A Forrester Total Economic Impact™ Study Commissioned By Google, January 2024
Chromebooks have become increasingly popular in educational settings. Interviewed educational leaders attributed this popularity to Chromebooks’ affordability, longevity, quick startup, and extended battery life. When used with Google Workspace for Education Fundamentals, educators received a combination of tools and features that can be instrumental in transforming K-12 education. Interviewees across the world found that leveraging this platform helped improve student educational outcomes, save teachers time, lower hardware costs, reduce IT management, and enhance the security of their hardware environments.
Chromebooks provide educational organizations with a cloud-native and easy-to-deploy alternative to traditional laptops and tablets. Additionally, qualifying educational institutions receive free access to Google Workspace for Education Fundamentals for their students and teachers, which provides a comprehensive collaboration suite and a robust academic management system. The two solutions complement each other as a cloud-based platform that allows for broader technological access for students, teachers, and staff across school systems.
Google commissioned Forrester Consulting to conduct a Total Economic Impact™ (TEI) study and examine the potential return on investment (ROI) organizations may realize by deploying Chromebooks in education.1 The purpose of this study is to provide readers with a framework to evaluate the potential financial impact of Chromebooks in education.
To better understand the benefits, costs, and risks associated with this investment, Forrester interviewed 18 representatives at nine organizations with experience using Chromebooks in education. For the purposes of this study, Forrester aggregated the interviewees’ experiences and combined the results into a single composite organization that is an educational group with 30,000 elementary students and 1,200 teachers across several individual schools.
Interviewees said that prior to using Chromebooks, teachers struggled to adapt technology in the classrooms, IT groups were burdened with significant costs to deploy and manage devices, students had class time reduced while waiting for devices to startup each day, and socioeconomically disadvantaged students missed the educational benefits of having their own dedicated device. Prior attempts to add dedicated devices to the classroom yielded limited success, leaving interviewees’ organizations with frustrated teachers, lower student time on task, and wasted IT resources.
After the investment in Chromebooks, the interviewees described improved educational outcomes, organizational security, and cost savings. Key results from the investment include saved student and teacher time, significantly reduced IT burden, more secure environments, and less need for third-party accessibility tools and services.
Quantified financial benefits. Five-year, risk-adjusted present value (PV) quantified benefits for the composite organization include:
“Chromebooks are quite a bit less expensive. We usually get student devices for between $200 and $250, but it's almost double for [our legacy devices].”
District edtech coordinator, K-12, North America
Quantified educational outcomes. The composite school also benefits from improved educational outcomes that are quantified in terms of students’ and teachers’ time on task.
Unquantified benefits. Benefits that provide value for the composite organization but are not quantified for this study include:
Costs. Five-year, risk-adjusted PV costs for the composite organization include:
“There isn’t a way that Chromebooks costs more than [our legacy devices]. It's a total savings.”
District edtech coordinator, K-12, North America
The representative interviews and financial analysis found that a composite organization experiences benefits of $35.12 million over three years versus costs of $10.66 million, adding up to a net present value (NPV) of $24.45 million and an ROI of 229%.
Want a deep dive into a specific region or product offering? Read more in the spotlights:
Return on investment (ROI):
IT time savings
Annual teacher time savings
Annual student time savings
From the information provided in the interviews, Forrester constructed a Total Economic Impact™ framework for those organizations considering an investment Chromebooks in education.
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 Chromebooks in education can have on an organization.
Interviewed Google stakeholders and Forrester analysts to gather data relative to Chromebooks in education.
Interviewed 18 representatives at nine organizations using Chromebooks in education 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 Google 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 Chromebooks in education.
Google 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.
Google provided the customer names for the interviews but did not participate in the interviews.
Consulting Team:
Chris Layton
Tony Lam
Role | Industry | Region | Number of students |
---|---|---|---|
Board of education director, Board of education chief manager | K-12 | APAC | 14,000 |
Board of education director | K-12 | APAC | 2,000 |
Vice director | K-12 | APAC | <1,000 |
Director of strategic partnerships, Director of digital teaching and learning | K-12 | EMEA | 4,500 |
IT administrator, IT manager | K-12 | EMEA | 1,800 |
IT superintendent, Educational technology officer, Leader of technology policy in schools | K-12 | Latin America | 400,000 |
Secretary of education, Operational director, Director of new projects | K-12 | Latin America | >1,000,000 |
District edtech coordinator, Edtech project manager | K-12 | North America | 13,000 |
Director of information and instructional technology, Technology integration specialist | K-12 | North America | 19,000 |
Prior to investing in Chromebooks and adopting Google Workspace for Education Fundamentals, school systems struggled with high device costs, overburdened IT groups, and inefficient use of class time.
The interviewees noted how their organizations struggled with common challenges, including:
“The biggest issue with [legacy devices] is battery life. The batteries go bad quickly and a teacher cannot make it through the day without needing to plug their device in. The longevity of the hardware, ease of user interface, and ease of management of the devices, along with cost, are big reasons why we transitioned our staff members from [legacy] to Chrome.”
Edtech project manager, K-12, EMEA
“One of the biggest gaps for our students is not all families have access to computers. Chromebooks give us the ability to provide computer access for students at home. It bridges that gap, so everybody has equal access. That's a huge thing in our district.”
Disctrict edtech coordinator, K-12, North America
“[Legacy devices] are a nightmare to manage. We probably spent more time managing 100 [legacy devices] than we do 4,000 Chromebooks.”
Director of strategic partnerships, K-12, EMEA
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 18 interviewees and their nine 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 educational organization serves 30,000 K-12 students across multiple schools and employs 1,200 teachers along with 60 IT staff responsible for student and teacher endpoint devices. Every student and teacher is given their own legacy device. Student devices are replaced once every three years on average. Teacher devices last longer and are replaced at an average interval of once every four years.
Deployment characteristics. The composite educational organization begins replacing legacy devices with Chromebooks in Year 1, with a third of all student and teacher devices replaced each year until all students and teachers have Chromebooks in Year 3.
Ref. | Benefit | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | Total | Present Value |
---|---|---|---|---|---|---|---|---|
Atr | Avoided legacy hardware and peripheral costs | $7,390,000 | $7,390,000 | $7,390,000 | $7,390,000 | $7,390,000 | $36,950,000 | $28,013,914 |
Btr | Easier management for Chromebook environment | $428,868 | $870,732 | $1,299,600 | $1,299,600 | $1,299,600 | $5,198,400 | $3,780,496 |
Ctr | Reduced need for third-party accessibility tools and services | $21,038 | $84,150 | $189,338 | $189,338 | $189,338 | $673,200 | $477,806 |
Dtr | Enhanced security of Chromebook and Google Workspace for Education Fundamentals | $322,575 | $654,925 | $977,500 | $977,500 | $977,500 | $3,910,000 | $2,843,517 |
Total benefits (risk-adjusted) | $8,162,481 | $8,999,807 | $9,856,438 | $9,856,438 | $9,856,438 | $46,731,600 | $35,115,733 |
Evidence and data. All interviewees found that Chromebooks cost their organizations less per device than the legacy devices they had either used in the past or had compared in their own business case. While the exact device price point varied by educational group, Chromebooks were found to be at most half as expensive as a comparable legacy device for students and teachers alike.
Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite organization:
Risks. Forrester recognizes that these results may not be representative of all experiences and that the impact may vary depending on several factors:
Results. To account for these risks, Forrester adjusted this benefit downward by 0%, yielding a five-year, risk-adjusted total PV (discounted at 10%) of $28 million.
50%
Device cost savings per Chromebook
“There really is no performance issue with our five- to six-year-old Chromebooks. They just work. But on the flipside, we can't use [legacy] devices after 4-5 years. They don't have enough RAM anymore, and new programs won't work as well.”
Director of information and instructional technology, K-12, North America
Ref. | Metric | Source | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
---|---|---|---|---|---|---|---|---|
A1 | Enrolled students | Composite | 30,000 | 30,000 | 30,000 | 30,000 | 30,000 | |
A2 | Replacement rate of legacy student devices in years | Composite | 3.0 | 3.0 | 3.0 | 3.0 | 3.0 | |
A3 | Additional legacy student devices for spares and student transfers | A1*5% | 1,500 | 1,500 | 1,500 | 1,500 | 1,500 | |
A4 | Legacy student devices avoided replacing | (A1/A2)+A3 | 11,500 | 11,500 | 11,500 | 11,500 | 11,500 | |
A5 | Cost per legacy student device | Interviews | $600 | $600 | $600 | $600 | $600 | |
A6 | Average cost of accessories for legacy student device | Interviews | $10 | $10 | $10 | $10 | $10 | |
A7 | Subtotal: Legacy student device hardware | A4*(A5+A6) | $7,015,000 | $7,015,000 | $7,015,000 | $7,015,000 | $7,015,000 | |
A8 | Number of teachers | Composite | 1,200 | 1,200 | 1,200 | 1,200 | 1,200 | |
A9 | Replacement rate of teacher legacy devices in years | Interviews | 4.0 | 4.0 | 4.0 | 4.0 | 4.0 | |
A10 | Cost of legacy teacher device | Interviews | $1,250 | $1,250 | $1,250 | $1,250 | $1,250 | |
A11 | Subtotal: Legacy teacher hardware | A8/A9*A10 | $375,000 | $375,000 | $375,000 | $375,000 | $375,000 | |
At | Avoided legacy hardware and peripheral costs | A7+A11 | $7,390,000 | $7,390,000 | $7,390,000 | $7,390,000 | $7,390,000 | |
Risk adjustment | 0% | |||||||
Atr | Avoided legacy hardware and peripheral costs (risk-adjusted) | $7,390,000 | $7,390,000 | $7,390,000 | $7,390,000 | $7,390,000 | ||
Five-year total: $36,950,000 | Five-year present value: $28,013,914 |
Evidence and data. Chromebooks were significantly easier for IT groups to deploy and manage because much of the labor was automated and performed at scale through Google’s ChromeOS device management service. The saved labor, software, and hardware resources could instead be focused on improving the school’s environment and completing new initiatives instead of basic management and maintenance of endpoint devices.
Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite organization:
Risks. Forrester recognizes that these results may not be representative of all experiences and that the impact may vary depending on several factors:
Results. To account for these risks, Forrester adjusted this benefit downward by 5%, yielding a five-year, risk-adjusted total PV (discounted at 10%) of $3.8 million.
76%
IT time saved supporting Chromebooks
“When a [legacy] device goes down, we have to try to recover and then reimage. But for Chromebook, any teacher can do a hard reset in two seconds. It's super simple and it's minutes instead of an hour.”
District edtech coordinator, K-12, North America
Ref. | Metric | Source | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
---|---|---|---|---|---|---|---|---|
B1 | Number of IT staff with primary responsibility for legacy student and teacher devices | Composite | 25 | 25 | 25 | 25 | 25 | |
B2 | IT time saved supporting Chromebooks | Interviews | 76% | 76% | 76% | 76% | 76% | |
B3 | Number of IT staff with primary responsibility for student and teacher Chromebooks | B1*(1-B2) | 6 | 6 | 6 | 6 | 6 | |
B4 | Percent of students using Chromebooks (rounded) | 1/A2, aggregating previous years until 100% | 33% | 67% | 100% | 100% | 100% | |
B5 | IT support staff fully burdened salary | TEI standard | $72,000 | $72,000 | $72,000 | $72,000 | $72,000 | |
Bt | Easier management for Chromebook environment | B1*B2*B4*B5 | $451,440 | $916,560 | $1,368,000 | $1,368,000 | $1,368,000 | |
Risk adjustment | ↓5% | |||||||
Btr | Easier management for Chromebook environment (risk-adjusted) | $428,868 | $870,732 | $1,299,600 | $1,299,600 | $1,299,600 | ||
Five-year total: $5,198,400 | Five-year present value: $3,780,496 |
Evidence and data. In addition to saving money on the initial purchase of devices, school systems were able to reduce spend on third-party services and accessibility tools by deploying Chromebooks.
Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite organization:
Risks. Forrester recognizes that these results may not be representative of all experiences and that the impact may vary depending on several factors:
Results. To account for these risks, Forrester adjusted this benefit downward by 15%, yielding a five-year, risk-adjusted total PV (discounted at 10%) of $478,000.
Ref. | Metric | Source | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
---|---|---|---|---|---|---|---|---|
C1 | Number of students using Chromebooks | A1*B3 | 10,000 | 20,000 | 30,000 | 30,000 | 30,000 | |
C2 | Percentage of students who require third-party accessibility tools and services | Composite | 15% | 15% | 15% | 15% | 15% | |
C3 | Cost of accessibility tools and services per student | Interviews | $150 | $150 | $150 | $150 | $150 | |
C4 | Reduction in students who require additional accessibility tools and services due to built-in accessibility tools in Chromebooks | Interviews | 11% | 22% | 33% | 33% | 33% | |
Ct | Reduced need for third-party accessibility tools and services | C1*C2*C3*C4 | $24,750 | $99,000 | $222,750 | $222,750 | $222,750 | |
Risk adjustment | ↓15% | |||||||
Ctr | Reduced need for third-party accessibility tools and services (risk-adjusted) | $21,038 | $84,150 | $189,338 | $189,338 | $189,338 | ||
Five-year total: $673,200 | Five-year present value: $477,806 |
33%
Reduction in students requiring additional accessibility tools
“We have a large second-language population, and those students would use the features right away to communicate with teachers when we started giving them Chromebooks. Then we started using [Workspace for Education Fundamentals], and it would auto translate for the parents as well. It's just really made it easier for our students, parents, and teachers to communicate.”
District edtech coordinator, K-12, North America
Evidence and data. Interviewed IT leadership found that the number of security incidents and breaches their district experienced fell after migration to Chromebooks. This was attributed to Chromebook’s cloud-based OS and built-in security features from Google.
Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite organization:
Risks. Forrester recognizes that these results may not be representative of all experiences and that the impact may vary depending on several factors:
Results. To account for these risks, Forrester adjusted this benefit downward by 15%, yielding a five-year, risk-adjusted total PV (discounted at 10%) of $2.8 million.
Ref. | Metric | Source | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
---|---|---|---|---|---|---|---|---|
D1 | Expected annualized cost of ransomware attacks on legacy student and teacher devices | Composite | $1,150,000 | $1,150,000 | $1,150,000 | $1,150,000 | $1,150,000 | |
D2 | Reduction in successful ransomware attacks on student and teacher devices | Interviews | 100% | 100% | 100% | 100% | 100% | |
D3 | Percent of students and teachers using Chromebooks | B3 | 33% | 67% | 100% | 100% | 100% | |
Dt | Enhanced security of Chromebook and Google Workspace for Education Fundamentals | D1*D2*D3 | $379,500 | $770,500 | $1,150,000 | $1,150,000 | $1,150,000 | |
Risk adjustment | ↓15% | |||||||
Dtr | Enhanced security of Chromebook and Google Workspace for Education Fundamentals (risk-adjusted) | $322,575 | $654,925 | $977,500 | $977,500 | $977,500 | ||
Five-year total: $3,910,000 | Five-year present value: $2,843,517 |
100%
Reduction in successful ransomware attacks
“We haven't had a virus, ransomware, or malware attack since we've moved to Chromebook, so that's really a big plus for us.”
IT manager, K-12, EMEA
Interviewees mentioned their organizations experienced the following quantified educational outcomes:
Evidence and data. Of upmost importance to interviewed educational leaders was student outcomes and how Chromebook and Google Workspace for Education Fundamentals impacted student learning and time on task. Interviewees shared that giving students their own individual Chromebooks enabled access to a wide range of powerful tools. When teachers properly implemented the devices they dramatically improved the classroom experience.
Modeling and assumptions. Based on the interviews, Forrester assumes the following about improved time on task for students:
Ref. | Metric | Source | Savings |
---|---|---|---|
X1 | Time saved on device startup (minutes per week) | Interviews | 20 |
X2 | Time saved on device updates (minutes per week) | Interviews | 5 |
X3 | Time saved on collaboration and assignment work (minutes per week) | Interviews | 30 |
X4 | Time recaptured | Composite | 50% |
X5 | Improved student time on task (hours per week, rounded) | (X1+X2+X3)*X4/60 minutes | 0.46 |
Xt | Improved student time on task (hours per year, rounded) | X5*40 weeks | 18 |
Evidence and data. Another top priority for interviewed educational leaders was improving the efficiency and work-life balance of teachers, who often carried heavy workloads and could struggle to meet all of their students’ needs.
Modeling and assumptions. Based on the interviews, Forrester assumes the following about saved labor for teachers:
Ref. | Metric | Source | Savings |
---|---|---|---|
Y1 | Time saved on device startup (minutes per week) | Interviews | 20 |
Y2 | Time saved on device updates (minutes per week) | Interviews | 5 |
Y3 | Time saved on parent communication (minutes per week) | Interviews | 15 |
Y4 | Time saved on lesson preparation (minutes per week) | Interviews | 45 |
Y5 | Time recaptured | Composite | 75% |
Y6 | Reduced teacher labor (hours per week, rounded) | (Y1+Y2+Y3+Y4)*Y5/60 minutes | 1.06 |
Yt | Improved teacher labor (hours per year, rounded) | Y6*40 weeks | 42 |
Interviewees mentioned the following additional benefits that their organizations experienced but were not able to quantify:
“Early in our adoption, I remember one of my former students who struggled with a learning disability stated how the Chromebook allowed him to feel like every other student. This left a lasting impression on me and has been one of the reasons we have not shifted to a BYOD [bring-your-own-device] model.”
District edtech coordinator, K-12, North America
70%
Student growth attributable to Chromebooks
“Dare to take the leap to Google. In the end, it provides organizations with a very pleasant environment that has benefits on all sides for students, staff, management, and your budget."
IT manager, K-12, EMEA
The value of flexibility is unique to each customer. There are multiple scenarios in which a customer might implement Chromebooks in education 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).
“It almost sounds like we're paid by Google to say what we do about Chromebook, but we're in a high-stress environment and we're passionate about helping kids who are really struggling. So, when we find tools that help us help those kids, you almost can't not talk about it.”
Director of information and instructional technology, K-12, North America
Ref. | Cost | Initial | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | Total | Present Value |
---|---|---|---|---|---|---|---|---|---|
Etr | Chromebook costs | $0 | $3,670,000 | $3,670,000 | $3,670,000 | $450,000 | $450,000 | $11,910,000 | $9,713,517 |
Ftr | Labor for improved student and teacher outcomes | $316,800 | $213,840 | $178,200 | $142,560 | $142,560 | $142,560 | $1,136,520 | $951,469 |
Total costs (risk-adjusted) | $316,800 | $3,883,840 | $3,848,200 | $3,812,560 | $592,560 | $592,560 | $13,046,520 | $10,664,986 |
Evidence and data. Interviewees’ districts that moved from legacy devices to Chromebooks had the cost of buying Chromebooks devices, even if they were less expensive than legacy devices. After initial pilot tests, schools often replaced legacy devices with Chromebooks in large numbers so that all students and teachers were using Chromebooks within two or three years.
Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite organization:
Risks. Forrester recognizes that these results may not be representative of all experiences and that the impact may vary depending on several factors:
Results. To account for these risks, Forrester adjusted this cost upward by 0%, yielding a five-year, risk-adjusted total PV (discounted at 10%) of $9.9 million.
“The TCO [total cost of ownership] of Chromebook is lower than [our legacy OS]. Setup for Chromebook is by far the fastest for our employees, and device startup time is by far the fastest for our students. Therefore, the performance is much better compared to other operating systems.”
Board of education director, K-12, APAC
Ref. | Metric | Source | Initial | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
---|---|---|---|---|---|---|---|---|---|
E1 | Number of students using Chromebooks | C1 | 0 | 10,000 | 20,000 | 30,000 | 30,000 | 30,000 | |
E2 | Number of students migrated to Chromebooks | Increase in E1 | 0 | 10,000 | 10,000 | 10,000 | 0 | 0 | |
E3 | Additional Chromebooks for spares and new student transfers | A3 | 0 | 1,500 | 1,500 | 1,500 | 1,500 | 1,500 | |
E4 | Cost of student Chromebook | Interviews | $300 | $300 | $300 | $300 | $300 | $300 | |
E5 | Subtotal: Student Chromebook costs | (E2+E3)*E4 | $0 | $3,450,000 | $3,450,000 | $3,450,000 | $450,000 | $450,000 | |
E6 | Percent of teachers using Chromebooks (the same as students) | B3 | 0% | 33% | 67% | 100% | 100% | 100% | |
E7 | Number of teachers using Chromebooks (rounded to hundreds) | A8*E6 | 0 | 400 | 800 | 1,200 | 1,200 | 1,200 | |
E8 | Number of teachers migrated to Chromebooks | Increase in E7 | 0 | 400 | 400 | 400 | 0 | 0 | |
E9 | Cost of teacher Chromebook Pluses | Interviews | $550 | $550 | $550 | $550 | $550 | $550 | |
E10 | Subtotal: Teacher Chromebook Plus costs | E8*E9 | $0 | $220,000 | $220,000 | $220,000 | $0 | $0 | |
Et | Chromebook costs | E5+E10 | $0 | $3,670,000 | $3,670,000 | $3,670,000 | $450,000 | $450,000 | |
Risk adjustment | 0% | ||||||||
Etr | Chromebook costs (risk-adjusted) | $0 | $3,670,000 | $3,670,000 | $3,670,000 | $450,000 | $450,000 | ||
Five-year total: $11,910,000 | Five-year present value: $9,713,517 |
Evidence and data. In order to receive the greatest benefit of Chromebook and Google Workspace for Education Fundamentals, and shorten the adoption timeline, educational organizations allocated teachers and IT staff to train other teachers and staff on best practices for incorporating into classroom environments.
Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite organization:
Risks. Forrester recognizes that these results may not be representative of all experiences and that the impact may vary depending on several factors:
Results. To account for these risks, Forrester adjusted this cost upward by 10%, yielding a five-year, risk-adjusted total PV (discounted at 10%) of $951,000.
“The switch from [our legacy OS] has not been complicated at all because the Google environment Is very intuitive and Is similar In some ways to the programs we had been using before. So, the migration from one system to the other has generally been flawless.”
IT manager, K-12, EMEA
Ref. | Metric | Source | Initial | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
---|---|---|---|---|---|---|---|---|---|
F1 | IT staff and teachers reallocated to incorporate Chromebook best practices into classrooms | Interviews | 12 | 6 | 6 | 6 | 6 | 6 | |
F2 | Percentage of time spent on training and incorporating best practices | Interviews | 100% | 60% | 50% | 40% | 40% | 40% | |
F3 | IT support staff and teacher fully burdened salary | TEI standard | $72,000 | $72,000 | $72,000 | $72,000 | $72,000 | $72,000 | |
F4 | Months of year spent on integration and training | Interviews | 4 | 9 | 9 | 9 | 9 | 9 | |
Ft | Labor for improved student and teacher outcomes | F1*F2*F3*F4/12 months | $288,000 | $194,400 | $162,000 | $129,600 | $129,600 | $129,600 | |
Risk adjustment | ↑10% | ||||||||
Ftr | Labor for improved student and teacher outcomes (risk-adjusted) | $316,800 | $213,840 | $178,200 | $142,560 | $142,560 | $142,560 | ||
Five-year total: $1,136,520 | Five-year present value: $951,469 |
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 | Year 4 | Year 5 | Total | Present Value | |
---|---|---|---|---|---|---|---|---|
Total costs | ($316,800) | ($3,883,840) | ($3,848,200) | ($3,812,560) | ($592,560) | ($592,560) | ($13,046,520) | ($10,664,986) |
Total benefits | $0 | $8,162,481 | $8,999,807 | $9,856,438 | $9,856,438 | $9,856,438 | $46,731,600 | $35,115,733 |
Net benefits | ($316,800) | $4,278,641 | $5,151,607 | $6,043,878 | $9,263,878 | $9,263,878 | $33,685,080 | $24,450,747 |
ROI | 229% | |||||||
Payback | <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
“Improve Your Threat Protection Efficacy Using Built-In OS Security,” Forrester Research, Inc., December 2, 2020.
Online Resources
More information about edtech is available at valueedtech.org
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: “The State of Chromebooks, 2022,” Forrester Research, Inc., March 11, 2022.
3 Source: “The Future of Employee Computing” Forrester Research, Inc., August 2, 2021.
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© 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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