A Forrester Total Economic Impact™ Study Commissioned By Google, November 2023
Google Workspace is a suite of tools that enables transformation toward a more collaborative and connected workplace culture that empowers employees across all roles with intuitive apps like Gmail, Docs, Sheets, and Meet. Workspace allows employees to accomplish more in a Zero Trust, cloud-native security environment, focusing on what matters most. With Workspace, organizations improve the productivity of both office and frontline workers, enhance security, grow revenue, and drive innovation.
Google Workspace includes tools such as Drive, Gmail, Calendar, Chat, Meet, Docs, Forms, Sheets, Slides, and AppSheet, which come together to provide a collaborative and secure environment that drives efficiency across the entire workforce. The platform supports greater digitization and continual adaptation with an easy-to-use, cloud-native solution. AI-powered features in Workspace help employees save time, remove the burden of routine tasks, and stay safe against malware and phishing attacks.
Google commissioned Forrester Consulting to conduct a Total Economic Impact™ (TEI) study and examine the potential return on investment (ROI) enterprises may realize by deploying Workspace. The purpose of this study is to provide readers with a framework to evaluate the potential financial impact of Workspace on their organizations.1
To better understand the benefits, costs, and risks associated with this investment, Forrester interviewed six representatives at five enterprise organizations with experience using Google Workspace. For the purposes of this study, Forrester aggregated the interviewees’ experiences and combined the results into a single composite organization, which is an organization with 10,000 employees in office roles and 10,000 in frontline roles.
Interviewees said that prior to using Workspace, their organizations used a mix of on-premises and cloud collaboration tools. Office workers who used these legacy tools could not effectively collaborate in real time, hindering productivity and innovation. Frontline workers often lacked access to these tools altogether, leaving them disconnected from their organizations’ larger digitization and modernization efforts, impeding efficiency, collaboration, and access to convenient communication channels. In addition, IT teams struggled with the uncertain security standards of these legacy systems and saw a need for solutions that enhanced their organizations’ security.
After the investment in Workspace, the interviewees saw a more collaborative, productive, and secure workplace. Key results from the investment include improved collaboration, faster searching for and finding information, more efficient workflows and application development, security tool cost savings and IT productivity, increased incremental profit, and a more connected and inclusive work community.
Quantified benefits. Three-year, risk-adjusted present value (PV) quantified benefits for the composite organization include:
Unquantified benefits. Benefits that provide value for the composite organization but are not quantified for this study include:
Costs. Three-year, risk-adjusted PV costs for the composite organization include:
The representative interviews and financial analysis found that a composite organization experiences benefits of $74.3 million over three years versus costs of $17.1 million, adding up to a net present value (NPV) of $57.3 million and an ROI of 336%.
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 Workspace.
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 Workspace can have on an organization.
Interviewed Google stakeholders and Forrester analysts to gather data relative to Workspace.
Interviewed six representatives at five enterprise organizations using Workspace 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 Workspace.
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:
Matthew Carr
Jonny Cook
Role | Industry | Region | Number Of Employees | Revenue | |
---|---|---|---|---|---|
Director of IT | Retail | EMEA | 15,000 | $1.5B | |
Head of IT | Technology | APAC | 20,000 | $3B | |
Head of emerging technologies | Technology | APAC | 20,000 | $3B | |
VP of operations | Healthcare | North America | 35,000 | $7.5B | |
Change management leader | Manufacturing | Global | 200,000 | $60B | |
Senior consultant | Professional services | Global | 600,000 | $30B |
Before their investment in Google Workspace, interviewees noted how their organizations struggled with common challenges using their on-premises and cloud-based legacy solutions, including:
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, 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 generates $4 billion in annual revenue and employs 20,000 employees representing a wide variety of job roles; 10,000 are in office roles and 10,000 are in frontline roles. Before adopting Google Workspace, the composite organization relied on a set of legacy productivity tools that left it struggling with limited collaboration capabilities, time-consuming processes, and less robust security features.
Deployment characteristics. The composite organization adopts Workspace as its primary productivity suite, making it available to all employees. For most frontline workers, it is their first time using an enterprise productivity and collaboration suite at the company. The composite implements Workspace over six months. All 20,000 employees are Workspace users.
Ref. | Benefit | Year 1 | Year 2 | Year 3 | Total | Present Value |
---|---|---|---|---|---|---|
Atr | Improved collaboration | $19,890,000 | $19,890,000 | $19,890,000 | $59,670,000 | $49,463,486 |
Btr | Improved speed of searching for and finding information | $2,652,000 | $2,652,000 | $2,652,000 | $7,956,000 | $6,595,131 |
Ctr | More efficient workflows and decreasing application development time | $3,494,400 | $3,494,400 | $3,494,400 | $10,483,200 | $8,690,056 |
Dtr | Enhanced security resulting in security tool cost savings | $495,000 | $742,500 | $990,000 | $2,227,500 | $1,807,438 |
Etr | Enhanced security resulting in security team and IT team productivity | $254,232 | $254,232 | $254,232 | $762,696 | $632,237 |
Ftr | Increase in incremental profit | $960,000 | $960,000 | $960,000 | $2,880,000 | $2,387,378 |
Gtr | Decommissioned legacy systems | $1,912,500 | $1,912,500 | $1,912,500 | $5,737,500 | $4,756,104 |
Total benefits (risk-adjusted) | $29,658,132 | $29,905,632 | $30,153,132 | $89,716,896 | $74,331,830 |
Evidence and data. All interviewees emphasized that improved collaboration was a top benefit of transitioning to Workspace and the collaborative capabilities of the platform were significantly more robust than those of their legacy solutions. They noted a wide array of improvements, such as AI automation, better and faster communication, greater and easier information sharing, and improved use of data, which were brought by Workspace. These improvements drove collaboration, leading to significant time savings for office and frontline workers alike. The time savings during collaborative activities due to Workspace varied at interviewees’ organizations but was typically 30% and, in some cases, over 50%.
Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite organization:
Risks. The benefit of improved collaboration will vary based on:
Results. To account for these risks, Forrester adjusted this benefit downward by 15%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $49.5 million.
Ref. | Metric | Source | Year 1 | Year 2 | Year 3 | |
---|---|---|---|---|---|---|
A1 | Users in highly collaborative roles | Composite | 10,000 | 10,000 | 10,000 | |
A2 | Time spent each week in collaborative activities using tools (hours) | Composite | 8 | 8 | 8 | |
A3 | Users in intermediately collaborative roles | Composite | 10,000 | 10,000 | 10,000 | |
A4 | Time spent each week in collaborative activities using tools (hours) | Composite | 2 | 2 | 2 | |
A5 | Organizationwide collaborative hours annually | (A1*A2*52)+(A3*A4*52) | 5,200,000 | 5,200,000 | 5,200,000 | |
A6 | Time saved in collaborative activities with Workspace | Interviews | 30% | 30% | 30% | |
A7 | Organizationwide hours saved with Workspace | A5*A6 | 1,560,000 | 1,560,000 | 1,560,000 | |
A8 | Productivity recapture | TEI standard | 50% | 50% | 50% | |
A9 | Average fully burdened hourly salary for an employee | TEI standard | $30 | $30 | $30 | |
At | Improved collaboration | A7*A8*A9 | $23,400,000 | $23,400,000 | $23,400,000 | |
Risk adjustment | ↓15% | |||||
Atr | Improved collaboration (risk-adjusted) | $19,890,000 | $19,890,000 | $19,890,000 | ||
Three-year total: $59,670,000 | Three-year present value: $49,463,486 |
Evidence and data. Workspace made information easily accessible at interviewees’ organizations and this — together with the platform’s advanced search capabilities — allowed individual users to quickly find the files and information they needed. Among interviewees who could quantify this benefit, on average, there was a time savings of 40% when searching for information with Workspace.
Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite organization:
Risks. The benefit of improved speed of searching for and finding information will vary based on:
Results. To account for these risks, Forrester adjusted this benefit downward by 15%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $6.6 million.
Ref. | Metric | Source | Year 1 | Year 2 | Year 3 | |
---|---|---|---|---|---|---|
B1 | Users who regularly search for and find information | Composite | 10,000 | 10,000 | 10,000 | |
B2 | Average time spent per week searching (hours) | Composite | 1 | 1 | 1 | |
B3 | Organizationwide hours spent searching | B1*B2*52 | 520,000 | 520,000 | 520,000 | |
B4 | Time saved in searching for and finding information with Workspace | Interviews | 40% | 40% | 40% | |
B5 | Organizationwide hours saved with Workspace | B3*B4 | 208,000 | 208,000 | 208,000 | |
B6 | Productivity recapture | TEI standard | 50% | 50% | 50% | |
B7 | Average fully burdened hourly salary of an employee | TEI standard | $30 | $30 | $30 | |
Bt | Improved speed of searching for and finding information | B5*B6*B7 | $3,120,000 | $3,120,000 | $3,120,000 | |
Risk adjustment | ↓15% | |||||
Btr | Improved speed of searching for and finding information (risk-adjusted) | $2,652,000 | $2,652,000 | $2,652,000 | ||
Three-year total: $7,956,000 | Three-year present value: $6,595,131 |
Evidence and data. Some interviewees’ organizations included AppSheet as part of their Workspace implementation, greatly increasing the speed of app development. Additionally, as an easy-to-use, no-code platform, AppSheet empowered the end users to build and modify apps. Though AppSheet was used to create apps of all kinds, interviewees highlighted those that automated processes and streamlined workflows. At interviewees’ organizations, AppSheet led to 80% faster app development on average. Moreover, AppSheet and other Workspace apps improved the efficiency of defined workflows by 20%, although this time savings varied significantly based on the use case.
Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite organization:
Risks. The benefit of more efficient workflows and decreasing application development time will vary based on:
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 $8.7 million.
Ref. | Metric | Source | Year 1 | Year 2 | Year 3 | |
---|---|---|---|---|---|---|
C1 | Number of apps developed with Appsheet | Composite | 30 | 30 | 30 | |
C2 | Average hours to develop an app before Appsheet (five FTEs working for six months) | Composite | 5,200 | 5,200 | 5,200 | |
C3 | Hours to develop apps before Appsheet | C1*C2 | 156,000 | 156,000 | 156,000 | |
C4 | Time saved to develop apps with Appsheet | Interviews | 80% | 80% | 80% | |
C5 | Hours saved with Appsheet | C3*C4 | 124,800 | 124,800 | 124,800 | |
C6 | Average fully burdened hourly salary of an employee developing apps | TEI standard | $60 | $60 | $60 | |
C7 | Workflows orchestrated with Workspace | Composite | 10 | 10 | 10 | |
C8 | Average hours spent executing workflows (ten FTEs) | Composite | 20,800 | 20,800 | 20,800 | |
C9 | Total time spent on workflows before Workspace | C7*C8 | 208,000 | 208,000 | 208,000 | |
C10 | Reduction in in time spent on workflows after Workspace | Interviews | 20% | 20% | 20% | |
C11 | Hours saved on workflows with Workspace | Composite | 41,600 | 41,600 | 41,600 | |
C12 | Average fully burdened hourly salary of an employee engaged in workflows | TEI standard | $30 | $30 | $30 | |
C13 | Productivity recapture | TEI standard | 50% | 50% | 50% | |
Ct | More efficient workflows and decreasing application development time | (C5*C6*C13)+ (C11*C12*C13) | $4,368,000 | $4,368,000 | $4,368,000 | |
Risk adjustment | ↓20% | |||||
Ctr | More efficient workflows and decreasing application development time (risk-adjusted) | $3,494,400 | $3,494,400 | $3,494,400 | ||
Three-year total: $10,483,200 | Three-year present value: $8,690,056 |
Evidence and data. All interviewees identified enhanced security as a key value proposition of Workspace. Interviewees’ organizations were less reliant on their third-party antispam, antiphishing, encryption, ransomware, and data loss solutions given the superior security features built into Workspace. In some cases, organizations retired security solutions after adopting Workspace and realized cost savings.
Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite organization:
Risks. The benefit of enhanced security resulting in security tool cost savings will vary based on:
Results. To account for these risks, Forrester adjusted this benefit downward by 10%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $1.8 million.
Ref. | Metric | Source | Year 1 | Year 2 | Year 3 | |
---|---|---|---|---|---|---|
D1 | Decommissioned antiphishing solutions | Interviews | $250,000 | $375,000 | $500,000 | |
D2 | Decommissioned encryption solutions | Interviews | $300,000 | $450,000 | $600,000 | |
Dt | Enhanced security resulting in security tool cost savings | D1+D2 | $550,000 | $825,000 | $1,100,000 | |
Risk adjustment | ↓10% | |||||
Dtr | Enhanced security resulting in security tool cost savings (risk-adjusted) | $495,000 | $742,500 | $990,000 | ||
Three-year total: $2,227,500 | Three-year present value: $1,807,438 |
Evidence and data. IT teams at interviewees’ organizations found it easy to administer Workspace as it was straightforward to create and manage accounts, integrate the platform with their active directories, onboard and offboard staff members, and flag problem accounts. Additionally, single sign-on (SSO) provided simplicity for IT as well as end users, and a lack of outages prevented downtime. While it was not possible for interviewees to quantify all of these benefits, interviewees did calculate a 90% reduction in the time needed to set up new workstations and a 20% reduction in tickets on average.
Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite organization:
Risks. The benefit of enhanced security resulting in security team and IT team productivity will vary based on:
Results. To account for these risks, Forrester adjusted this benefit downward by 10%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $632,200.
Ref. | Metric | Source | Year 1 | Year 2 | Year 3 | |
---|---|---|---|---|---|---|
E1 | Number of employee work devices newly configured each year | Composite | 5,000 | 5,000 | 5,000 | |
E2 | Average time to configure devices with legacy product (hours) | Interviews | 2 | 2 | 2 | |
E3 | Reduction in time to configure with Workspace | Interviews | 90% | 90% | 90% | |
E4 | Hours saved to configure devices with Workspace | E1*E2*E3 | 9,000 | 9,000 | 9,000 | |
E5 | Time dedicated to internal help desk tickets related to legacy product | Interviews | 2,080 | 2,080 | 2,080 | |
E6 | Reduction in tickets with Workspace | Interviews | 20% | 20% | 20% | |
E7 | Hours saved due to reduction in tickets with Workspace | E5*E6 | 416 | 416 | 416 | |
E8 | Total time saved with Workspace (hours) | E4+E7 | 9,416 | 9,416 | 9,416 | |
E9 | Average fully burdened hourly salary | TEI standard | $30 | $30 | $30 | |
Et | Enhanced security resulting in security team and IT team productivity | E8*E9 | $282,480 | $282,480 | $282,480 | |
Risk adjustment | ↓10% | |||||
Etr | Enhanced security resulting in security team and IT team productivity (risk-adjusted) | $254,232 | $254,232 | $254,232 | ||
Three-year total: $762,696 | Three-year present value: $632,237 |
Evidence and data. Multiple interviewees said that Workspace supported revenue generation at their organizations, noting that Workspace facilitated data analysis and inventory management, led to better customer service, and enabled innovation. One interviewee was able to quantify the revenue uplift, estimating that certain revenue streams grew by between 1% and 2% due to Workspace.
Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite organization:
Risks. The benefit of an increase in incremental profit will vary based on:
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 $2.4 million.
Ref. | Metric | Source | Year 1 | Year 2 | Year 3 | |
---|---|---|---|---|---|---|
F1 | Total revenue | Composite | 4,000,000,000 | 4,000,000,000 | 4,000,000,000 | |
F2 | Percentage of revenue affected by Workspace | Interviews | 20% | 20% | 20% | |
F3 | Dollar amount of revenue stream affected (before Workspace) | F1*F2 | $800,000,000 | $800,000,000 | $800,000,000 | |
F4 | Increase in this revenue stream due to Workspace | Interviews | 1.5% | 1.5% | 1.5% | |
F5 | Revenue uplift due to Workspace | F3*F4 | $12,000,000 | $12,000,000 | $12,000,000 | |
F6 | Operating margin | Composite | 10% | 10% | 10% | |
Ft | Increase in incremental profit | F5*F6 | $1,200,000 | $1,200,000 | $1,200,000 | |
Risk adjustment | ↓20% | |||||
Ftr | Increase in incremental profit (risk-adjusted) | $960,000 | $960,000 | $960,000 | ||
Three-year total: $2,880,000 | Three-year present value: $2,387,378 |
Evidence and data. Upon adoption, Workspace served as the primary productivity suite for employees at interviewees’ organizations. Interviewees’ organizations thus decommissioned various legacy productivity tools that were replaced by Workspace and saved costs.
Modeling and assumptions. Based on the interviews, Forrester assumes that the composite organization decommissions legacy systems after implementing Workspace, saving $2.25 million dollars annually.
Risks. The benefit of decommissioned legacy systems will vary based on:
Results. To account for these risks, Forrester adjusted this benefit downward by 15%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $4.8 million.
Ref. | Metric | Source | Year 1 | Year 2 | Year 3 | |
---|---|---|---|---|---|---|
G1 | Cost of legacy systems | Interviews | $2,250,000 | $2,250,000 | $2,250,000 | |
Gt | Decommissioned legacy systems | G1 | $2,250,000 | $2,250,000 | $2,250,000 | |
Risk adjustment | ↓15% | |||||
Gtr | Decommissioned legacy systems (risk-adjusted) | $1,912,500 | $1,912,500 | $1,912,500 | ||
Three-year total: $5,737,500 | Three-year present value: $4,756,104 |
Interviewees mentioned the following additional benefits that their organizations experienced but were not able to quantify:
Supported a connected and inclusive work community. Interviewees offered several examples of Workspace strengthening connection and inclusion at their organizations. For example, the VP of operations in healthcare noted that workers communicated with ease on Chat, and phone calls were replaced by Meet, which is more personal. They concluded: “Culturally, that’s been a major shift. … Connecting on a less formal basis with managers and coworkers engenders some cultural significance.”
Interviewees noted that Chat Spaces empowered various communities like musicians and coders to come together during the COVID-19 pandemic and has continued since then. Some organizations used Forms and Sheets to poll frontline workers. The change management leader in manufacturing noted several features in Workspace, such as captions in Meet, support for Braille keyboards, and inclusive emojis, and added, “On top of that, inclusivity requires silos to be broken down, which is happening as a result of Workspace.”
Improved employee experience and morale. Interviewees said the increased connection also improved employee morale. Providing effective and modern tools also enhanced the employee experience. For instance, the director of IT in retail reported that employees said they work smarter and faster with Workspace. Some interviewees said that, while they could not measure it, they believed Workspace probably helped attrition.
Frontline and office workers often used Workspace apps in their private lives already. Similarly, the senior consultant in professional services noted broad familiarity with the products, including younger generations: “On the personal level, employees heavily use Google products. That makes it much simpler for them to learn. Also, most of the colleges and universities are using Google products. For the next generation who are joining, it’s a familiar platform. That’s an advantage.”
Improved onboarding and training for HR. Interviewees’ organizations used Workspace to reduce the time to onboard by adding greater digitization to the process. With a Google account, new employees could receive the welcome pack digitally and sign and return documents. This saved administrative time for both new employees and HR.
Some interviewees noted that Workspace unlocked training opportunities, particularly for frontline workers. Interviewees used Meet for live events, noting the Jamboard and whiteboard functionalities, while Gmail was used to reach frontline workers better and direct them to training courses. The director of IT in retail added: “Thanks to the Google ID, the frontline workers have the chance to enter a ton of different platforms. We film videos showing how to make and prepare [products and services], maintain equipment, and so on. The content definitely helps the people feel more empowered to do their job.”
The value of flexibility is unique to each customer. There are multiple scenarios in which a customer might implement Workspace and later realize additional uses and business opportunities, including:
Enabling future cultural transformation. Interviewees said Workspace positioned their organizations for continued cultural and digital transformation into the future. The head of IT in technology said that Workspace lived up to the expectation of helping drive cultural transformation and that it inspired their attitude to solutions going forward as they sought those that were like Workspace.
The head of emerging technologies at the same company said, “Workspace is really part of how we were able to transition [the company] to more digital collaboration.” Similarly, the change management leader in manufacturing said, “From a cultural transformation perspective, Workspace has been a key enabler.”
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 |
---|---|---|---|---|---|---|---|
Htr | Subscription costs | $0 | $5,117,500 | $5,117,500 | $5,117,500 | $15,352,500 | $12,726,465 |
Itr | Internal labor costs | $3,312,000 | $414,000 | $414,000 | $414,000 | $4,554,000 | $4,341,557 |
Total costs (risk adjusted) |
$3,312,000 | $5,531,500 | $5,531,500 | $5,531,500 | $19,906,500 | $17,068,022 |
Evidence and data. Interviewees’ organizations paid Google subscription costs for the use of Workspace. These subscription fees were based on factors such as the number of users, the scope of the implementation, and the inclusion of any add-ons like AppSheet.
Modeling and assumptions. To model this cost for the composite organization, Forrester assumes:
Risks. The subscription cost will vary based on:
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 $12.7 million.
Ref. | Metric | Source | Initial | Year 1 | Year 2 | Year 3 |
---|---|---|---|---|---|---|
H1 | Subscription costs | Interviews | $0 | $4,450,000 | $4,450,000 | $4,450,000 |
Ht | Subscription costs | H1 | $0 | $4,450,000 | $4,450,000 | $4,450,000 |
Risk adjustment | ↑15% | |||||
Htr | Subscription costs (risk-adjusted) | $0 | $5,117,500 | $5,117,500 | $5,117,500 | |
Three-year total: $15,352,500 | Three-year present value: $12,726,465 |
Evidence and data. At interviewees’ organizations, a small group of employees dedicated some of their time to implementing and managing Workspace, while users spent a few hours getting to know the platform.
Modeling and assumptions. To model this cost for the composite organization, Forrester assumes:
Risks. The cost of internal labor will vary based on:
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 $4.3 million.
Ref. | Metric | Source | Initial | Year 1 | Year 2 | Year 3 |
---|---|---|---|---|---|---|
I1 | FTEs dedicated to implementation and ongoing management | Interviews | 8 | 3 | 3 | 3 |
I2 | Average fully burdened annual salary of FTE | Composite | $120,000 | $120,000 | $120,000 | $120,000 |
I3 | Length of implementation (months) | Interviews | 6 | |||
I4 | Users | Composite | 20,000 | |||
I5 | Average user time spent learning and getting comfortable with Workspace (hours) | Interviews | 4 | |||
I6 | Average fully burdened hourly salary of a user | Composite | $30 | |||
It | Internal labor costs | (I1*I2*I3/12)+(I4*I5*I6)+(I1*I2) | $2,880,000 | $360,000 | $360,000 | $360,000 |
Risk adjustment | ↑15% | |||||
Itr | Internal labor costs (risk-adjusted) | $3,312,000 | $414,000 | $414,000 | $414,000 | |
Three-year total: $4,554,000 | Three-year present value: $4,341,557 |
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 | ($3,312,000) | ($5,531,500) | ($5,531,500) | ($5,531,500) | ($19,906,500) | ($17,068,022) |
Total benefits | $0 | $29,658,132 | $29,905,632 | $30,153,132 | $89,716,896 | $74,331,830 |
Net benefits | ($3,312,000) | $24,126,632 | $24,374,132 | $24,621,632 | $69,810,396 | $57,263,808 |
ROI | 336% | |||||
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 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.
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Behavioral information collected by our web analytics vendor is used to analyze data pertaining to visitor trends, plan website enhancements, and measure overall website effectiveness. We may also use cookies or web beacons to help us offer you products, programs, or services that may be of interest to you and to deliver relevant advertising. We may use third-party advertising companies to help tailor website content to users or to serve ads on our behalf. These companies may also employ cookies and web beacons to measure advertising effectiveness.
Please accept cookies and the collection of behavioral information to receive full functionality and enhance your experience. If you decline cookies, some features of the website may not function normally.
Please see our
Privacy Policy for more information.