure. Furthermore, several staff members (notably sales staff members) did not have access to the organization’s ERP on-site, which resulted in delayed customer communication, support, and satisfaction. It was difficult for the majority of finance, operations, and sales/support staff to use hybrid work without compromise.
Deployment characteristics. In line with organizational cloud-transformation mandates, the composite organization deploys Business Central in the cloud supported by a Microsoft partner and internal staff. It also begins a phased retirement of its legacy on-premises Microsoft Dynamics tools, and it retires 90% of these costs by the third year of the Business Central deployment. The organization has 28 staff members responsible for finance, supply chain operations, and sales decisions, and they are the primary users of Business Central.
Ref. | Benefit | Year 1 | Year 2 | Year 3 | Total | Present Value |
---|---|---|---|---|---|---|
Atr | Improvement to staff productivity | $38,556 | $38,556 | $38,556 | $115,668 | $95,883 |
Btr | Avoided third-party fees | $71,400 | $71,400 | $71,400 | $214,200 | $177,561 |
Ctr | Avoided costs of previous solutions and support | $28,104 | $38,729 | $45,104 | $111,938 | $91,445 |
Dtr | Improved sales efficiency and profitability | $146,400 | $146,400 | $146,400 | $439,200 | $364,075 |
Total benefits (risk-adjusted) | $284,460 | $295,085 | $301,460 | $881,006 | $728,964 | |
Evidence and data. Interviewees said deploying Business Central allowed their organizations’ finance and operations staff to reduce the amount of time they spent on manual reporting and information reconciliation while also providing improved visibility and tools to accelerate and improve the quality of decision-making. Automating tasks within these finance and operations processes yielded quantifiable productivity savings for the organizations’ staff. As a result, as the organizations continued to grow, they required fewer finance and operations hires because of the capacity increase due to more efficient staff. Having a modern, intuitive user experience further improved productivity, which reduced the requirement for training or re-training for new and existing staff. Ultimately, migrating to Business Central in the cloud enabled finance and operations staff to operate more effectively while offsetting subsequent hires required as the organizations grew, which yielded savings quantified in user productivity.
Base: 160 decision-makers with experience using Dynamics 365 Business Central at their organization
Source: A commissioned TEI study conducted by Forrester Consulting on behalf of Microsoft, June 2024
Base: 160 decision-makers with experience using Dynamics 365 Business Central at their organization
Source: A commissioned TEI study conducted by Forrester Consulting on behalf of Microsoft, June 2024
Base: 160 decision-makers with experience using Dynamics 365 Business Central at their organization
Source: A commissioned TEI study conducted by Forrester Consulting on behalf of Microsoft, June 2024
Base: 160 decision-makers with experience using Dynamics 365 Business Central at their organization
Source: A commissioned TEI study conducted by Forrester Consulting on behalf of Microsoft, June 2024
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 15%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $96,000.
25 hours
Monthly time saved per finance staff member
“With Business Central, our employees can quickly pull the information they need to get their work done faster. Not only are they more productive, they’re also happier.”
Global CIO, financial services
Ref. | Metric | Source | Year 1 | Year 2 | Year 3 |
---|---|---|---|---|---|
A1 | Finance users (baseline) | Composite | 4 | 4 | 4 |
A2 | Time savings on manual reporting per month (hours) | Interviews and survey | 25 | 25 | 25 |
A3 | Percentage of time reclaimed per working month (rounded) | A2/160 | 15.6% | 15.6% | 15.6% |
A4 | Hourly rate for a finance personnel FTE (rounded) | TEI standard | $42 | $42 | $42 |
A5 | Subtotal: Savings due to automated reporting with Business Central | A1*A2*A4*12 months | $50,400 | $50,400 | $50,400 |
A6 | Operations users | Composite | 4 | 4 | 4 |
A7 | Time savings on operations activities per month (hours) | Interviews and survey | 20 | 20 | 20 |
A8 | Percentage of time reclaimed per working month (rounded) | A7/160 | 12.5% | 12.5% | 12.5% |
A9 | Hourly rate for an operations personnel FTE (rounded) | TEI standard | $42 | $42 | $42 |
A10 | Subtotal: Savings due to operations task automation with Business Central | A6*A7*A9*12 months | $40,320 | $40,320 | $40,320 |
A11 | Total savings for finance and operations users due to saved time | A5+A10 | $90,720 | $90,720 | $90,720 |
A12 | Productivity recapture | TEI standard | 50% | 50% | 50% |
At | Improvement to staff productivity | A11*A12 | $45,360 | $45,360 | $45,360 |
Risk adjustment | ↓15% | ||||
Atr | Improvement to staff productivity (risk-adjusted) | $38,556 | $38,556 | $38,556 | |
Three-year total: $115,668 | Three-year present value: $95,883 |
Evidence and data. Interviewees said that despite the fact that their organizations “owned” licenses for their on-premises Microsoft Dynamics ERP solutions, the complexity resulting from years of customizations and integrations required significant ongoing partner/IT consulting investments to maintain. In addition, functionality gaps often meant the organizations paid for additional external reporting on a monthly or quarterly basis. Interviewees said that once Business Central was implemented, their firms eliminated third-party reporting costs while internal IT staff could manage any integration or customization work because Business Central operates closer to “standard.”
Base: 160 decision-makers with experience using Dynamics 365 Business Central at their organization
Source: A commissioned TEI study conducted by Forrester Consulting on behalf of Microsoft, June 2024
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 15%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $178,000.
80 hours
Annual partner consulting time avoided
Ref. | Metric | Source | Year 1 | Year 2 | Year 3 |
---|---|---|---|---|---|
B1 | Cost per customized report | Interviews | $5,000 | $5,000 | $5,000 |
B2 | Reports | Composite | 12 | 12 | 12 |
B3 | Subtotal: Avoided third-party reporting fees | B1*B2 | $60,000 | $60,000 | $60,000 |
B4 | Avoided IT consulting time per quarter for ongoing support, upgrades, integrations, and strategy (hours) | Interviews | 20 | 20 | 20 |
B5 | Avoided IT consulting time (hours) | B4*4 | 80 | 80 | 80 |
B6 | Cost per IT consulting hour | Assumption | $300 | $300 | $300 |
B7 | Subtotal: Avoided IT consulting costs | B5*B6 | $24,000 | $24,000 | $24,000 |
Bt | Avoided third-party fees | B3+B7 | $84,000 | $84,000 | $84,000 |
Risk adjustment | ↓15% | ||||
Btr | Avoided third-party fees (risk-adjusted) | $71,400 | $71,400 | $71,400 | |
Three-year total: $214,200 | Three-year present value: $177,561 |
Evidence and data. Interviewees told Forrester their organizations incurred increasingly expensive costs associated with maintaining their on-premises Microsoft ERP solutions. Notably, the organizations paid for infrastructure, maintenance (personnel costs), and upgrade costs, where possible (personnel hours). As the organizations grew, overprovisioning infrastructure would be required to support peak demands of the business. Interviewees concluded that by adopting Dynamics 365 Business Central, their organizations were able to avoid most of these costs as a result of their cloud migration.
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 15%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $91,000.
Ref. | Metric | Source | Year 1 | Year 2 | Year 3 |
---|---|---|---|---|---|
C1 | Cost of infrastructure supporting legacy MS solution(s) | Composite | $50,000 | $50,000 | $50,000 |
C2 | Percentage of total spend retired | Interviews and survey | 50% | 75% | 90% |
C3 | Subtotal: total retired spend | C1*C2 | $25,000 | $37,500 | $45,000 |
C4 | IT personnel supporting and developing previous tool(s) | Composite | 2 | 2 | 2 |
C5 | Hours per month spent on support and development (per IT FTE) | Interviews | 8 | 8 | 8 |
C6 | IT FTE hourly rate (rounded) | TEI Standard | $42 | $42 | $42 |
C7 | Subtotal: cost of infrastructure, support, and development for previous tool(s) | C4*C5*C6*12 months | $8,064 | $8,064 | $8,064 |
Ct | Avoided costs of previous solutions and support | C3+C7 | $33,064 | $45,564 | $53,064 |
Risk adjustment | ↓15% | ||||
Ctr | Avoided costs of previous solutions and support (risk-adjusted) | $28,104 | $38,729 | $45,104 | |
Three-year total: $111,938 | Three-year present value: $91,445 |
55.2%
Average IT cost reduction (ERP tools) attributable to Business Central deployment
“After moving to [Business Central] in the cloud, we were able to reduce the complexity of our environment and cut our infrastructure costs in half.”
Global CIO, financial services
Evidence and data. Interviewees said that with their organizations’ previous on-premises Microsoft ERP solutions, constant access to company and customer data was not a given because accessing these records required onsite presence. They also noted that this often delayed the ability of sales staff to deliver timely proposals or provide support in real time, which affected sales, satisfaction, and retention. Interviewees noted that by migrating to Dynamics 365 Business Central, their organizations’ sales and support staff became better equipped to service their customer bases and ultimately drive revenue.
Base: 160 decision-makers with experience using Dynamics 365 Business Central at their organization
Source: A commissioned TEI study conducted by Forrester Consulting on behalf of Microsoft, June 2024
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 20%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $364,000.
Ref. | Metric | Source | Year 1 | Year 2 | Year 3 |
---|---|---|---|---|---|
D1 | Sales representatives | Composite | 20 | 20 | 20 |
D2 | Efficiency improvement with Dynamics 365 Business Central | Interviews and survey | 15% | 15% | 15% |
D3 | Average salary for a sales representative | TEI standard | $90,000 | $90,000 | $90,000 |
D4 | Productivity recapture | TEI standard | 50% | 50% | 50% |
D5 | Subtotal: Sales productivity improvement | D1*D2*D3*D4 | $135,000 | $135,000 | $135,000 |
D6 | Revenue | Composite | $15,000,000 | $15,000,000 | $15,000,000 |
D7 | Average deal size | Composite | $30,000 | $30,000 | $30,000 |
D8 | Deals | D6/D7 | 500 | 500 | 500 |
D9 | Deals per sales representative | D8/D1 | 25 | 25 | 25 |
D10 | Increase in deals closed per sales representative with Business Central | Interviews and survey | 5% | 5% | 5% |
D11 | New deals per sales representative | D9*D10 | 1 | 1 | 1 |
D12 | New revenue from new deals attributable to Business Central | D1*D11*D7 | $600,000 | $600,000 | $600,000 |
D13 | Operating margin | Composite | 8% | 8% | 8% |
D14 | Subtotal: Profitability increase attributable to Business Central | D15*D16 | $48,000 | $48,000 | $48,000 |
Dt | Improved sales efficiency and profitability | D5+D11 | $183,000 | $183,000 | $183,000 |
Risk adjustment | ↓20% | ||||
Dtr | Improved sales efficiency and profitability (risk-adjusted) | $146,400 | $146,400 | $146,400 | |
Three-year total: $439,200 | Three-year present value: $364,075 |
$600K
Additional annual revenue generation through Dynamics 365 Business Central attributable to sales pipeline generation
Interviewees mentioned the following additional benefits that their organizations experienced but were not able to quantify:
Base: 160 decision-makers with experience using Dynamics 365 Business Central at their organization
Source: A commissioned TEI study conducted by Forrester Consulting on behalf of Microsoft, June 2024
“[Business Central’s] user interface is very easy to train people on, and it integrates with the applications that they’re used to [using]: Word, Excel, and PowerPoint. It’s all very important that the training was kept minimal when we made the migration.”
Sales manager, manufacturing
“[With Business Central,] issues raised can be picked up by management, squared away, and smoothed over before customers decide to give our competitor the chance. If a customer submits a complaint, an email immediately goes to management so we can get on top of it straight away, and we don't lose the business.”
Sales manager, manufacturing
The value of flexibility is unique to each customer. There are multiple scenarios in which a customer might implement Dynamics 365 Business Central and later realize additional uses and business opportunities, including:
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 |
---|---|---|---|---|---|---|---|
Etr | Subscription fees paid to Microsoft | $0 | $32,844 | $32,844 | $32,844 | $98,532 | $81,678 |
Ftr | Implementation, ongoing management, and training personnel costs | $89,286 | $11,537 | $11,537 | $11,537 | $123,896 | $117,976 |
Total costs (risk-adjusted) | $89,286 | $44,381 | $44,381 | $44,381 | $222,428 | $199,654 | |
Evidence and data. Interviewees said their organizations pay Microsoft a subscription fee for their usage of Business Central. Their firms pay license fees on a per-month, per-user, or per-device basis.
Modeling and assumptions. For the composite organization, Forrester makes the following assumptions:
Risks. This cost will vary among organizations based on:
Results. To account for these risks, Forrester adjusted this cost upward by 15%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $81,700.
28
Dynamics 365 Business Central users
Ref. | Metric | Source | Initial | Year 1 | Year 2 | Year 3 |
---|---|---|---|---|---|---|
E1 | Total subscribed users | A1+A6+D1 | 0 | 28 | 28 | 28 |
E2 | Monthly price per user (assuming an even split between Business Central Essentials and Premium licenses) | Interviews | $0 | $85 | $85 | $85 |
Et | Subscription fees paid to Microsoft | E1*E2*12 months | $0 | $28,560 | $28,560 | $28,560 |
Risk adjustment | ↑15% | |||||
Etr | Subscription fees paid to Microsoft (risk-adjusted) | $0 | $32,844 | $32,844 | $32,844 | |
Three-year total: $98,532 | Three-year present value: $81,678 |
Evidence and data. The interviewees described migration experiences for Business Central that averaged four months from concept to implementation, were often staged in phases, and typically leveraged Microsoft partners. While the level of partner support varied, partner involvement in some capacity was consistent among the interviewees’ organizations.
Modeling and assumptions. For the composite organization, Forrester makes the following assumptions:
Risks. This cost will vary among organizations based on:
Results. To account for these risks, Forrester adjusted this cost upward by 15%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $118,000.
Ref. | Metric | Source | Initial | Year 1 | Year 2 | Year 3 |
---|---|---|---|---|---|---|
F1 | Required personnel for implementation | Composite | 2 | |||
F2 | Implementation and initial ramping duration (months) | Composite | 4 | |||
F3 | Percentage of personnel time spent on implementation | Composite | 25% | |||
F4 | Average rate for a personnel FTE | TEI standard | $90,000 | |||
F5 | Total personnel cost for implementation | F1*F2*F3*F4 | $15,000 | |||
F6 | Total partner cost for implementation | Composite | $45,000 | |||
F7 | Time spent on ongoing management by third-party professional services per quarter (hours) | Composite | 20 | 20 | 20 | |
F8 | Hourly rate of third-party professional services for ongoing management | Composite | $75 | $75 | $75 | |
F9 | Total third-party professional services cost for ongoing management | F7*F8*4 | $6,000 | $6,000 | $6,000 | |
F10 | Required personnel for ongoing management | Composite | 1 | 1 | 1 | |
F11 | Personnel time spent per month on support and development | Composite | 8 | 8 | 8 | |
F12 | Hourly rate for a personnel FTE (rounded) | TEI standard | $42 | $42 | $42 | |
F13 | Total personnel cost of ongoing management | F10*F11*F12*12 months | $4,032 | $4,032 | $4,032 | |
F14 | Total users who require training | A1+A6+D1 | 28 | |||
F15 | Training time per user (hours) | Composite | 15 | |||
F16 | Hourly rate for a user who requires training (rounded) | TEI standard | $42 | |||
F17 | Total personnel cost of training | F14*F15*F16 | $17,640 | |||
Ft | Implementation, ongoing management, and training personnel costs | F5+F6+F9+F13+F1 7 | $77,640 | $10,032 | $10,032 | $10,032 |
Risk adjustment | ↑15% | |||||
Ftr | Implementation, ongoing management, and training personnel costs (risk-adjusted) | $89,286 | $11,537 | $11,537 | $11,537 | |
Three-year total: $123,896 | Three-year present value: $117,976 |
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 | ($89,286) | ($44,381) | ($44,381) | ($44,381) | ($222,428) | ($199,654) |
Total benefits | $0 | $284,460 | $295,085 | $301,460 | $881,006 | $728,964 |
Net benefits | ($89,286) | $240,080 | $250,705 | $257,080 | $658,578 | $529,310 |
ROI | 265% | |||||
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.
Role | Industry | Region | Migrated from |
---|---|---|---|
Sales manager | Manufacturing | Europe | Dynamics Business Central (on-premises) |
Finance manager | Food and beverage importing | Europe | Dynamics NAV |
Global CIO | Financial services | North America | Dynamics GP |
Manager of finance and integrations | Healthcare | Europe | Dynamics NAV |
Base: 160 decision-makers with experience using Dynamics 365 Business Central at their organization
Source: A commissioned TEI study conducted by Forrester Consulting on behalf of Microsoft, June 2024
Base: 160 decision-makers with experience using Dynamics 365 Business Central at their organization
Source: A commissioned TEI study conducted by Forrester Consulting on behalf of Microsoft, June 2024
Base: 160 decision-makers with experience using Dynamics 365 Business Central at their organization
Source: A commissioned TEI study conducted by Forrester Consulting on behalf of Microsoft, June 2024
Base: 160 decision-makers with experience using Dynamics 365 Business Central at their organization
Source: A commissioned TEI study conducted by Forrester Consulting on behalf of Microsoft, June 2024
Base: 160 decision-makers with experience using Dynamics 365 Business Central at their organization
Source: A commissioned TEI study conducted by Forrester Consulting on behalf of Microsoft, June 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 The financial model aggregates insights from organizations who have migrated from multiple legacy Microsoft systems, including Dynamics NAV, GP, and Business Central online. While the composite organization migrates from Dynamics NAV, the findings of this study are representative of migrations from any of these systems.
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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