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 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.
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.
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 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%.
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 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.
Interviewed Microsoft stakeholders and Forrester analysts to gather data relative to Power Platform.
Interviewed eight representatives at seven organizations using Power Platform 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 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 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
Role | Industry | Region | Number of employees |
---|---|---|---|
Product owner | Energy | Global | 30,000 |
IT leader | Utilities | North America | 25,000 |
Director | Professional services | Global | More than 100,000 |
Technical
lead Product owner |
Financial services | Global | 45,000 |
Manager of product and engineering | Telecommunications | Global | 65,000 |
Head of new product | Manufacturing | Global | More than 100,000 |
Director | Manufacturing | North America | 6,000 |
Prior to adopting Power Platform, the interviewees reported that their organizations faced many challenges with modernizing IT to transform their organization, that were exacerbated as they worked to support more users and overall business growth. The interviewees noted how their organizations struggled with common challenges, including:
The interviewees’ organizations searched for a solution that could:
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 seven interviewees, and it is used to present the aggregate financial analysis in the next section. The composite organization has the following characteristics:
Description of composite. The composite organization has 30,000 employees and an annual revenue of $10 billion. The organization adopts all components of the Power Platform, including Power Automate, Power Apps, Power Pages, Power BI, and Power Virtual Agents. Following a implementation period of 10 months, the composite organization gradually rolls out Power Platform, and most employees are affected by its use cases by Year 3.
Ref. | Benefit | Year 1 | Year 2 | Year 3 | Total | Present Value |
---|---|---|---|---|---|---|
Atr | Time savings enabled by new solutions built on Power Platform | $8,751,600 | $18,961,800 | $27,713,400 | $55,426,800 | $44,448,397 |
Btr | Operational cost savings from improved operational visibility | $1,870,000 | $5,610,000 | $11,220,000 | $18,700,000 | $14,766,116 |
Ctr | Topline revenue growth from better time to value in building use cases | $2,550,000 | $6,120,000 | $10,710,000 | $19,380,000 | $15,422,615 |
Dtr | Direct development and IT cost savings | $16,152,389 | $17,610,389 | $19,068,389 | $52,831,168 | $43,564,394 |
Total benefits (risk-adjusted) | $29,323,989 | $48,302,189 | $68,711,789 | $146,337,968 | $118,201,522 | |
Evidence and data. Interviewees noted that Power Platform enabled them to create many solutions using its different components (e.g., applications using Power Apps, workflow automations using Power Automate, and web development using Power Pages). Some solutions resulted in users being able to do certain tasks faster, translating into time savings that can be repurposed into further productivity.
Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite organization:
Risks. The exact benefit realized by an organization can vary depending 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 $44.4 million.
Ref. | Metric | Source | Year 1 | Year 2 | Year 3 | |
---|---|---|---|---|---|---|
A1 | Employees | Composite | 30,000 | 30,000 | 30,000 | |
A2 | Percentage of high-impact use cases on Power Platform | Composite | 4% | 9% | 13% | |
A3 | Percentage of work directly affected by high-impact solutions built on Power Platform | Composite | 60% | 60% | 60% | |
A4 | Average time savings related to process improvement from built solutions | Interviews | 25% | 25% | 25% | |
A5 | Average fully-burdened annual salary of a business end user | TEI standard | $83,200 | $83,200 | $83,200 | |
A6 | Productivity recapture | TEI standard | 50% | 50% | 50% | |
A7 | Subtotal: Efficiency gain from high-impact use cases | A1*A2*A3*A4*A5*A6 | $7,488,000 | $16,848,000 | $24,336,000 | |
A8 | Percentage of medium-impact use cases on Power Platform | Composite | 18% | 35% | 53% | |
A9 | Percentage of work directly affected by medium-impact solutions built on Power Platform | Composite | 5% | 5% | 5% | |
A10 | Average time savings related to process improvement from solutions built on Power Platform | Interviews | 25% | 25% | 25% | |
A11 | Subtotal: Efficiency gain from medium-impact use cases | A1*A5*A6*A8*A9*A10 | $2,808,000 | $5,460,000 | $8,268,000 | |
At | Time savings enabled by new solutions built on Power Platform | A7+A11 | $10,296,000 | $22,308,000 | $32,604,000 | |
Risk adjustment | ↓15% | |||||
Atr | Time savings enabled by new solutions built on Power Platform (risk-adjusted) | $8,751,600 | $18,961,800 | $27,713,400 | ||
Three-year total: $55,426,800 | Three-year present value: $44,448,397 |
Evidence and data. Other solutions created on Power Platform allowed interviewees to realize direct cost savings. In most cases, the visibility introduced by an application created using Power Apps, or as a result of the time savings discussed before, allowed users to spend more time monitoring activities around the organization. Interviewees shared they were able to recoup expenditure waste that was previously missed or undetected.
Other forms of cost savings were a result of the organization being able to create certain functionalities that previously had to be done by an external vendor.
The director at a consumer goods company said: “We recognize cost savings by replacing all the applications we previously used. We worked with a lot of third-party companies to support different [departments] in our organization. [Instead of continuing with them], we built our own applications in-house, giving us access to our own data.”
Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite organization:
Risks. The exact benefit realized by an organization can vary depending 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 $14.8 million.
Ref. | Metric | Source | Year 1 | Year 2 | Year 3 | |
---|---|---|---|---|---|---|
B1 | Annual revenue | Composite | $10,000,000,000 | $10,000,000,000 | $10,000,000,000 | |
B2 | Operating expense as percentage of revenue | TEI standard | 88% | 88% | 88% | |
B3 | Subtotal: Operating expense | B1*B2 | $8,800,000,000 | $8,800,000,000 | $8,800,000,000 | |
B4 | Percentage of operating expense impacted by Power Platform use cases | Composite | 5% | 10% | 15% | |
B5 | Percentage of spending avoided with Power Platform use cases | Composite | 0.5% | 0.6% | 0.8% | |
Bt | Operational cost savings from improved operational visibility | B3*B4*B5 | $2,200,000 | $5,280,000 | $10,560,000 | |
Risk adjustment | ↓15% | |||||
Btr | Operational cost savings from improved operational visibility (risk-adjusted) | $1,870,000 | $5,610,000 | $11,220,000 | ||
Three-year total: $18,700,000 | Three-year present value: $14,766,116 |
Evidence and data. Interviewees also shared use cases and solutions created with Power Platform that directly impacted annual revenue growth and discussed use cases that helped them better address customer needs. Accelerated time to market of solutions meant they were able to create prototypes of solutions for their clients, where they could also promptly adjust and enhance offerings based on inputs.
Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite organization:
Risks. The exact benefit realized by an organization can vary depending 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 $15.4 million.
Ref. | Metric | Source | Year 1 | Year 2 | Year 3 | |
---|---|---|---|---|---|---|
C1 | Annual revenue | Composite | $10,000,000,000 | $10,000,000,000 | $10,000,000,000 | |
C2 | Percentage of topline growth affected by Power Platform use cases | B3 | 5% | 10% | 15% | |
C3 | Percentage of topline growth directly attributable to Power Platform | Interviews | 5% | 6% | 7% | |
C4 | Operating margin | 1-B2 | 12% | 12% | 12% | |
Ct | Topline revenue growth from better time to value in building use cases | C1*C2*C3*C4 | $3,000,000 | $7,200,000 | $12,600,000 | |
Risk adjustment | ↓15% | |||||
Ctr | Topline revenue growth from better time to value in building use cases (risk-adjusted) | $2,550,000 | $6,120,000 | $10,710,000 | ||
Three-year total: $19,380,000 | Three-year present value: $15,422,615 |
Evidence and data. Interviewees shared that having Power Platform reduced costs and effort for various projects, regardless of which platform the components are used on. Compared to their organization’s previous state where development activities could only be conducted by professional developers, using Power Platform enables this process to be done faster, cheaper, and with less people.
Additionally, by using Power Platform, interviewees also shared that they were able to discontinue certain parts of their legacy tech stack. For example, Power Automate and Power Pages effectively replaced their legacy automation and web development tools.
Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite organization:
Risks. The exact benefit realized by an organization can vary depending on:
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 $43.6 million.
Ref. | Metric | Source | Year 1 | Year 2 | Year 3 | |
---|---|---|---|---|---|---|
D1 | Employees involved | Composite | 300 | 300 | 300 | |
D2 | Percentage of developer time spent on building solutions or use cases in legacy environment | Composite | 80% | 80% | 80% | |
D3 | Average fully-burdened salary of a software developer | TEI standard | $164,668 | $164,668 | $164,668 | |
D4 | Percentage improvement in time to develop solutions with Power Platform | Interviews | 35% | 35% | 35% | |
D5 | Productivity recapture | TEI standard | 50% | 50% | 50% | |
D6 | Subtotal: Efficiency gain in building solutions with Power Platform | D1*D2*D3*D4*D5 | $6,916,046 | $6,916,046 | $6,916,046 | |
D7 | Percentage reduction in average fully-burdened salary of an involved employee | Interviews | 25% | 25% | 25% | |
D8 | Subtotal: Cost savings from using more citizen developers in development process | D1*D3*D7 | $8,151,054 | $8,151,054 | $8,151,054 | |
D9 | Legacy tech stack cost | Composite | $6,300,000 | $6,300,000 | $6,300,000 | |
D10 | Percentage of tech stack cost replaced by Power Platform | Interviews | 40% | 60% | 80% | |
D11 | Reduced legacy system support FTEs | Composite | 3 | 6 | 9 | |
D12 | Average fully-burdened annual salary of a system support FTE | Composite | $120,000 | $120,000 | $120,000 | |
D13 | Subtotal: Tech stack savings | D9*D10+D11*D12 | $2,880,000 | $4,500,000 | $6,120,000 | |
Dt | Direct development and IT cost savings | D6+D8+D13 | $17,947,099 | $19,567,099 | $21,187,099 | |
Risk adjustment | ↓10% | |||||
Dtr | Direct development and IT cost savings (risk-adjusted) | $16,152,389 | $17,610,389 | $19,068,389 | ||
Three-year total: $52,831,168 | Three-year present value: $43,564,394 |
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 Power Platform 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 | Power Platform licensing costs | $0 | $9,702,000 | $9,702,000 | $9,702,000 | $29,106,000 | $24,127,438 |
Ftr | Initial implementation, user training, and experimentation costs | $5,049,333 | $633,600 | $633,600 | $0 | $6,316,533 | $6,148,970 |
Gtr | Ongoing management costs | $0 | $1,856,943 | $1,856,943 | $1,856,943 | $5,570,829 | $4,617,942 |
Htr | Training and experimentation costs of solutions built on Power Platform | $580,800 | $580,800 | $580,800 | $0 | $1,742,400 | $1,588,800 |
Total costs (risk-adjusted) | $5,630,133 | $12,773,343 | $12,773,343 | $11,558,943 | $42,735,762 | $36,483,150 | |
Evidence and data. Interviewees incurred licensing costs for using Power Platform, which is determined by various factors. Most of the functions that users need are included with their Microsoft 365 E5 and F3 licenses. Some solutions that users create can have additional license fees. Premium capabilities are available to enhance and unlock more business value by using the platform, such as the ability to build and create connectors across Power Platform that extend apps, flows, dashboards, and web pages via hosted APIs. Projects that require premium connectors would also incur additional fees.
Modeling and assumptions. The composite organization spends $9.2 million per year for Power Platform, which is a total of their various licensing and combined use of Power Apps, Power Automate, and Power Pages.
Risks. Licensing costs will vary depending on organization size and use case. Contact Microsoft for a more detailed pricing estimate.
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 $24.1 million.
Ref. | Metric | Source | Initial | Year 1 | Year 2 | Year 3 | |
---|---|---|---|---|---|---|---|
E1 | Power Platform annual cost | Composite | $0 | $9,240,000 | $9,240,000 | $9,240,000 | |
Et | Licensing costs | E1 | $0 | $9,240,000 | $9,240,000 | $9,240,000 | |
Risk adjustment | ↑5% | ||||||
Etr | Licensing costs (risk-adjusted) | $0 | $9,702,000 | $9,702,000 | $9,702,000 | ||
Three-year total: $29,106,000 | Three-year present value: $24,127,438 |
Evidence and data. Interviewees shared that to successfully take advantage of their Power Platform investment, it was important to involve key team members in the setup and planning process. Once set up, they had to select a percentage of pilot users to be certified and start testing use cases using Power Platform. As the use case expands, other employees start to get trained and certified to use the platform on a rolling basis.
Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite organization:
Risks. Some factors that could result in this cost being different 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 $6.2 million.
Ref. | Metric | Source | Initial | Year 1 | Year 2 | Year 3 | |
---|---|---|---|---|---|---|---|
F1 | Software developers involved in Power Platform setup | Composite | 20 | ||||
F2 | Time spent for planning and setup (months) | Composite | 10.0 | ||||
F3 | Average fully-burdened salary of a software developer | TEI standard | $175,500 | ||||
F4 | Web developers involved in Power Platform setup | Composite | 15 | ||||
F5 | Time spent for planning and setup (months) | Composite | 3 | ||||
F6 | Average fully-burdened salary of a web developer | TEI standard | $120,000 | ||||
F7 | Subtotal: Total implementation effort | F1*F2/12*F3+F4* F5/12*F6 | $3,375,000 | ||||
F8 | Developers obtaining Power Platform certification | Composite | 300 | ||||
F9 | Training and experimentation time related to using Power Platform (hours) | Composite | 30 | ||||
F10 | Average fully-burdened hourly rate of a software developer or web developer | TEI standard | $71 | ||||
F11 | Subtotal: Total training effort for developers | F8*F9*F10 | $639,303 | ||||
F12 | Citizen developers obtaining Power Platform certification | F1*25 | 600 | 600 | 600 | ||
F13 | Training and experimentation time related to using Power Platform (hours) | Composite | 24 | 24 | 24 | 24 | |
F14 | Average fully-burdened hourly rate of a business user | TEI standard | $40 | $40 | $40 | $40 | |
F15 | Subtotal: Total training effort for citizen developers | F12*F13*F14 | $576,000 | $576,000 | $576,000 | $0 | |
Ft | Initial implementation, user training, and experimentation costs | F7+F11+F15 | $4,590,303 | $576,000 | $576,000 | $0 | |
Risk adjustment | ↑10% | ||||||
Ftr | Initial implementation, user training, and experimentation costs (risk-adjusted) | $5,049,333 | $633,600 | $633,600 | $0 | ||
Three-year total: $6,316,533 | Three-year present value: $6,148,970 |
Evidence and data. In addition to resources during the setup of Power Platform, interviewees shared that their organizations dedicated a number of their employees to ongoing management. This includes monitoring and maintaining the platform and its users, ensuring data security and compliance, managing access, as well as implementing updates and enhancements where appropriate. Other ongoing activities involved providing user support, troubleshooting issues, and gathering feedback for continuous improvement. This team typically included a mix of both professional developers and non-technical employees certified on Power Platform.
Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite organization:
Risks. Some factors that could result in this cost being different 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 $4.6 million.
Ref. | Metric | Source | Initial | Year 1 | Year 2 | Year 3 | |
---|---|---|---|---|---|---|---|
G1 | Employees involved in ongoing management | Composite | 10 | 10 | 10 | ||
G2 | Average fully-burdened salary of an involved employee | Composite | $168,813 | $168,813 | $168,813 | ||
Gt | Ongoing management costs | G1*G2 | $0 | $1,688,130 | $1,688,130 | $1,688,130 | |
Risk adjustment | ↑10% | ||||||
Gtr | Ongoing management costs (risk-adjusted) | $0 | $1,856,943 | $1,856,943 | $1,856,943 | ||
Three-year total: $5,570,829 | Three-year present value: $4,617,942 |
Evidence and data. To successfully maximize their Power Platform investment, interviewees also noted having to set up processes and infrastructure to manage solutions and use cases that were built on Power Platform. Typically, this would be manifested as a Center of Excellence (CoE), by creating a centralized hub where employees can interact, ask questions, and even experiment on building a use case themselves related to their work.
Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite organization:
Risks. Some factors that could result in this cost being different 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 $1.6 million.
Ref. | Metric | Source | Initial | Year 1 | Year 2 | Year 3 | |
---|---|---|---|---|---|---|---|
H1 | Net new employees trained on new solutions built on Power Platform | Composite | 6,600 | 6,600 | 6,600 | ||
H2 | Training time related to new solutions | Composite | 2 | 2 | 2 | ||
H3 | Average fully-burdened rate of a business employee | TEI standard | $40 | $40 | $40 | ||
Ht | Training and experimentation costs of solutions built on Power Platform | H1*H2*H3 | $528,000 | $528,000 | $528,000 | $0 | |
Risk adjustment | ↑10% | ||||||
Htr | Training and experimentation costs of solutions built on Power Platform (risk-adjusted) | $580,800 | $580,800 | $580,800 | $0 | ||
Three-year total: $1,742,400 | Three-year present value: $1,588,800 |
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 | ($5,630,133) | ($12,773,343) | ($12,773,343) | ($11,558,943) | ($42,735,762) | ($36,483,150) |
Total benefits | $0 | $29,323,989 | $48,302,189 | $68,711,789 | $146,337,968 | $118,201,522 |
Net benefits | ($5,630,133) | $16,550,646 | $35,528,846 | $57,152,846 | $103,602,205 | $81,718,372 |
ROI | 224% | |||||
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 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.
2Source: The State Of Low-Code In The Financial Services And Insurance Industries, Forrester Research, Inc. January 23, 2024.
3Source: The Low-Code And Digital Process Automation Market, 2023 To 2028, Forrester Research, Inc., January 10, 2024.
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