A Forrester Total Economic Impact™ Study Commissioned By Dell Technologies and AMD, February 2024
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Common challenges like fragmented processes, noncompliant purchases, rogue spending, security flaws, and device inconsistencies plague IT procurement teams, who are increasingly seeking automation. Dell Premier offers quick e-procurement and streamlined processes through a centralized online portal and integrations. These solutions enable productivity enhancements, risk management, and cost controls; and frees up procurement resources to focus on strategic initiatives.
Dell Premier brings innovation to e-procurement through its suite of complimentary tools designed to simplify and expand access to IT purchasing, asset management, and accelerated deployment. Dell Premier saves organizations time and money, and improves employee productivity.
Dell Premier offers a single site that is personalized for specific buying needs, with consistent pricing and products. IT procurement teams can customize solutions according to whether they need to digitally modernize locally or globally. For both local and global businesses, Dell integrates Premier with ERP systems to streamline the purchasing process for punchout or buyer-hosted catalogs. Dell’s API technology allows teams to extend their existing IT service management (ITSM) systems, even if they’re hosted by another provider, to Dell’s Premier purchasing environment. Dell customers can deploy any combination — if not all — of the solutions to best serve their business and IT needs.
Dell Technologies and AMD commissioned Forrester Consulting to conduct a Total Economic Impact™ (TEI) study and examine the potential return on investment (ROI) enterprises may realize by deploying Premier.1 Dell Technologies and AMD, who continually partner with each other to evolve their own technologies, are now also working together to provide modern data center solutions that power digital innovation for other businesses. The partnership seeks to advance technological boundaries, which will aid businesses in accelerating growth, optimizing operations, and minimizing risks. This study serves to equip readers with a comprehensive framework for evaluating Premier's potential financial impact, driving innovation by addressing challenges, enhancing efficiencies, and enabling next-generation outcomes.
Return on investment (ROI)
324%324%
Net present value (NPV)
$2.36M$2.36M
To better understand the benefits, costs, and risks associated with this investment, Forrester interviewed six representatives at four organizations and surveyed 207 additional respondents with experience using Premier. Survey respondents came from organizations across 10 countries: 41% from APAC, 29% from EMEA, 20% from North America, and 10% from South America. Their organizations ranged in size, between 100 to more than 20,000 employees. For the purposes of this study, Forrester aggregated the interviewees’ experiences and combined the results into a single composite organization that is a global enterprise with $5 billion in annual revenue and has 25,000 employees, and 95% of employees interact directly with Premier through their ITSM system. The procurement team comprises 25 people and the composite organization’s annual spending averages $22.5 million, or $900 per employee. All financial findings presented in this study are based on the details of the composite organization.
purchases IT devices for about 0 employees, has 0 (estimated) procurement-team members, and receives approximately 0 procurement-related IT helpdesk tickets per year. Custom results are based on these inputs and the TEI case study.
Interviewees said that prior to using Premier, their organizations navigated decentralized IT procurement processes that demanded substantial time and effort to coordinate equipment orders across departments. Manual processes created common issues like inconsistent pricing and the lack of standardized device configurations for orders globally. This led to rogue spending and a loss of productivity across the organization.
After the investment in Premier, the interviewees gained access to a centralized IT purchasing platform that automates workflows, which creates efficiencies for procurement and IT teams as well as new hires. With standard configurations and custom personalized product bundles, teams can better control spending across all users. Access to Premier also enhances the relationship organizations share with their Dell representative, who engages in high-level strategic solutioning.
Base: 207 global decision-makers who are managers and above in IT roles
Source: A commissioned study conducted by Forrester Consulting on behalf of Dell, November 2023
Quantified benefits. Three-year, risk-adjusted present value (PV) quantified benefits for the composite organization include:
For with 0 procurement team members (estimate), this benefit might be worth over three years.
For this benefit might be worth over three years.
For this benefit might be worth over three years.
For this benefit might be worth over three years.
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:
For , these costs could represent over three years.
For , these costs could represent over three years.
The representative interviews and financial analysis found that a composite organization experiences benefits of $3.09 million over three years versus costs of $728,000, adding up to a net present value (NPV) of $2.36 million and an ROI of 324%.
might experience benefits of over three years versus costs of , adding up to an NPV of and an ROI of 0%.
Reduced annual Dell-related procurement effort:
Up to 20%
“Our company grows faster than processes sometimes allow. Dell Premier provided the answer that we needed. Where do we go to look at our quotes, orders, order our equipment, or download our invoices? Rather than having to juggle between three different Dell websites or engage our inside salesperson, there’s one central place where we can do everything.”
Head of IT operations, traffic control services and safety
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 Premier.
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 Premier can have on an organization.
Interviewed Dell stakeholders and Forrester analysts to gather data relative to Premier.
Interviewed six representatives at four organizations and surveyed 207 respondents at organizations using Premier 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 Dell Technologies and AMD 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 Premier. 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 Dell Premier based on the inputs provided and any assumptions made. Forrester does not endorse Dell or its offerings. Although great care has been taken to ensure the accuracy and completeness of this model, Dell 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 Dell make no warranties of any kind.
Dell 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.
Dell 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:
Roger Nauth
Sarah Lervold
Jonathan Lipsitz
Role | Industry | Region | Revenue | Employees | Premier Users | Annual Dell Spending | ||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Global IT order fulfillment director Order support leader |
Advanced technology manufacturer | Global | $35 billion | 150,000 | 50 | $51 million | ||||||
Head of IT operations | Traffic control services and safety | US | $300 million | 200 | 8 | $291,000 | ||||||
IT procurement specialist IT procurement analyst |
HVAC and refrigeration systems manufacturer | Global | $17 billion | 39,000 | 30 | $7.7 million | ||||||
Manager of end-user computing | Truck, bus, and diesel engine manufacturing | Global | $11 billion | 14,500 | 10 | $7.8 million | ||||||
Forrester interviewed six decision-makers at four organizations and surveyed users at 207 organizations with experience using Premier. For more details on the respondents who participated in this study, see Appendix B.
Before adopting Premier, customers coordinated their IT purchasing processes through a myriad of disjointed methods, such as ordering directly from their Dell representative via email or over the phone, and building internal applications to streamline ordering across individual departments.
The interviewees noted how their organizations struggled with common challenges, including:
The interviewees’ organizations searched for a solution that could:
Base: 207 global decision-makers who are managers and above in IT roles
Source: A commissioned study conducted by Forrester Consulting on behalf of Dell, November 2023
“We used a homegrown application that talked to Dell. It’s retiring at the end of this month. Prior to that, we were actually purchasing with a corporate p-card for Dell orders. We were just emailing in our orders and putting them on a p-card, balancing that every month.”
Order support leader, advanced technology manufacturer
“We wanted a solution that would provide us with a scalable and sustainable way to procure IT equipment while maintaining or optimizing efficiency.”
Head of IT operations, traffic control services and safety
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 organizations where the six interviewees are from, 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 global enterprise has $5 billion in annual revenue with 25,000 employees, 95% of whom directly interact with Premier through their ITSM. The organization has a procurement team of 25 people and an annual spending with Dell of $22.5 million (i.e., $900 per employee). The composite has integrated its ERP system with Premier.
purchases IT devices for about 0 employees, has 0 (estimated) procurement team members, and receives approximately 0 procurement-related IT helpdesk tickets per year.
“The investment for us was a no-brainer. In a fast-moving organization, there’s constant change. As people, we tend to not like change unless it’s for our benefit. Premier was one of those things where there were almost no trade-offs. Sure, we had to set up a new account, we had to make sure that our accounting department had proper permissions. … I’d say Premier took us all of 15 minutes to set up. It was very straightforward. The great thing was Dell provided a path to migrate or transpose our existing account and centralize it all within Premier.”
Head of IT operations, traffic control services and safety
Ref. | Benefit | Year 1 | Year 2 | Year 3 | Total | Present Value |
---|---|---|---|---|---|---|
Atr | Increased procurement team efficiency | $105,719 $105,719 | $211,438 $211,438 | $211,438 $211,438 | $528,594 $528,594 | $429,706 $429,706 |
Btr | Increased IT team efficiency | $180,471 $180,471 | $180,471 $180,471 | $180,471 $180,471 | $541,414 $541,414 | $448,806 $448,806 |
Ctr | Decreased device costs due to standardization | $787,469 $787,469 | $787,469 $787,469 | $787,469 $787,469 | $2,362,406 $2,362,406 | $1,958,318 $1,958,318 |
Dtr | Increased new hire efficiency | $61,200 $61,200 | $122,400 $122,400 | $122,400 $122,400 | $306,000 $306,000 | $248,754 $248,754 |
Total benefits (risk-adjusted) | $1,134,859 $1,134,859 | $1,301,777 $1,301,777 | $1,301,777 $1,301,777 | $3,738,413 $3,738,413 | $3,085,584 $3,085,584 | |
Evidence and data. Centralizing procurement improves team efficiency and effectiveness, which allows existing team members to reallocate their time to higher-value projects and allows the organization to avoid hiring additional people to the team. Interviewees noted:
The survey looked at procurement efficiency gains across a range of activities like purchasing, reporting, and tracking Dell equipment, as well as getting pricing, ensuring compliance requirements, and setting product standards for global locations. Respondents reported significant reductions in time spent across these activities.
Base: 83 global decision-makers who are managers and above in IT roles who use Local Portal
Source: A commissioned study conducted by Forrester Consulting on behalf of Dell, November 2023
Base: 92 global decision-makers who are managers and above in IT roles who use Global Portal
Source: A commissioned study conducted by Forrester Consulting on behalf of Dell, November 2023
“My accounting team is changing the way I capitalize or expense equipment. [Dell Premier] saved me a lot of time — I can go get the reports and then I can forecast to the Dell site in an hour or two. That saved me a couple hours rather than going through my ERP system, looking manually at what my spending was.”
Manager of end-user computing, truck, bus, and diesel engine manufacturer
Modeling and assumptions. For the composite organization, Forrester assumes the following:
Risks. Some factors that could result in this benefit being lower than that reported by interviewees 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 $430,000.
For , this benefit may have a three-year, risk-adjusted total PV of .
“[Premier] cut down a lot of the back-and-forth communication between Dell and us. We’re able to do a lot of things, such as adding standard configurations, doing our own quotes, looking up our own orders, downloading our own invoices, running reports to a certain degree without ever having to engage a Dell person directly. For my team specifically, it’s cut down by about 75%. It’s allowed us to reinvest that time into things that our technicians need to handle directly, whereas before, they were using that time to navigate through the different decentralized channels in procuring IT equipment.”
Order support leader, advanced technology manufacturer
Ref. | Metric | Source | Year 1 | Year 2 | Year 3 |
---|---|---|---|---|---|
A1 | Employees | CompositeComposite | 25,00025,000 | 25,00025,000 | 25,00025,000 |
A2 | Procurement team members | CompositeComposite | 2525 | 2525 | 2525 |
A3 | Reduced procurement effort | CompositeComposite | 10%10% | 20%20% | 20%20% |
A4 | Procurement effort after Premier | A2*A3 | 2.52.5 | 5.05.0 | 5.05.0 |
A5 | Average annual fully-burdened cost of a procurement professional | TEI StandardTEI Standard | $99,500 $99,500 | $99,500 $99,500 | $99,500 $99,500 |
A6 | Productivity recapture | TEI standard | 50%50% | 50%50% | 50%50% |
At | Increased procurement team efficiency | A4*A5*A6 | $124,375 $124,375 | $248,750 $248,750 | $248,750 $248,750 |
Risk adjustment | ↓15% | ||||
Atr | Increased procurement team efficiency (risk-adjusted) | $105,719 $105,719 | $211,438 $211,438 | $211,438 $211,438 | |
Three-year total: $528,594 $528,594 | Three-year present value: $429,706 $429,706 |
Increased IT Team Efficiency
Evidence and data. Interviewees reported that deploying Dell Premier in their environments improved product standardization and eliminated rogue hardware purchasing. This made it easier for the customers’ IT organizations to configure and provision new devices as most necessary services were built into standard configurations. Additionally, with standard, preconfigured devices, IT teams spent less time addressing IT helpdesk tickets related to their Dell equipment as employees submitted less unique requests over time. Interviewee examples included:
Survey responses noted time savings for an IT employee to set up hardware:
Survey responses also noted the percentage decrease in helpdesk tickets and calls related to Dell products/purchases:
Modeling and assumptions. For the composite organization, Forrester assumes the following:
Risks. Some factors that could result in this benefit being lower than that reported by interviewees 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 $449,000.
For , this benefit may have a three-year, risk-adjusted total PV of .
15%
Reduction in IT tickets submitted for procurement support.
“By having a standard configuration, everything’s already built into our onboarding. If an employee was to bring another machine, we would have to configure and customize it. Because we can keep a standard system through the Premier, they’re only ordering what we can just get out the door in a quick manner. It does save a lot of time.”
Manager of end-user computing, truck, bus, and diesel engine manufacturer
“It has allowed us to get away from having to have different groups managed in different countries. Corporate IT has taken control of owning it for the world for the most part with a few exceptions, whereas it used to be very decentralized and every business would have their own groups.”
Global IT order fulfillment director, advanced technology manufacturer
Ref. | Metric | Source | Year 1 | Year 2 | Year 3 |
---|---|---|---|---|---|
B1 | Devices purchased (rounded) | CompositeComposite | 8,3338,333 | 8,3338,333 | 8,3338,333 |
B2 | Configuration time savings per device (hours) | CompositeComposite | 0.50.5 | 0.50.5 | 0.50.5 |
B3 | Productivity recapture | TEI Standard | 75%75% | 75%75% | 75%75% |
B4 | Total time savings (hours) | B1*B2*B3 | 3,1253,125 | 3,1253,125 | 3,1253,125 |
B5 | Fully-burdened hourly salary for an IT professional | TEI StandardTEI Standard | $63 $63 | $63 $63 | $63 $63 |
B6 | Subtotal: Total IT labor savings for optimized configuration time | B4*B5 | $196,875 $196,875 | $196,875 $196,875 | $196,875 $196,875 |
B7 | Helpdesk tickets related to IT prior to Dell Premier | CompositeComposite | 3,7003,700 | 3,7003,700 | 3,7003,700 |
B8 | Percentage reduction in tickets submitted after Dell Premier | CompositeComposite | 15%15% | 15%15% | 15%15% |
B9 | Avoided helpdesk tickets related to IT after Dell Premier | B6*B7 | 555555 | 555555 | 555555 |
B10 | Hours required for each ticket | CompositeComposite | 0.250.25 | 0.250.25 | 0.250.25 |
B11 | Total hours avoided (rounded) | B9*B10 | 139139 | 139139 | 139139 |
B12 | Productivity recapture | TEI Standard | 75%75% | 75%75% | 75%75% |
B13 | Fully-burdened hourly salary of a helpdesk analyst | CompositeComposite | $35 $35 | $35 $35 | $35 $35 |
B14 | Subtotal: Total savings for IT helpdesk support on procurement-related tickets | B11*B12*B13 | $3,649 $3,649 | $3,649 $3,649 | $3,649 $3,649 |
Bt | Increased IT team efficiency | B6+B14 | $200,524 $200,524 | $200,524 $200,524 | $200,524 $200,524 |
Risk adjustment | ↓10% | ||||
Btr | Increased IT team efficiency (risk-adjusted) | $180,471 $180,471 | $180,471 $180,471 | $180,471 $180,471 | |
Three-year total: $541,414 $541,414 | Three-year present value: $448,806 $448,806 |
Evidence and data. Interviewees said that they were able to reduce device costs in several ways. Encouraging staff to order through Premier’s catalog ensured that negotiated pricing was being applied. Preventing rogue spending kept employees from buying from higher-priced sources and ensured that customers could centralize and easily access Dell spending data. Creating standard configurations for different user profiles kept employees from buying devices at a higher cost. Interviewees shared:
Modeling and assumptions. For the composite organization, Forrester assumes the following:
Risks. Some factors that could result in this benefit being lower than that reported by interviewees 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 $2 million.
For , this benefit may have a three-year, risk-adjusted total PV of .
Ref. | Metric | Source | Year 1 | Year 2 | Year 3 |
---|---|---|---|---|---|
C1 | Devices purchased | B1 | 8,3338,333 | 8,3338,333 | 8,3338,333 |
C2 | Previous purchase cost per device | CompositeComposite | $1,050 $1,050 | $1,050 $1,050 | $1,050 $1,050 |
C3 | Reduced purchase cost with Dell Premier | CompositeComposite | 10%10% | 10%10% | 10%10% |
C4 | Savings per device with Dell Premier | C2*C3 | $105 $105 | $105 $105 | $105 $105 |
Ct | Decreased device costs due to standardization | C1*C4 | $874,965 $874,965 | $874,965 $874,965 | $874,965 $874,965 |
Risk adjustment | ↓10% | ||||
Ctr | Decreased device costs due to standardization (risk-adjusted) | $787,469 $787,469 | $787,469 $787,469 | $787,469 $787,469 | |
Three-year total: $2,362,406 $2,362,406 | Three-year present value: $1,958,318 $1,958,318 |
10%
Reduction in purchase cost per device.
“Employees feel more empowered to say, “I need [a new device.]” I can just order it automatically, not waiting for anybody to go ahead and process this for me.”
IT procurement specialist, HVAC and refrigeration systems manufacturer
“We’ve continued to get more efficient with the standards that we have and we’re getting better at figuring out what people truly need. … At one point in time, when I first came in, I think we had almost 500 different configurations in the system because people were ordering their own stuff. Now we have about 10 to 12 standards.”
Global IT order fulfillment director, advanced technology manufacturer
Evidence and data. Interviewees shared that new hires were able to realize an improved speed to productivity as Dell equipment were ready for use immediately upon onboarding. A streamlined ordering process and standard configurations enabled the devices to reach new employees with little customization, eliminating the potential for further delays. Interviewees shared:
Modeling and assumptions. For the composite organization, Forrester assumes the following:
Risks. Some factors that could result in this benefit being lower than interviewees reported 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 $249,000.
For , this benefit may have a three-year, risk-adjusted total PV of .
Ref. | Metric | Source | Year 1 | Year 2 | Year 3 |
---|---|---|---|---|---|
D1 | Employees | A1 | 25,00025,000 | 25,00025,000 | 25,00025,000 |
D2 | Percentage of employees who are new hires each year | CompositeComposite | 9%9% | 9%9% | 9%9% |
D3 | New hires each year | D1*D2 | 2,2502,250 | 2,2502,250 | 2,2502,250 |
D4 | Average hours needed for new hire to receive equipment before Dell Premier | CompositeComposite | 2424 | 2424 | 2424 |
D5 | Average hours needed for new hire to receive equipment with Dell Premier | CompositeComposite | 1616 | 88 | 88 |
D6 | Decrease in hours needed for new hire to receive equipment with Dell Premier | D4-D5 | 88 | 1616 | 1616 |
D7 | Percentage productivity of new hire during ramp | CompositeComposite | 20%20% | 20%20% | 20%20% |
D8 | Fully-burdened hourly salary of average employee | TEI StandardTEI Standard | $40 $40 | $40 $40 | $40 $40 |
D9 | Productivity recapture | TEI standard | 50%50% | 50%50% | 50%50% |
Dt | Increased new hire efficiency | D3*D6*D7*D8*D9 | $72,000 $72,000 | $144,000 $144,000 | $144,000 $144,000 |
Risk adjustment | ↓15% | ||||
Dtr | Increased new hire efficiency (risk-adjusted) | $61,200 $61,200 | $122,400 $122,400 | $122,400 $122,400 | |
Three-year total: $306,000 $306,000 | Three-year present value: $248,754 $248,754 |
67%
Decrease in time needed for new hires to receive equipment.
“Our new hires are generally getting their computers on day one. That’s due to ready ship being available globally now, and as well as our stockrooms having machines in them. We strive to try to get them their PCs on day one so they’re up and ready to go.”
Order support leader, advanced technology manufacturer
“One of the issues that we always had was with new hires. We had to wait for a ticket to be able to place an order for a new hire. Nowadays, they don’t have to wait. They know that a new hire is going to come on board. They just order the equipment and that equipment will be waiting for that new hire to start.”
IT procurement specialist, HVAC & refrigeration systems manufacturer
Base: 90 global decision-makers who are managers and above in IT roles who use an ERP integration
Source: A commissioned study conducted by Forrester Consulting on behalf of Dell, November 2023
Base: 108 Manager+ global decision-makers in IT roles who use an ITSM integration
Source: A commissioned study conducted by Forrester Consulting on behalf of Dell, November 2023
Interviewees mentioned the following additional benefits that their organizations experienced but were not able to quantify:
“Whoever designed Dell Premier really focused on minimizing the amount of mouse clicks. The great thing is it is customizable.”
Head of IT operations, traffic control services and safety
“If our accounting and finance department wants to do reconciliation on POs [purchase orders], it’s very simple for them to go into the portal, look up the order number, the invoice number, the PO number and download necessary items. … Before, they had to talk with Dell financial services and email back and forth.”
Head of IT operations, traffic control services and safety
“Our company comes with a “mom-and-pop” mentality. Personal relationships carry a lot of weight. Our relationship with Dell largely because of how our account representative engages with different resources at Dell, continues to add value to us. It has been nothing short of amazing.”
Head of IT operations, traffic control services and safety
The value of flexibility is unique to each customer. There are multiple scenarios in which a customer might implement Premier and later realize additional uses and business opportunities, including:
“We have a green IT project that started this year and a lot of that’s looking at how we make energy and packaging savings. We’ve been looking at ordering in bulk quantities more this year. … We are looking into drop-shipping next year. I’d say that makes a difference.”
Manager of end-user computing, truck, bus, and diesel engine manufacturer
Flexibility would also be quantified when evaluated as part of a specific project (described in more detail in Appendix A).
“I feel much more confident now that we are using Premier globally.”
Order support leader, advanced technology manufacturer
Ref. | Cost | Initial | Year 1 | Year 2 | Year 3 | Total | Present Value |
---|---|---|---|---|---|---|---|
Etr | Initial internal setup cost of Dell Premier | $114,430 $114,430 | $0 $0 | $0 $0 | $0 $0 | $114,430 $114,430 | $114,430 $114,430 |
Ftr | Ongoing internal management and programmatic expenses | $0 $0 | $246,675 $246,675 | $246,675 $246,675 | $246,675 $246,675 | $740,025 $740,025 | $613,444 $613,444 |
Total costs (risk-adjusted) | $114,430 $114,430 | $246,675 $246,675 | $246,675 $246,675 | $246,675 $246,675 | $854,455 $854,455 | $727,874 $727,874 | |
Evidence and data. Interviewees shared that it was generally quick and easy to implement Premier. Dell enables Premier for organizations with little involvement needed from the customer. However, some internal effort is required to perform the ERP and ITSM integration work alongside Dell.
Modeling and assumptions. For the composite organization, Forrester assumes the following:
Risks. Some factors that could result in this cost being higher than reported include:
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 $114,000.
For , these costs may have a three-year, risk-adjusted total PV of .
“The setup included a 20-minute phone call with the Dell rep. It’s simple to navigate and simple to use.”
Manager of end-user computing, truck, bus, and diesel engine manufacturer
Ref. | Metric | Source | Initial | Year 1 | Year 2 | Year 3 |
---|---|---|---|---|---|---|
E1 | Number of FTEs involved in setting up Dell Premier | CompositeComposite | 44 | 0 | 0 | 0 |
E2 | Months required to set up Dell Premier | CompositeComposite | 33 | 0 | 0 | 0 |
E3 | Fully-burdened monthly salary of FTEs involved in setting up Dell Premier (rounded) | CompositeComposite | $8,292 $8,292 | 0 | 0 | 0 |
Et | Initial internal setup cost of Dell Premier | E1*E2*E3 | $99,504 $99,504 | $0 $0 | $0 $0 | $0 $0 |
Risk adjustment | ↑15% | |||||
Etr | Initial internal setup cost of Dell Premier (risk-adjusted) | $114,430 $114,430 | $0 $0 | $0 $0 | $0 $0 | |
Three-year total: $114,430 $114,430 | Three-year present value: $114,430 $114,430 |
Evidence and data. One and a half FTEs are dedicated to ongoing management and development of the solution suite.
Modeling and assumptions. For the composite organization, Forrester assumes the following:
Risks. Some factors that could result in this cost being higher than reported 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 $613,000.
For , these costs may have a three-year, risk-adjusted total PV of .
Ref. | Metric | Source | Initial | Year 1 | Year 2 | Year 3 | |
---|---|---|---|---|---|---|---|
F1 | FTEs involved in ongoing management and development | CompositeComposite | 0 | 1.501.50 | 1.501.50 | 1.501.50 | |
F2 | Average fully-burdened annual salary of an experienced procurement manager | TEI StandardTEI Standard | $0 | $99,500 $99,500 | $99,500 $99,500 | $99,500 $99,500 | |
F3 | Configuration costs | CompositeComposite | $0 | $75,000 $75,000 | $75,000 $75,000 | $75,000 $75,000 | |
Ft | Ongoing internal management and programmatic expenses | (F1*F2)+F3 | $0 $0 | $224,250 $224,250 | $224,250 $224,250 | $224,250 $224,250 | |
Risk adjustment | ↑10% | ||||||
Ftr | Ongoing internal management and programmatic expenses (risk-adjusted) | $0 $0 | $246,675 $246,675 | $246,675 $246,675 | $246,675 $246,675 | ||
Three-year total: $740,025 $740,025 | Three-year present value: $613,444 $613,444 |
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 | ($114,430)($114,430) | ($246,675)($246,675) | ($246,675)($246,675) | ($246,675)($246,675) | ($854,455)($854,455) | ($727,874)($727,874) |
Total benefits | $0 $0 | $1,134,859 $1,134,859 | $1,301,777 $1,301,777 | $1,301,777 $1,301,777 | $3,738,413 $3,738,413 | $3,085,584 $3,085,584 |
Net benefits | ($114,430)($114,430) | $888,184 $888,184 | $1,055,102 $1,055,102 | $1,055,102 $1,055,102 | $2,883,959 $2,883,959 | $2,357,710 $2,357,710 |
ROI | 324%324% | |||||
Payback period | <6 months<6 months | |||||
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.
Related Forrester Research
“2023 Buyer Insights: Procurement Professional,” Forrester Research, Inc., December 4, 2023.
“Transform Procurement For Future Fit Supply Chains,” Forrester Research, Inc., August 21, 2023.
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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