A Forrester Total Economic ImpactTM Study Commissioned By Everbridge, February 2023
Organizations today continue to face major events that have the potential to disrupt business operations and threaten employee safety. From civil unrest to severe weather, organizations need a process to monitor, assess, and efficiently communicate and respond to all types of threats that could impact them. The Everbridge Critical Event Management platform helps teams efficiently identify, communicate, and respond to events affecting employees and company assets.
The Everbridge Critical Event Management (CEM) platform helps teams quickly identify and respond to relevant critical events to keep employees and company assets safe. The CEM platform integrates data feeds from weather to emergency incidents, delivers richer contextualized intelligence, provides an intuitive dashboard to visualize all the information in a singular location, and gives teams the ability to create and activate automated and templated communications with standard operating procedures so that organizations can make faster decisions to decrease the impact of events.
Everbridge commissioned Forrester Consulting to conduct a Total Economic Impact™ (TEI) study and examine the potential return on investment (ROI) enterprises may realize by deploying CEM.1 The purpose of this study is to provide readers with a framework to evaluate the potential financial impact of CEM on their organizations.
To better understand the benefits, costs, and risks associated with this investment, Forrester interviewed six representatives from four organizations with experience using the CEM platform. For the purposes of this study, Forrester aggregated the interviewees’ experiences and combined the results into a single composite organization that is a global manufacturing firm with $16 billion in revenue and 30,000 employees.
Prior to using Everbridge CEM, interviewees noted their organizations utilized teams of analysts who relied on internet searches, news alerts, web-based maps, and other disparate tools to monitor potential safety or operational threats and assess their impact to employees and business assets. Interviewees’ organizations lacked an enterprisewide process to deal with events and needed a more robust enterprise communication system. With the manual process and limited threat intelligence capabilities to help accurately identify relevant weather, security, or disruptive events near their people and locations, it was difficult for security administrators to alert the correct set of employees accurately and efficiently. Therefore, interviewees found themselves reacting to critical events and scrambling to effectively identify the full extent of an impact to employees and company assets. After the investment in Everbridge’s CEM platform, interviewees’ organizations had the capabilities and resources to effectively respond to and contain critical events, allowing them to better protect employees, company assets, and business processes.
Quantified benefits. Three-year, risk-adjusted present value (PV) quantified benefits for the composite organization include:
For , reduced business interruptions for critical events might result in in efficiency gains over three years.
For , decreased costs from IT downtime might save over three years.
For , increased security team productivity might yield in benefits over three years.
For , avoided inventory and property damages might save over three years.
For , recaptured employee productivity with faster response incident management and coordination might total over three years.
Unquantified benefits. Benefits that provide value for the composite organization but are not quantified in this study include:
Costs. Three-year, risk-adjusted PV costs for the composite organization include:
For , subscription fees might total over three years.
For , implementation fees might total over three years.
For , maintenance and operations might cost over three years.
For , training for the CEM platform might total over three years.
The representative interviews and financial analysis found that a composite organization experiences benefits of $8.47 million over three years versus costs of $1.85 million, adding up to a net present value (NPV) of $6.62 million and an ROI of 358%.
might experience benefits of over three years versus costs of , adding up to an NPV of and an ROI of .
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 Everbridge CEM.
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 Everbridge CEM can have on an organization.
Interviewed Everbridge stakeholders and Forrester analysts to gather data relative to CEM.
Interviewed six representatives at four organizations using CEM 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 Everbridge 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 CEM.
Everbridge 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.
Everbridge provided the customer names for the interviews but did not participate in the interviews.
Consulting Team:
Rishabh Dua
Sarah Lervold
Kim Finnerty
Role | Industry | Region | Revenue | Employees |
---|---|---|---|---|
Crisis management and global security operations senior manager | Pharmaceutical | Asia | $29 billion | 50,000 |
Crisis management and global security operations director | Pharmaceutical | Asia | $29 billion | 50,000 |
Security systems director | Pharmaceutical | Asia | $29 billion | 50,000 |
Global security operations manager | Pharmaceutical | North America | $6 billion | 7,000 |
Head of resilience | Marketing | United Kingdom | $18 billion | 45,000 |
Security intelligence director | Financial services | North America | $11 billion | 16,000 |
Before investing in and deploying Everbridge, the interviewees’ organizations used disparate intelligence sources with no formal process to manage event identification and response.
The 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 six interviewees from four organizations, and it is used to present the aggregate financial analysis in the next section. The composite organization has the following characteristics:
Description of composite. The composite organization is a global manufacturer based in North America. The firm has annual revenues of $16 billion with 30,000 employees and operates 75 facilities around the world from factories to distribution centers to offices. The organization has 33,000 total assets managed in CEM, including — but not limited to — employees, offices, physical resources, supply chain resources, and traveler locations. The Everbridge CEM capabilities that the organization utilizes include emergency communication, mobile safety, data visualization, and IT alerting on desktop and mobile instances.
Ref. | Benefit | Year 1 | Year 2 | Year 3 | Total | Present Value |
---|---|---|---|---|---|---|
Atr | Revenue recaptured from reduced business interruptions | $1,200,000 | $1,200,000 | $1,200,000 | $3,600,000 | $2,984,222 |
Btr | Reduced IT downtime | $796,500 | $796,500 | $796,500 | $2,389,500 | $1,980,778 |
Ctr | Increased security team productivity | $607,500 | $607,500 | $607,500 | $1,822,500 | $1,510,763 |
Dtr | Avoided inventory and property damage | $455,625 | $455,625 | $455,625 | $1,366,875 | $1,133,072 |
Etr | Recaptured employee productivity | $345,600 | $345,600 | $345,600 | $1,036,800 | $859,456 |
Total benefits (risk-adjusted) | $3,405,225 | $3,405,225 | $3,405,225 | $10,215,675 | $8,468,291 |
Evidence and data. Critical events, such as extreme weather and protests, could require organizations to pause or shut down operations. Interviewees said that prior to Everbridge CEM, they would react to events after receiving a news alert and were slow in getting information out to the appropriate teams and locations. Implementing Everbridge CEM allowed the interviewees’ organizations to maintain business operations as they could react faster to unplanned business interruptions and activate the appropriate standard operating plans to manage an event. Everbridge provided complete and integrated threat intelligence with all data feeds situated with the data visualization, the ability to automate alerts, multichannel notifications, and templated process plans to deal with critical events. Additionally, with all key locations and employees covered within Everbridge, security analysts could send information out faster to the appropriate stakeholders.
Modeling and assumptions. For the composite organization, Forrester assumes:
might have an estimated hours of unplanned downtime and an average downtime cost of per hour.
Risks. Risks that could impact the realization of this benefit include the following:
Results. To account for these risks, Forrester adjusted this benefit downward by 20%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $3.0 million.
For , this benefit might have a three-year, risk-adjusted PV of .
Ref. | Metric | Source | Year 1 | Year 2 | Year 3 | |
---|---|---|---|---|---|---|
A1 | Average cost of unplanned downtime per hour | Composite | $250,000 | $250,000 | $250,000 | |
A2 | Average annual hours unplanned downtime | Composite | 24 | 24 | 24 | |
A3 | Annual cost of unplanned downtime | A1*A2 | $6,000,000 | $6,000,000 | $6,000,000 | |
A4 | Reduction attributable to Everbridge | Interviews | 25% | 25% | 25% | |
At | Revenue recaptured from reduced business interruptions | A3*A4 | $1,500,000 | $1,500,000 | $1,500,000 | |
Risk adjustment | ↓20% | |||||
Atr | Revenue recaptured from reduced business interruptions (risk-adjusted) | $1,200,000 | $1,200,000 | $1,200,000 | ||
Three-year total: $3,600,000 | Three-year present value: $2,984,222 |
Evidence and data. The interviewees’ organizations had complex computing environments that ranged from on-premises servers to hybrid environments with multiple cloud providers. Interruptions to IT services could be from natural disasters at offices to outages at cloud data centers. Downtime at data centers and servers disrupted workflow, causing inaccessible external customer-facing websites, internal applications for employees, and more. Interviewees noted that IT teams improved operating workflows to detect, investigate, and respond to reduce IT downtime after implementing Everbridge CEM and utilizing Everbridge’s IT alerting on both desktop and mobile instances, along with its emergency communication functionality.
Modeling and assumptions. For the composite organization, Forrester assumes:
For , each outage might cost an estimated per minute and last approximately minutes.
might experience outages per year.
Risks. Risks that could impact the realization of this benefit include the following:
Results. To account for these risks, Forrester adjusted this benefit downward by 25%, yielding a three-year, risk-adjusted total PV of $2.0 million.
For , this benefit might have a three-year, risk-adjusted PV of .
Ref. | Metric | Source | Year 1 | Year 2 | Year 3 | |
---|---|---|---|---|---|---|
B1 | IT cost per minute | Composite | $8,850 | $8,850 | $8,850 | |
B2 | Average minutes per outage | Ponemon | 80 | 80 | 80 | |
B3 | Average frequency of outages per year | Composite | 4 | 4 | 4 | |
B4 | Cost of IT downtime | B1*B2*B3 | $2,832,000 | $2,832,000 | $2,832,000 | |
B5 | Average minutes saved due to faster response by the IT team applicable to Everbridge | Interviews | 30 | 30 | 30 | |
Bt | Reduced IT downtime | B1*B3*B5 | $1,062,000 | $1,062,000 | $1,062,000 | |
Risk adjustment | ↓25% | |||||
Btr | Reduced IT downtime (risk-adjusted) | $796,500 | $796,500 | $796,500 | ||
Three-year total: $2,389,500 | Three-year present value: $1,980,778 |
Evidence and data. Prior to implementing the CEM platform, the interviewees’ organizations lacked a comprehensive solution that integrated data intelligence feeds and had a formalized plan to manage critical events, so teams were forced to use ad hoc tools like internet maps and alerts via news sites. This was a time-consuming and labor-intensive process that made it challenging to consistently and accurately identify threats relevant to their organizations and notify employees when an event was happening around their location. With CEM, interviewees’ organizations could take their existing resources on security teams and reallocate them to higher value-add activities.
With more comprehensive detection for critical events using the underlying technology and analytics within the platform and more efficient management of all assets, interviewees more efficiently managed critical events. Interviewees found that the ability to view all information in one location within the data visualization saved their team’s time. Interviewees further noted that Everbridge allowed security teams to create templated plans and get information out quickly to the right people with the easy-to-use UI and integrated data sources, saving security analysts time to work on other high-priority tasks.
Modeling and assumptions. For the composite organization, Forrester assumes:
For , security analysts might be redeployed.
Risks. Risks that could impact the realization of this benefit include the following:
Results. To account for these risks, Forrester adjusted this benefit downward by 10%, yielding a three-year, risk-adjusted total PV of $1.5 million.
For , this benefit might have a three-year, risk-adjusted PV of .
Ref. | Metric | Source | Year 1 | Year 2 | Year 3 | |
---|---|---|---|---|---|---|
C1 | Number of security analysts redeployed | Composite | 5 | 5 | 5 | |
C2 | Security analyst fully loaded annual salary | TEI standard | $135,000 | $135,000 | $135,000 | |
C3 | Security team productivity savings | C1*C2 | $675,000 | $675,000 | $675,000 | |
Ct | Increased security team productivity | $675,000 | $675,000 | $675,000 | ||
Risk adjustment | ↓10% | |||||
Ctr | Increased security team productivity (risk-adjusted) | $607,5000 | $607,500 | $607,500 | ||
Three-year total: $1,822,500 | Three-year present value: $1,510,763 |
Evidence and data. Representatives from organizations noted how prior to CEM, getting information out to locations was manual and time-consuming. After implementing CEM, they could inform teams and locations within a specified radius of a weather, protest, or other major event that could cause damage. With the CEM platform, interviewees noted that analysts found the ability to use the data across a variety of integrated data feeds to verify information and swiftly identify impacted areas and employees. The intuitive UI saved necessary time to inform the affected entities. Because Everbridge works with location data and data about an organization’s valuable assets, such as buildings and inventory to supply chains and employees, it allowed analysts to quickly identify potential threats to assets and rapidly notify the appropriate teams to act and decrease the impact of events.
Modeling and assumptions. For the composite organization, Forrester assumes:
For , the estimated average loss per event might be .
has facilities.
Risks. Risks that could impact the realization of this benefit include the following:
Results. To account for these risks, Forrester adjusted this benefit downward by 10%, yielding a three-year, risk-adjusted total PV of $1.1 million.
For , this benefit might have a three-year, risk-adjusted PV of .
Ref. | Metric | Source | Year 1 | Year 2 | Year 3 | |
---|---|---|---|---|---|---|
D1 | Average loss claim | Composite | $1,500,000 | $1,500,000 | $1,500,000 | |
D2 | Likelihood of claim per facility | Composite | 3% | 3% | 3% | |
D3 | Number of facilities | Composite | 75 | 75 | 75 | |
D4 | Projected loss per year | D1*D2*D3 | $3,375,000 | $3,375,000 | $3,375,000 | |
D5 | Percent avoidable attributable to Everbridge | Interviews | 15% | 15% | 15% | |
Dt | Avoided inventory and property damage | D4*D5 | $506,250 | $506,250 | $506,250 | |
Risk adjustment | ↓10% | |||||
Dtr | Avoided inventory and property damage (risk-adjusted) | $455,625 | $455,625 | $455,625 | ||
Three-year total: $1,366,875 | Three-year present value: $1,133,072 |
Evidence and data. Prior to Everbridge CEM, the interviewees’ organizations did not have an efficient method of getting in touch with the right employees at potentially impacted locations from corporate offices to home locations. Interviewees struggled with identifying which employees to contact and if they had the most up-to-date and accurate contact information. Furthermore, with no way to check if employees received the alert regarding critical events like weather or an IT outage, interviewees’ organizations were left in the dark about if the information was correctly dispersed and resulted in employees not being able to complete their work effectively. Because Everbridge CEM uses data from both external and internal feeds, including the location of employees and assets, it helped security teams better assess what people and locations the event could impact.
With the CEM platform, the interviewees’ organizations were efficiently able to alert employees using the emergency communication capability and, with multimodal, two-way communication, confirm employees received the notification. With speed of utmost importance, the information through the platform allowed employees to continue work with less disruption, such as working away from an affected office or quickly getting back online from an IT outage.
Modeling and assumptions. For the composite organization, Forrester assumes:
might have employees impacted by weather and downtime with a total average of hours missed.
Risks. Risks that could impact the realization of this benefit include the following:
Results. To account for these risks, Forrester adjusted this benefit downward by 10%, yielding a three-year, risk-adjusted total PV of $861,000.
For , this benefit might have a three-year, risk-adjusted PV of .
Ref. | Metric | Source | Year 1 | Year 2 | Year 3 | |
---|---|---|---|---|---|---|
E1 | Revenue per employee per hour | Composite | $256 | $256 | $256 | |
E2 | Average number of employees not working due to events (weather and IT downtime) | Composite | 2,000 | 2,000 | 2,000 | |
E3 | Average hours missed | Composite | 30 | 30 | 30 | |
E4 | Revenue lost due to lost productivity | E1*E2*E3 | $15,384,000 | $15,384,000 | $15,384,000 | |
E5 | Average industry margin | Composite | 10% | 10% | 10% | |
E6 | Profit impact of lost productivity | D5*D4 | $1,538,400 | $1,538,400 | $1,538,400 | |
E7 | Portion regained with Everbridge | Interviews | 50% | 50% | 50% | |
E8 | Productivity recapture rate | TEI standard | 50% | 50% | 50% | |
Et | Recaptured employee productivity | D6*D7*D8 | $384,600 | $384,600 | $384,600 | |
Risk adjustment | ↓10% | |||||
Etr | Recaptured employee productivity (risk-adjusted) | $346,140 | $346,140 | $346,140 | ||
Three-year total: $1,038,420 | Three-year present value: $860,799 |
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 CEM and later realize additional uses and business opportunities, including:
New and additional capabilities. Interviewees discussed how they would expand their use of the system by adding additional modules to the CEM platform. Two interviewees noted they were looking to add an additional module with Everbridge’s travel risk management solution to the platform.
The global security operations manager for a pharmaceutical firm said, “[Looking at] the travel portion with Everbridge’s acquisition … we’re looking forward to how those two big platforms merge efficiently.” They added they were also looking at Everbridge’s social media and dark web solution, noting, “[With] social media scrubbing and anything that we can alert on especially for executive protection … will be interesting to see how that pans out.”
The security intelligence director at a financial services firm noted they were looking at an additional module with Everbridge’s physical security management solution. They said, “We have a 24-hour alarm monitoring center, which is our security operations, and there may be some value in connecting all of our systems to Control Center [physical security management], which we are looking at.”
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 |
---|---|---|---|---|---|---|---|
Ftr | Subscription fees | $0 | $630,000 | $630,000 | $630,000 | $1,890,000 | $1,566,717 |
Gtr | Implementation costs | $105,000 | $0 | $0 | $0 | $105,000 | $105,000 |
Htr | Maintenance and operations cost | $0 | $55,125 | $55,125 | $55,125 | $165,375 | $137,088 |
Itr | Security team internal training | $25,740 | $5,148 | $5,148 | $5,148 | $41,184 | $38,542 |
Total costs (risk-adjusted) | $130,740 | $690,273 | $690,273 | $690,273 | $2,201,559 | $1,847,347 |
Evidence and data. All the interviewees paid an annual subscription fee for the CEM platform. The amount was based on the solution type, number of assets, and number of users.
Modeling and assumptions. For the composite organization, Forrester assumes:
For , an annual subscription to Everbridge might cost . This is an automated estimate only and does NOT constitute a quote. Please contact Everbridge for detailed pricing specific to .
Risks. Risks that could impact the realization of this cost include the following:
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 $1.6 million.
For , this cost might have a three-year, risk-adjusted PV of .
Ref. | Metric | Source | Initial | Year 1 | Year 2 | Year 3 | |
---|---|---|---|---|---|---|---|
F1 | Subscription fees | Composite | $0 | $600,000 | $600,000 | $600,000 | |
Ft | Subscription fees | F1 | $0 | $600,000 | $600,000 | $600,000 | |
Risk adjustment | ↑5% | ||||||
Ftr | Subscription fees (risk-adjusted) | $0 | $630,000 | $630,000 | $630,000 | ||
Three-year total: $1,890,000 | Three-year present value: $1,566,717 |
Evidence and data. Interviewees described a straightforward setup utilizing professional services from Everbridge. They worked with Everbridge to connect different data feeds and made sure all employees and company assets were connected to the CEM platform.
Modeling and assumptions. For the composite organization, Forrester assumes an initial cost of $100,000 for professional services and implementation fees during implementation.
might incur an initial cost of for professional services and implementation fees during implementation. This is an automated estimate only and does NOT constitute a quote. Please contact Everbridge for detailed pricing specific to .
Risks. Risks that could impact the realization of this cost include the following:
Results. To account for these risks, Forrester adjusted this cost upward by 5%, yielding a three-year, risk-adjusted total PV of $105,000.
For , this cost might have a three-year, risk-adjusted PV of .
Ref. | Metric | Source | Initial | Year 1 | Year 2 | Year 3 | |
---|---|---|---|---|---|---|---|
G1 | Implementation cost | Composite | $100,000 | $0 | $0 | $0 | |
Gt | Implementation costs | G1 | $100,000 | $0 | $0 | $0 | |
Risk adjustment | ↑5% | ||||||
Gtr | Implementation costs (risk-adjusted) | $105,000 | $0 | $0 | $0 | ||
Three-year total: $105,000 | Three-year present value: $105,000 |
Evidence and data. Interviewees described minimal time and effort to maintain and continue operations for the CEM platform. A team member monitored and maintained the functionality of the system, including adding new modules and performs other tasks to ensure the quality of the data going into the system.
Modeling and assumptions. For the composite organization, Forrester assumes:
At , team member(s) might spend 35% of their time on maintenance and operations of the CEM platform.
Risks. Risks that could impact the realization of this cost include the following:
Results. To account for these risks, Forrester adjusted this cost upward by 5%, yielding a three-year, risk-adjusted total PV of $137,000.
For , this cost might have a three-year, risk-adjusted PV of .
Ref. | Metric | Source | Initial | Year 1 | Year 2 | Year 3 | |
---|---|---|---|---|---|---|---|
H1 | Number of users | Composite | 1.00 | 1.00 | 1.00 | 1.00 | |
H2 | Time spent for ongoing management | Composite | 0% | 35% | 35% | 35% | |
H3 | Total hours spent for ongoing management | H1*H2*2080 | 0 | 728 | 728 | 728 | |
Security team member fully loaded annual salary | TEI standard | $72 | $72 | $72 | $72 | ||
Ht | Maintenance and operations cost | H3*H4 | $0 | $52,000 | $52,000 | $52,000 | |
Risk adjustment | ↑5% | ||||||
Htr | Maintenance and operations cost (risk-adjusted) | $55,125 | $55,125 | $55,125 | $55,125 | ||
Three-year total: $165,375 | Three-year present value: $137,088 |
Evidence and data. Interviewees noted that security team members only required some time and effort training with the CEM platform. The teams spent time learning how to use the system through training sessions and then worked with the system to become familiarized with the CEM platform. Interviewees noted ease of use with the system once implemented given the intuitive dashboard and alerts that were focused to criteria important to their organizations.
Modeling and assumptions. For the composite organization, Forrester assumes:
At , member(s) of the security team might initially spend time on training.
At , security analysts might need to be trained in future years due to turnover, etc.
Risks. Risks that could impact the realization of this cost include the following:
Results. To account for these risks, Forrester adjusted this cost upward by 10%, yielding a three-year, risk-adjusted total PV of $38,500.
For , this cost might have a three-year, risk-adjusted PV of .
Ref. | Metric | Source | Initial | Year 1 | Year 2 | Year 3 | |
---|---|---|---|---|---|---|---|
I1 | Number of users | Composite | 10 | 2 | 2 | 2 | |
I2 | Dedicated training hours | Interviews | 16 | 16 | 16 | 16 | |
I3 | On the job training hours | Interviews | 20 | 20 | 20 | 20 | |
I4 | Security analyst fully loaded salary (hourly) | TEI standard | $65 | $65 | $65 | $65 | |
It | Security team internal training | I1*(I2+I3)*I4 | $23,400 | $4,680 | $4,680 | $4,680 | |
Risk adjustment | ↑10% | ||||||
Itr | Security team internal training (risk-adjusted) | $25,740 | $5,148 | $5,148 | $5,148 | ||
Three-year total: $41,184 | Three-year present value: $38,542 |
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 | ($130,740) | ($690,273) | ($690,273) | ($690,273) | ($2,201,559) | ($1,847,347) |
Total benefits | $0 | $3,405,765 | $3,405,765 | $3,405,765 | $10,217,295 | $8,469,634 |
Net benefits | ($130,740) | $2,715,492 | $2,715,492 | $2,715,492 | $8,015,736 | $6,622,287 |
ROI | 358% | |||||
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.
2 Source: “Cost of a Data Breach 2015,” Ponemon Institute, January 2016.
3 Source: Aswath Damodaran, “Margins By Sector (US),” NYU Stern School of Business, January 2023.
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