A Forrester Total Economic Impact™ Study Commissioned By Microsoft, June 2024
Rapid web application development is vital for all organizations. Regardless of size, organizations need to ensure that new pages and features are helping to convert customers as quickly as possible, while non-corporate entities have legal obligations to inform the public about access to resources or potential threats. However, as cross-functional collaboration becomes more important than ever, and skilled senior-level developers are in short supply, it can be difficult for organizations to grow quickly in a sustainable and affordable way.
Microsoft Power Pages, a part of the Microsoft Power Platform, provides organizations with low-code web application development capabilities, improved integrations between web applications and back-end services, and additional features when used in conjunction with other parts of the Power Platform, including Power Apps, Power Automate, and Copilot Studio.
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 Power Pages.1 The purpose of this study is to provide readers with a framework to evaluate the potential financial impact of Power Pages on their organizations.
Three-year Return on investment (ROI)
197%
Three-year Net present value (NPV)
$5.5M
To better understand the benefits, costs, and risks associated with this investment, Forrester interviewed five representatives with experience using Power Pages. For the purposes of this study, Forrester aggregated the interviewees’ experiences and combined the results into a single composite organization.
Interviewees said that prior to using Power Pages, their organizations were limited to outdated legacy web application development services. These services often required significant manual effort to maintain, and siloed management made both the actual labor of web application development and the processes surrounding it take significant time. This led to a reliance on external contractors, delayed web application projects, and significant expenses to maintain integrations and data connectors, maintain the prior platform, and pay licensing fees.
After the investment in Power Pages, the interviewees were able to replace expensive, senior-level contractors with business users and accelerate their web application development. Key results from the investment include productivity savings on web application development, cost savings on hiring contractors, reduced total cost of ownership, and accelerated rollout of web applications.
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 $8.2 million over three years versus costs of $2.7 million, adding up to a net present value (NPV) of $5.5 million and an ROI of 197%.
Productivity savings for web application development
25%
“Without Power Pages, we would have struggled to put up something with the same level of functionality with a different platform in the short period of time we had.”
Senior business analyst, international non-corporate organization
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 an investment in Microsoft Power Pages.
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 Power Pages can have on an organization.
Interviewed Microsoft stakeholders and Forrester analysts to gather data relative to Power Pages.
Interviewed five representatives at organizations using Power Pages to obtain data about 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 five 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 Power Pages. 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 Power Pages 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.
Consulting Team:
Sam Sexton
Role | Industry | Geography | Revenue |
---|---|---|---|
Director, products and technology group | Professional services | Global | $50 billion |
Senior business analyst | International non-corporate organization | Global | $10 billion budget |
Manager of product and engineering | Telecommunications | Global | $79 billion |
IT director | State government agency | US | $80 million budget |
IT program manager | Federal government agency | US | $5.6 billion budget |
Before implementing Microsoft Power Pages, the interviewees’ organizations had limited, legacy low-code web development solutions. Some had multiple limited solutions that worked in silos for different parts of the process, while others had a single platform that had to be managed by a separate siloed team.
The interviewees noted how their organizations struggled with common challenges, including:
The interviewees’ organizations searched for a solution that could:
“Our main driver was to get a platform instead of just another product or service for a particular need. We wanted one platform that could serve multiple needs.”
IT director, state government agency
“We had a lot of duplicate software and capabilities. One of our main goals was to reduce that operational cost and simplify our overall ecosystem.”
Manager of product and engineering, telecommunications
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 five 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 industry-agnostic organization has 30,000 employees, a revenue of $10 billion, and operates around the globe. It has a total of 100 full-time web developers using Microsoft Power Pages.
Ref. | Benefit | Year 1 | Year 2 | Year 3 | Total | Present Value |
---|---|---|---|---|---|---|
Atr | Reduced development time for new web applications | $1,306,250 | $1,306,250 | $1,306,250 | $3,918,750 | $3,248,450 |
Btr | Cost savings on contractor developer team | $1,309,417 | $1,309,417 | $1,309,417 | $3,928,250 | $3,256,325 |
Ctr | Time savings on maintaining integrations and data connectors for existing web applications | $153,900 | $153,900 | $153,900 | $461,700 | $382,727 |
Dtr | Avoided ongoing maintenance and licensing costs for prior software and platforms | $540,000 | $540,000 | $540,000 | $1,620,000 | $1,342,900 |
Total benefits (risk-adjusted) | $3,309,567 | $3,309,567 | $3,309,567 | $9,928,700 | $8,230,402 | |
Evidence and data. Every interviewee noted that Microsoft Power Pages streamlined various parts of their web application development process, enabling faster development of web applications with less labor and effort required for their development team.
Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite organization:
Risks. Factors that could impact the size of this benefit for organizations include:
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 $3.2 million.
25%
Reduction in web application and page development time with Microsoft Power Pages
"We definitely save at least 20% of our time once you get up to speed on [Power Pages]."
Manager of product and engineering, telecommunications
Ref. | Metric | Source | Year 1 | Year 2 | Year 3 | |
---|---|---|---|---|---|---|
A1 | Web developers using Microsoft Power Pages | Interviews | 100 | 100 | 100 | |
A2 | Web apps developed annually, per web developer | Interviews | 5 | 5 | 5 | |
A3 | Time required for development before Power Pages (weeks) | Interviews | 8 | 8 | 8 | |
A4 | Weekly fully-burdened salary of a web app developer | TEI standard | $2,750 | $2,750 | $2,750 | |
A5 | Subtotal: Cost of web application development before Power Pages | A1*A2*A3*A4 | $11,000,000 | $11,000,000 | $11,000,000 | |
A6 | Web app and page development time savings with Power Pages | Interviews | 25% | 25% | 25% | |
A7 | Time required for development with Power Pages (weeks) | A3*(1-A6) | 6 | 6 | 6 | |
A8 | Subtotal: Cost of web application development with Power Pages | A1*A2*A4*A7 | $8,250,000 | $8,250,000 | $8,250,000 | |
A9 | Productivity recapture | TEI standard | 50% | 50% | 50% | |
At | Reduced development time for new web applications | (A5-A8)*A9 | $1,375,000 | $1,375,000 | $1,375,000 | |
Risk adjustment | ↓5% | |||||
Atr | Reduced development time for new web applications (risk-adjusted) | $1,306,250 | $1,306,250 | $1,306,250 | ||
Three-year total: $3,918,750 | Three-year present value: $3,248,450 |
Evidence and data. Before Microsoft Power Pages, interviewees reported that they either had to rely on contractors to provide additional project support for the main web application development team, request help from higher-level employees from other parts of the business, or simply do without the needed support. Implementing Power Pages frees up other employees to work on additional tasks.
Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite organization:
Risks. Factors that could impact the size of this benefit for organizations include:
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 $3.3 million.
100% of contractor FTE team
Reallocated with business users and junior developers
81% lower
Reduction in excess project development hours to supplement the internal web development team with Power Pages
“Most people outside of our group are dealing with contractors. … Now they can come to us, and we can handle the bulk of the development in a few weeks.”
IT program manager, federal government agency
Ref. | Metric | Source | Year 1 | Year 2 | Year 3 |
---|---|---|---|---|---|
B1 | Junior or citizen developer FTEs used for project support | A1*10% | 10 | 10 | 10 |
B2 | Fully-burdened blended salary of a junior or citizen developer | TEI standard | $110,500 | $110,500 | $110,500 |
B3 | Fully-burdened salary of a web developer contractor | A4*52 weeks per year | $143,000 | $143,000 | $143,000 |
B4 | Subtotal: Avoided contractor costs | B1*B2*B3 | $1,913,600 | $1,913,600 | $1,913,600 |
B5 | Junior and citizen developers trained to support Power Pages | Composite | 50 | 50 | 50 |
B6 | Annual hours per employee to replace contractor tasks | Interviews | 80 | 80 | 80 |
B7 | Junior or citizen developer full burdened hourly wage | TEI Standard | $53 | $53 | $53 |
B8 | Subtotal: Incremental labor from junior or citizen developers | B5*B6*B7 | $212,000 | $212,000 | $212,000 |
Bt | Cost savings on contractor developer team | (B1*B3)-(B1*B2) | $1,540,490 | $1,540,490 | $1,540,490 |
Risk adjustment | ↓15% | ||||
Btr | Cost savings on contractor developer team (risk-adjusted) | $1,309,417 | $1,309,417 | $1,309,417 | |
Three-year total: $3,928,250 | Three-year present value: $3,256,325 |
Evidence and data. A major area of benefit for the interviewees’ organizations was avoiding the manual work of maintaining integrations and data connectors with web applications on their prior design platform.
Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite organization:
Risks. Factors that could impact the size of this benefit for organizations include:
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 $383,000.
Ref. | Metric | Source | Year 1 | Year 2 | Year 3 |
---|---|---|---|---|---|
C1 | Integration engineers managing integrations and data connectors for web applications | Interviews | 10 | 10 | 10 |
C2 | Annual fully-burdened salary of an integration engineer | TEI standard | $162,000 | $162,000 | $162,000 |
C3 | Percentage of time saved on integration and data connection tasks by Microsoft Power Pages | Interviews | 20% | 20% | 20% |
C4 | Productivity recapture | TEI standard | 50% | 50% | 50% |
Ct | Time savings on maintaining integrations and data connectors for existing web applications | C1*C2*C3*C4 | $162,000 | $162,000 | $162,000 |
Risk adjustment | ↓5% | ||||
Ctr | Time savings on maintaining integrations and data connectors for existing web applications (risk-adjusted) | $153,900 | $153,900 | $153,900 | |
Three-year total: $461,700 | Three-year present value: $382,727 |
20%
Reduction in effort to maintain Integrations and data connectors
"If I swapped Power Pages out for an alternate kind of platform, I would need several people for tasks, including to manage the integrations."
IT director, state government agency
Evidence and data. Interviewees whose organizations had significant investments in other web development platforms reported savings on total cost of ownership (TCO) expenses, including annual licensing and maintenance effort.
Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite organization:
Risks. Factors that could impact the size of this benefit for organizations include:
Results. To account for these risks, Forrester adjusted this benefit downward by 10%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $1.3 million.
Ref. | Metric | Source | Year 1 | Year 2 | Year 3 |
---|---|---|---|---|---|
D1 | Maintenance engineering FTEs required to maintain prior web app development platform | Interviews | 2 | 2 | 2 |
D2 | Annual fully-burdened salary of a platform maintenance FTE | TEI standard | $120,000 | $120,000 | $120,000 |
D3 | Subtotal: Avoided platform maintenance engineer FTEs | D1*D2 | $240,000 | $240,000 | $240,000 |
D4 | Database administrator FTEs required prior to Microsoft Power Pages | Interviews | 2 | 2 | 2 |
D5 | Annual fully-burdened salary of a database administrator FTE | TEI Standard | $105,000 | $105,000 | $105,000 |
D6 | Subtotal: Avoided database administrator FTEs | D4*D5 | $210,000 | $210,000 | $210,000 |
D7 | Subtotal: Annual prior platform and software licensing fees | Interviews | $150,000 | $150,000 | $150,000 |
Dt | Avoided maintenance and licensing costs for prior software and platforms | D3+D6+D7 | $600,000 | $600,000 | $600,000 |
Risk adjustment | ↓10% | ||||
Dtr | Avoided maintenance and licensing costs for prior software and platforms (risk-adjusted) | $540,000 | $540,000 | $540,000 | |
Three-year total: $1,620,000 | Three-year present value: $1,342,900 |
$540,000
Total annual TCO savings
100%
Prior license fees avoided
“In the past, we used to have a small team of database administrators that were associated with our back-end servers. We don't do that anymore."
Senior business analyst, international non-corporate organization
Interviewees 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 Microsoft Power Pages 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 | Implementation and training | $560,175 | $5,214 | $5,214 | $5,214 | $575,817 | $573,141 |
Ftr | Licensing and maintenance | $0 | $882,000 | $882,000 | $882,000 | $2,646,000 | $2,193,403 |
Total costs (risk-adjusted) | $560,175 | $887,214 | $887,214 | $887,214 | $3,221,817 | $2,766,544 | |
Evidence and data. Interviewees described an initial implementation process followed by ongoing training.
Modeling and assumptions. For the composite organization, Forrester assumes the following:
Risks. Factors that could impact the size of this cost for organizations include:
Results. To account for these risks, Forrester adjusted this cost upward by 10%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $573,000.
8 hours
Duration of training required to use Power Pages
Ref. | Metric | Source | Initial | Year 1 | Year 2 | Year 3 | |
---|---|---|---|---|---|---|---|
E1 | Implementation team members | Interviews | 15 | ||||
E2 | Length of implementation (months) | Interviews | 3 | ||||
E3 | Monthly fully-burdened blended salary of a implementation team member | TEI standard | $10,000 | ||||
E4 | Subtotal: Total implementation effort | E1*E2*E3 | $450,000 | ||||
E5 | Web developer FTEs required to be trained (rounded) | A1*8% | 100 | 8 | 8 | 8 | |
E6 | Length of training (hours) | Interviews | 8 | 8 | 8 | 8 | |
E7 | Fully-burdened hourly salary of a web developer | A4/40 hours per week | $69 | $69 | $69 | $69 | |
E8 | Subtotal: Total cost of training full web developers | E5*E6*E7 | $55,000 | $4,400 | $4,400 | $4,400 | |
E9 | Citizen or junior web developers required to be trained | B1*8% | 10 | 1 | 1 | 1 | |
E10 | Length of training (hours) | E6 | 8 | 8 | 8 | 8 | |
E11 | Fully-burdened hourly fully-burdened salary of a junior or citizen web developer | B2/2080 hours per year | $53 | $53 | $53 | $53 | |
E12 | Subtotal: Total cost of training citizen or junior web developers | E9*E10*E11 | $4,250 | $340 | $340 | $340 | |
Et | Implementation and training | E4+E8+E12 | $509,250 | $4,740 | $4,740 | $4,740 | |
Risk adjustment | ↑10% | ||||||
Etr | Implementation and training (risk-adjusted) | $560,175 | $5,214 | $5,214 | $5,214 | ||
Three-year total: $575,817 | Three-year present value: $573,141 |
Evidence and data. Interviewees told Forrester that their organizations had to dedicate lower-level engineering FTEs to maintenance and pay an annual licensing fee for usage of Microsoft Power Pages.
Modeling and assumptions. For the composite organization, Forrester assumes the following:
Risks. Factors that could impact the size of this cost for organizations include:
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 | Maintenance engineer FTEs required to maintain Microsoft Power Pages | Interviews | 2 | 2 | 2 | ||
F2 | Fully-burdened salary of a maintenance FTE | D6 | $120,000 | $120,000 | $120,000 | ||
F3 | Subtotal: Maintenance costs of Power Pages | F1*F2 | $240,000 | $240,000 | $240,000 | ||
F4 | Subtotal: Annual license fees for Power Pages | Composite | $600,000 | $600,000 | $600,000 | ||
Ft | Licensing and maintenance | F3+F4 | $0 | $840,000 | $840,000 | $840,000 | |
Risk adjustment | ↑5% | ||||||
Ftr | Licensing and maintenance (risk-adjusted) | $0 | $882,000 | $882,000 | $882,000 | ||
Three-year total: $2,646,000 | Three-year present value: $2,193,403 |
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 | ($560,175) | ($887,214) | ($887,214) | ($887,214) | ($3,221,817) | ($2,766,544) |
Total benefits | $0 | $3,309,567 | $3,309,567 | $3,309,567 | $9,928,700 | $8,230,402 |
Net benefits | ($560,175) | $2,422,353 | $2,422,353 | $2,422,353 | $6,706,883 | $5,463,858 |
ROI | 197% | |||||
Payback period (months) | Less than 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 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.
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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