The Total Economic Impact™ Of Microsoft Power Platform

Cost Savings And Business Benefits Enabled By Power Platform

A Forrester Total Economic Impact Study Commissioned By Microsoft, July 2024

Today’s rapidly evolving digital landscape necessitates enterprises to adopt an efficient and collaborative way of improving process performance that involves both their IT and business staff. This enables organizations to leverage the unique skills and perspective of each team member, allowing them to tackle larger, more complex problems. Microsoft Power Platform unlocks this capability across an enterprise by offering solutions to develop solutions with low-code tools, automate business processes, and gain insights from data.

Microsoft’s Power Platform is a suite of business tools with over 1,000 connectors that link data across applications to enable organizations to streamline a variety of workforce processes — while ensuring the built assets are managed, tracked, and protected with compliance and governance that meet enterprise standards. The Microsoft Power Platform consists of five tools:

  • Microsoft Power Apps. This is a low-code development environment that enables businesses to build and deploy custom applications.
  • Power Automate. This is a workflow automation tool that helps businesses automate repetitive tasks and processes across various applications and services.
  • Power Pages. This is a low-code environment for building secure modern business websites.
  • Power BI. This is a business intelligence tool that enables organizations to analyze data and gain insights through interactive visualizations and reports.
  • Microsoft Copilot Studio. This is an AI-powered assistant environment that allows businesses to deploy virtual agents to provide customer support and assistance.

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 Platform.1 The purpose of this study is to provide readers with a framework to evaluate the potential financial impact of Power Platform on their organizations.

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Return on investment (ROI)

224%

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Net present value (NPV)

$81.7M

To better understand the benefits, costs, and risks associated with this investment, Forrester interviewed eight representatives from seven organizations with experience using Power Platform at scale. For the purposes of this study, Forrester aggregated the interviewees’ experiences and combined the results into a single composite organization that has 30,000 employees and an annual revenue of $10 billion per year.

Interviewees said that prior to deploying Power Platform, their organizations struggled to meet demand for developer time in supporting business growth and process improvement, as it outstripped their capacity to deliver. Time-consuming tasks like manual data entry or repetitive administrative work drained the business of valuable resources. The lack of IT capacity to support the growing demands of the employee base led to delays in addressing technology needs and meant that employees had to find their own workarounds to everyday problems. Interviewees also shared that some of their business units bought or developed their own applications and workflows, which led to employees using unauthorized software, creating a shadow IT environment that introduced security risks.

After the investment in Power Platform, the interviewees were able to streamline a wide range of tasks, allowing employees to focus on more strategic initiatives. Power Platform also offered real-time visibility into their organization’s processes, helping them better manage their supply chains and reduce production costs. Interviewees were also able to build custom solutions with Power Apps and Power Automate, which enabled them to build innovative applications to meet customer needs and increase revenue. Interviewees further described that Power Platform’s low-code capabilities have significantly reduced development time, enabling organizations to build applications, webpages, and internal workflow automations more efficiently.

Key Findings

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

  • Average time savings of up to 25% per impacted employee enabled by using solutions built on Power Platform. The composite organization leverages Power Platform’s tools to streamline a large variety of processes such as data entry, reporting, invoicing, sales lead tracking, and applicant screening. As these processes affect so many different departments, most of the composite’s employees see some degree of time savings by Year 3. The extent of the savings vary by use case. Overall, the composite organization sees a risk-adjusted $44.5 million in employee time savings over the course of the three-year analysis.
  • Operational cost savings from improved operational visibility. By leveraging the solutions created with Power Platform, including Power BI’s data connectors and visualization capabilities, the composite organization gains additional visibility into its operational spend patterns. This comprehensive view allows them to identify inefficiencies in their supply chain, such as overstocked or underutilized inventory, excessive sourcing costs, or unreturned equipment, and take proactive measures to mitigate them. With these improved insights, the composite rightsizes its operational spending, leading to $14.8 million in cost savings over three years.
  • Topline revenue growth from better time to value in building use cases that improve sales and customer engagement. Power Platform caters to specific customer needs, which increases topline revenue. Power Platform’s low-code capabilities facilitate rapid prototyping of solutions for clients, allowing the composite to quickly iterate and refine their offerings based on client feedback. Furthermore, the composite can build applications, pages, and automations significantly faster, which sometimes reduces its time to market. Overall, Power Platform drives $15.4 million in additional operating profit for the composite organization over the three-year analysis.
  • Direct development and IT cost savings. After deploying Power Platform, the composite organization embraces citizen development, which reduces the level of effort and involvement needed from professional developers, resulting in significant cost savings on developing applications, automations, and webpages. Furthermore, Power Automate and Power Pages enable the composite organization to retire its legacy automation and web development solutions, leading to additional cost savings. During the three-year analysis, the composite organization avoids $43.6 million in development costs.

Unquantified benefits. Benefits that provide value for the composite organization but are not quantified for this study include:

  • Reduced shadow IT. Power Platform provides the composite organization’s employees with a user-friendly tool to build their own solutions and discourages users from adopting unauthorized software. Power Platform also allows them to enforce governance guardrails on the solutions created with Power Platform, thus improving compliance and security.
  • Improved employee satisfaction. Power Platform’s automation capabilities frees employees from some of the mundane tasks that previously took up much of their work day. This reduction of repetitive tasks improves employee engagement and satisfaction.
  • A new culture of digital innovation and workforce upskilling by embracing low code. Adopting the Power Platform encouraged a cultural shift as employees embraced low code development. Business users can independently solve issues in a way that is compliant with IT security and governance policies.  

Costs. Three-year, risk-adjusted PV costs for the composite organization include:

  • Power Platform licensing costs. The composite organization incurs licensing costs for use of the components of the Power Platform that amount to $24.1 million over three years.
  • Initial implementation, user training, and experimentation costs. The composite organization incurs internal employee labor costs for time devoted to managing the implementation of Power Platform and training both professional and citizen developers. The initial implementation and training costs amount to $6.1 million over the three-year analysis.
  • Ongoing management costs. The composite organization has a team of 10 employees responsible for managing the Power Platform on an ongoing basis. In total, the composite experiences ongoing management costs of $4.6 million.
  • Training and experimentation costs of solutions built on Power Platform. The composite devotes internal labor to experimenting on custom solutions built on the Power Platform and to train new staff on using the solutions. The training and experimentation costs amount to $1.6 million over three years.

The representative interviews and financial analysis found that a composite organization experience benefits of $118.2 million over three years versus costs of $36.5 million, adding up to a net present value (NPV) of $81.7 million and an ROI of 224%.

Average end user time savings by using solutions built on Power Platform (related to specific processes and functions)

Up to 25%

“With Power Platform, we foster better innovative relationships between business and IT experts. Our people can focus more on value creation and data-driven decision-making, rather than tedious administration tasks.”

Product owner, energy

Key Statistics

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    Return on investment (ROI)

    224%
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    Benefits PV

    $118.2M
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    Net present value (NPV)

    $81.7M
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    Payback

    <6 months
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Benefits (Three-Year)

Time savings enabled by new solutions built on Power Platform Operational cost savings from improved operational visibility Topline revenue growth from better time to value in building use cases Direct development and IT cost savings

TEI Framework And Methodology

From the information provided in the interviews, Forrester constructed a Total Economic Impact™ framework for those organizations considering an investment Power Platform.

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 Platform can have on an organization.

  1. Due Diligence

    Interviewed Microsoft stakeholders and Forrester analysts to gather data relative to Power Platform.

  2. Interviews

    Interviewed eight representatives at seven organizations using Power Platform to obtain data about costs, benefits, and risks.

  3. Composite Organization

    Designed a composite organization based on characteristics of the interviewees’ organizations.

  4. Financial Model Framework

    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.

  5. Case Study

    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.

Disclosures

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 Platform.

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:

Adi Sarosa

Matt Dunham

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