A Forrester Total Economic Impact™ Study Commissioned By Microsoft, March 2024
Organizations today face significant challenges in providing collaborative and engaging environments for their hybrid workforces. Employers and employees alike have higher expectations for offices, which serve as hubs for collaboration both in-person and with remote participants. In this new, dynamic, and flexible environment, they require solutions that enable them to communicate with their customers and colleagues in a way that drives actionability of meetings. Furthermore, they require tools that promote sustained engagement that makes everyone a first-class citizen, whether they are in the office or participating from a remote location. Technical issues and disruptions cannot be accepted in this new world. Leaders desire richer conference room facilities that empower collaboration, productivity, and culture-building. With AI transformation top of mind with customers, these leaders also are looking into their organizations’ conference and meeting spaces for ways AI can change collaboration, productivity, and meeting across their organizations.
Teams Rooms are designed for inclusive collaboration and engagement where everyone has a seat at the table and can fully participate, whether they are at the office or working remotely. With Teams Rooms, any space can be turned into a smart meeting space that becomes intelligently inclusive, richly collaborative, flexible, scalable, and easy to deploy, use, manage, and secure. Using Teams Rooms can increase productivity and decrease costs for both business and technical users.
Microsoft commissioned Forrester Consulting to conduct a Total Economic Impact™ (TEI) study and examine the potential return on investment (ROI) enterprises may realize by deploying Teams Rooms.1 The purpose of this study is to provide readers with a framework to evaluate the potential financial impact of Teams Rooms on their organizations.
To better understand the benefits, costs, and risks associated with this investment, Forrester interviewed four representatives with experience using Teams Rooms. For the purposes of this study, Forrester aggregated the interviewees’ experiences and combined the results into a single composite organization.
Interviewees said that prior to using Teams Rooms, their organizations utilized outdated video and collaborative technology solutions that required numerous licenses and significant technical support to set up meetings or mitigate how often meetings failed to start on time. These limitations led to inefficient meetings that did not effectively drive decisions and actionable outcomes because attendees spent significant time resolving the issues.
The interviewees touted that after the investment in Teams Rooms, their
organizations could start meetings immediately and on time, and that workers
could be more collaborative with customers and colleagues whether meeting
attendees participated in person or remotely. Furthermore, they said using Teams
Rooms helped their organizations drive increased employee satisfaction and
higher engagement, which made them more competitive at satisfying and retaining
employees.
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 $1.63 million over three years versus costs of $370,000, adding up to a net present value (NPV) of $1.27 million and an ROI of 342%.
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 Microsoft Teams Rooms.
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 Teams Rooms can have on an organization.
Interviewed Microsoft stakeholders and Forrester analysts to gather data relative to Teams Rooms.
Interviewed four representatives at organizations using Teams Rooms to obtain data about costs, benefits, and risks.
Designed a composite organization based on characteristics of the interviewees’ organizations.
Constructed a financial model representative of the interviews using the TEI methodology and risk-adjusted the financial model based on issues and concerns of the interviewees.
Employed four fundamental elements of TEI in modeling the investment impact: benefits, costs, flexibility, and risks. Given the increasing sophistication of ROI analyses related to IT investments, Forrester’s TEI methodology provides a complete picture of the total economic impact of purchase decisions. Please see Appendix A for additional information on the TEI methodology.
Readers should be aware of the following:
This study is commissioned by Microsoft and delivered by Forrester Consulting. It is not meant to be used as a competitive analysis.
Forrester makes no assumptions as to the potential ROI that other organizations will receive. Forrester strongly advises that readers use their own estimates within the framework provided in the study to determine the appropriateness of an investment in Teams Rooms.
Microsoft reviewed and provided feedback to Forrester, but Forrester maintains editorial control over the study and its findings and does not accept changes to the study that contradict Forrester’s findings or obscure the meaning of the study.
Microsoft provided the customer names for the interviews but did not participate in the interviews.
Consulting Team:
Roger Nauth
Role | Industry | Region | Employees | Revenues |
---|---|---|---|---|
Information technology manager | State government | US | 2,600 | $22B |
Senior manager of technology | Agriculture | US | 2,300 | $17B |
Senior director of information services | Nonprofit | US | 215 | $61M |
Vice president of information technology | Automotive services | US | 3,000 | $350M |
The interviewees noted how their organizations struggled with common challenges, 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 four 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, which is based in the US, generates more than $1 billion in annual revenue. It has 2,800 employees operating in a hybrid work environment, working in offices, and working remotely. The composite organization has complex work environments and diverse use cases, such as using Teams Rooms for customer meetings, internal meetings, and especially for optimizing communication, collaboration, and engagement.
Deployment characteristics. The composite organization deploys Teams Rooms of different sizes. It deploys Teams Rooms to some of its board rooms and focus rooms, and it has Teams Rooms in large, medium, and small rooms.
Ref. | Benefit | Year 1 | Year 2 | Year 3 | Total | Present Value |
---|---|---|---|---|---|---|
Atr | Improved user workflow efficiencies during and after meetings | $29,601 | $44,402 | $59,202 | $133,205 | $108,085 |
Btr | Increased employee productivity by reallocating saved commute time to work tasks | $273,319 | $273,319 | $273,319 | $819,958 | $679,704 |
Ctr | Reduced time spent by IT admins on room issue resolution | $62,969 | $157,424 | $293,857 | $514,250 | $408,126 |
Dtr | Increased meeting efficiency by minimizing technical issue disruptions during meetings | $108,918 | $163,375 | $217,834 | $490,127 | $397,699 |
Etr | Improved IT efficiency driven by remote configuration and device analytics | $10,806 | $16,981 | $23,156 | $50,944 | $41,256 |
Total benefits (risk-adjusted) | $485,613 | $655,501 | $867,369 | $2,008,483 | $1,634,870 | |
Evidence and data. Interviewees said Teams Rooms functionality prevented general issues that could interrupt business productivity during and after meetings, which enhanced the ability of workers to be productive and added value to their meetings.
Modeling and assumptions. To calculate the value of this benefit for the composite organization, Forrester assumes the following:
Risks. The value of this benefit can vary across organizations due to the variations in the following:
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 $108,000.
Ref. | Metric | Source | Year 1 | Year 2 | Year 3 |
---|---|---|---|---|---|
A1 | Average number of large rooms | Interviews | 2 | 3 | 4 |
A2 | Average number of employees per meeting in large rooms | Composite | 20 | 20 | 20 |
A3 | Average utilization per week in large rooms (hours) | Interviews | 4 | 4 | 4 |
A4 | Subtotal: Weekly utilization of large rooms (hours) | A1*A2*A3 | 160 | 240 | 320 |
A5 | Average number of medium rooms | Interviews | 8 | 12 | 16 |
A6 | Average number of employees per meeting in medium rooms | Interviews | 10 | 10 | 10 |
A7 | Average utilization per week in medium rooms (hours) | Interviews | 5 | 5 | 5 |
A8 | Subtotal: Weekly utilization of medium rooms (hours) | Interviews | 400 | 600 | 800 |
A9 | Average number of small rooms | Interviews | 6 | 9 | 12 |
A10 | Average number of employees per meeting in small rooms | Interviews | 6 | 6 | 6 |
A11 | Average utilization per week in small rooms (hours) | Interviews | 10 | 10 | 10 |
A12 | Subtotal: Weekly utilization of small rooms (hours) | Interviews | 360 | 540 | 720 |
A13 | Work weeks per year | TEI standard | 52 | 52 | 52 |
A14 | Subtotal: Total meeting room utilization per year (hours) | (A4+A8+A12)* A13 |
47,840 | 71,760 | 95,680 |
A15 | Percentage of total meeting time disrupted by technology issues that affect business users’ workflows (hours) | Interviews | 30% | 30% | 30% |
A16 | Average time lost due to each issue (minutes) | Interviews | 5 | 5 | 5 |
A17 | Subtotal: Total employee time saved with Teams Rooms preventing general issues (hours) | A14*A15*A16/60 | 1,196 | 1,794 | 2,392 |
A18 | Productivity recapture (i.e., percentage of recaptured time used productively) | TEI standard | 50% | 50% | 50% |
A19 | Average fully burdened hourly rate of a business user | TEI standard | $55 | $55 | $55 |
At | Improved user workflow efficiencies during and after meetings | A17*A18*A19 | $32,890 | $49,335 | $65,780 |
Risk adjustment | ↓10% | ||||
Atr | Improved user workflow efficiencies during and after meetings (risk-adjusted) | $29,601 | $44,402 | $59,202 | |
Three-year total: $133,205 | Three-year present value: $108,085 |
Evidence and data. Interviewees told Forrester that Teams Rooms allowed their organizations to be more productive and reallocate saved commute time to work tasks.
Modeling and assumptions. To calculate the value of this benefit for the composite organization, Forrester assumes the following:
Risks. The value of this benefit can vary across organizations due to variations in the following:
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 $609,000.
Ref. | Metric | Source | Year 1 | Year 2 | Year 3 |
---|---|---|---|---|---|
B1 | Total employees | Composite | 2,800 | 2,800 | 2,800 |
B2 | Days per week actually worked at home | Stanford Institute for Economic Policy Research | 1.5 | 1.5 | 1.5 |
B3 | Multiplier for employees working from home | Stanford Institute for Economic Policy Research | 0.29 | 0.29 | 0.29 |
B4 | Subtotal: Employees working hybrid after Teams Rooms | B1*B3 | 812 | 812 | 812 |
B5 | Average days per week in the office before Teams Rooms | Interviews | 4 | 4 | 4 |
B6 | Average days per week in the office after Teams Rooms | Composite | 3 | 3 | 3 |
B7 | Average one-way commute time (minutes) | Interviews | 30 | 30 | 30 |
B8 | Work weeks per year (excluding vacation and personal time off) | TEI standard | 48 | 48 | 48 |
B9 | Subtotal: Total employee commute time per year avoided after Teams Rooms (hours) | B4*(B5-B6)*B7*2 /60*B8 | 38,976 | 38,976 | 38,976 |
B10 | Percentage of time saved that is available to spend on work tasks from commute time avoided | National Bureau of Economic Research | 30% | 30% | 30% |
B11 | Productivity recapture (percentage of time available to spend on work tasks that is actually used productively on work tasks) | TEI standard | 50% | 50% | 50% |
B12 | Average fully burdened hourly rate of business user | A18 | $55 | $55 | $55 |
Bt | Increased employee productivity by reallocating saved commute time to work tasks | B9*B10*B12 | $321,552 | $321,552 | $321,552 |
Risk adjustment | ↓15% | ||||
Btr | Increased employee productivity by reallocating saved commute time to work tasks (risk-adjusted) | $273,319 | $273,319 | $273,319 | |
Three-year total: $819,958 | Three-year present value: $679,704 |
Evidence and data. Interviewees said their organizations benefit significantly from a reduction in time IT specialists spend on room issue resolution with Teams Rooms.
Modeling and assumptions. To calculate the value of this benefit for the composite organization, Forrester assumes the following:
Risks. The value of this benefit can vary across organizations due to variations in the following:
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 $408,000.
Ref. | Metric | Source | Year 1 | Year 2 | Year 3 |
---|---|---|---|---|---|
C1 | Total meeting room utilization per year (hours) | A14 | 47,840 | 71,760 | 95,680 |
C2 | Percentage of meeting time disrupted by technical startup issues prevented by Teams Rooms’ one-touch join functionality | Interviews | 30% | 30% | 30% |
C3 | Average time lost per technical startup issue (minutes) | Interviews | 30 | 30 | 30 |
C4 | Percentage of instances that are handled remotely | Interviews | 30% | 50% | 70% |
C5 | Subtotal: Total employee time saved because Teams Rooms’ OneTouch Join prevents technical startup issues (hours) | C1*C2*C3/60 | 2,153 | 5,382 | 10,046 |
C6 | Percentage of saved time used productively | Interviews | 50% | 50% | 50% |
C7 | Average fully burdened hourly rate of an IT help desk analyst FTE | TEI standard | $65 | $65 | $65 |
Ct | Reduced time spent by IT admins on room issue resolution | C5*C6*C7 | $69,966 | $174,915 | $326,508 |
Risk adjustment | ↓10% | ||||
Ctr | Reduced time spent by IT admins on room issue resolution (risk-adjusted) | $62,969 | $157,424 | $293,857 | |
Three-year total: $514,250 | Three-year present value: $408,126 |
Evidence and data. Interviewees told Forrester that using Teams Rooms drove increased meeting efficiency by containing technical disruptions during meetings.
Modeling and assumptions. To calculate the value of this benefit for the composite organization, Forrester assumes the following:
Risks. The value of this benefit can vary across organizations due to variations in the following:
Results. To account for these risks, Forrester adjusted this benefit downward by 5%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $398,000.
Ref. | Metric | Source | Year 1 | Year 2 | Year 3 |
---|---|---|---|---|---|
D1 | IT support time per meeting room per week before Teams Rooms (hours) | Interviews | 2.25 | 2.25 | 2.25 |
D2 | IT support time per meeting room per week with Teams Rooms (hours) | Interviews | 0.13 | 0.13 | 0.13 |
D3 | Subtotal: Number of meeting rooms with Teams Rooms devices | A1+A5+A9 | 16 | 24 | 32 |
D4 | Work weeks per year | TEI standard | 52 | 52 | 52 |
D5 | Subtotal: Total IT support time saved per year with Teams Rooms (hours) | (D1-D2)*D3*D4 | 1,764 | 2,646 | 3,528 |
D6 | Average hourly rate of an IT support technician | TEI standard | $65 | $65 | $65 |
Dt | Increased meeting efficiency by minimizing technical issue disruptions during meetings | D5*D6 | $114,650 | $171,974 | $229,299 |
Risk adjustment | ↓5% | ||||
Dtr | Increased meeting efficiency by minimizing technical issue disruptions during meetings (risk-adjusted) | $108,918 | $163,375 | $217,834 | |
Three-year total: $490,127 | Three-year present value: $397,699 |
Evidence and data. Interviewees told Forrester their organizations benefit significantly from Teams Rooms’ remote configuration and device analytics capabilities.
The senior director of information services at a nonprofit organization told Forrester, “Microsoft has really invested in having the components to be able to remotely and effectively manage the rooms themselves, [and] to get better advanced warnings, notifications, and all that. … That has made a world of difference from my seat because I now know before the users know. So, the user experience has absolutely just taken off with being able to have those tools available to me, and it has significantly reduced the amount of time that I have to manage the meetings.”
Modeling and assumptions. To calculate the value of this benefit for the composite organization, Forrester assumes the following:
Risks. The value of this benefit can vary across organizations due to variations in the following:
Results. To account for these risks, Forrester adjusted this benefit downward by 5%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $41,000.
Ref. | Metric | Source | Year 1 | Year 2 | Year 3 |
---|---|---|---|---|---|
E1 | Issues that require FTEs to resolve them in person | Composite | 1,000 | 1,000 | 1,000 |
E2 | Reduction of issues that were previously resolved manually that are resolved through remote management | Composite | 30% | 50% | 70% |
E3 | Subtotal: Number of issues automated through remote management | E1*E2 | 300 | 500 | 700 |
E4 | Average amount of time to resolve an in-person issue (hours) | Interviews | 0.5 | 0.5 | 0.5 |
E5 | Average fully burdened hourly salary of an IT support FTE | TEI standard | $65 | $65 | $65 |
E6 | Subtotal: Reduced cost as a result of use of remote management | E3*E4*E5 | $9,750 | $16,250 | $22,750 |
E7 | Issues that needed manual resolution prior to using Teams Rooms | Interviews | 500 | 500 | 500 |
E8 | Percent reduction of issues that were previously resolved manually that are automated with Teams Rooms | Composite | 10% | 10% | 10% |
E9 | Subtotal: Issues automated through portal recognition and automation capabilities | E7*E8 | 50 | 50 | 50 |
E10 | Average time to resolve an in-person issue (hours) | Interviews | 0.5 | 0.5 | 0.5 |
E11 | Average fully burdened hourly salary of an IT support FTE | TEI standard | $65 | $65 | $65 |
E12 | Subtotal: Reduced cost as a result of automation of issue resolution | E9*E10*E11 | $1,625 | $1,625 | $1,625 |
Et | Improved IT efficiency driven by remote configuration and device analytics | E6+E12 | $11,375 | $17,875 | $24,375 |
Risk adjustment | ↓5% | ||||
Etr | Improved IT efficiency driven by remote configuration and device analytics (risk-adjusted) | $10,806 | $16,981 | $23,156 | |
Three-year total: $50,944 | Three-year present value: $41,256 |
Interviewees mentioned the following additional benefits that their organizations experienced but were not able to quantify:
Ref. | Cost | Initial | Year 1 | Year 2 | Year 3 | Total | Present Value |
---|---|---|---|---|---|---|---|
Ftr | Teams Rooms devices | $74,384 | $37,192 | $37,192 | $0 | $148,768 | $138,932 |
Gtr | Installation of devices and other hardware | $86,763 | $43,381 | $43,381 | $0 | $173,525 | $162,052 |
Htr | IT setup, configuration time, and support for rooms and devices | $21,840 | $10,920 | $10,920 | $0 | $43,680 | $40,792 |
Itr | Annual Teams Rooms license cost | $0 | $7,680 | $11,520 | $15,360 | $34,560 | $28,043 |
Total costs (risk-adjusted) | $182,987 | $99,173 | $103,013 | $15,360 | $400,533 | $369,819 | |
Modeling and assumptions. The composite organization pays Microsoft a risk-adjusted total of $138,932 over three years for devices.
Risks. The value of this cost can vary across organizations due to variations in 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 $139,000.
Ref. | Metric | Source | Initial | Year 1 | Year 2 | Year 3 | |
---|---|---|---|---|---|---|---|
F1 | Large rooms | Interviews | 2 | 1 | 1 | 0 | |
F2 | Estimated cost of Teams Rooms devices for one large room | Composite | $5,170 | $5,170 | $5,170 | ||
F3 | Medium rooms | Interviews | 8 | 4 | 4 | 0 | |
F4 | Estimated cost of Teams Rooms devices for one medium room | Composite | $4,616 | $4,616 | $4,616 | ||
F5 | Small rooms | Interviews | 6 | 3 | 3 | 0 | |
F6 | Estimated cost of Teams Rooms devices for one small room | Composite | $3,930 | $3,930 | $3,930 | ||
Ft | Teams Rooms devices | F1*F2+F3*F4+F5* F6 | $70,842 | $35,421 | $35,421 | $0 | |
Risk adjustment | ↑5% | ||||||
Ftr | Teams Rooms devices (risk-adjusted) | $74,384 | $37,192 | $37,192 | $0 | ||
Three-year total: $148,768 | Three-year present value: $138,932 |
Modeling and assumptions. The composite organization pays Microsoft a risk-adjusted total of $162,052 over three years for the installation of devices and other hardware according to varying rates by room size.
Risks. The value of this cost can vary across organizations due to variations in 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 $162,000.
Ref. | Metric | Source | Initial | Year 1 | Year 2 | Year 3 | |
---|---|---|---|---|---|---|---|
G1 | Estimated installation costs for one large room | Composite | $7,438 | $7,438 | $7,438 | $0 | |
G2 | Estimated installation costs for one medium room | Composite | $6,009 | $6,009 | $6,009 | $0 | |
G3 | Estimated installation costs for one small room | Composite | $3,280 | $3,280 | $3,280 | $0 | |
Gt | Installation of devices and other hardware | F1*G1+F3*G2+F5* G3 | $82,631 | $41,316 | $41,316 | $0 | |
Risk adjustment | ↑5% | ||||||
Gtr | Installation of devices and other hardware (risk-adjusted) | $86,763 | $43,381 | $43,381 | $0 | ||
Three-year total: $173,525 | Three-year present value: $162,052 |
Modeling and assumptions. The composite organization pays Microsoft a risk-adjusted total of $40,792 over three years for IT setup, configuration time, and support for rooms and devices.
Risks. The value of this cost can vary across organizations due to variations in 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 $41,000.
Ref. | Metric | Source | Initial | Year 1 | Year 2 | Year 3 | |
---|---|---|---|---|---|---|---|
H1 | Total new rooms | F1+F3+F5 | 16 | 8 | 8 | 0 | |
H2 | IT setup and configuration time per room (hours) | Interviews | 20 | 20 | 20 | 0 | |
H3 | Average fully burdened hourly salary of an IT support technician | TEI standard | $65 | $65 | $65 | $0 | |
Ht | IT setup, configuration time, and support for rooms and devices | H1*H2*H3 | $20,800 | $10,400 | $10,400 | $0 | |
Risk adjustment | ↑5% | ||||||
Htr | IT setup, configuration time, and support for rooms and devices (risk-adjusted) | $21,840 | $10,920 | $10,920 | $0 | ||
Three-year total: $43,680 | Three-year present value: $40,792 |
Modeling and assumptions. The composite organization pays Microsoft a risk-adjusted total of $28,043 over three years for its Teams Rooms license cost.
Risks. The value of this cost can vary across organizations due to variations in the following:
Results. To account for these risks, Forrester adjusted this cost upward by 0%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $28,000.
Ref. | Metric | Source | Initial | Year 1 | Year 2 | Year 3 | |
---|---|---|---|---|---|---|---|
I1 | Monthly license cost per room | Composite | $0 | $40 | $40 | $40 | |
I2 | Annual license cost per room | I1*12 | $0 | $480 | $480 | $480 | |
I3 | Number of Teams Rooms | D3 | $0 | 16 | 24 | 32 | |
It | Annual Teams Rooms license cost | G2*G3 | $0 | $7,680 | $11,520 | $15,360 | |
Risk adjustment | 0% | ||||||
Itr | Annual Teams Rooms license cost (risk-adjusted) | $0 | $7,680 | $11,520 | $15,360 | ||
Three-year total: $34,560 | Three-year present value: $28,043 |
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 | ($182,987) | ($99,173) | ($103,013) | ($15,360) | ($400,533) | ($369,819) |
Total benefits | $0 | $485,613 | $655,501 | $867,369 | $2,008,483 | $1,634,870 |
Net benefits | ($182,987) | $386,440 | $552,487 | $852,009 | $1,607,950 | $1,265,051 |
ROI | 342% | |||||
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.
Related Forrester Research
The Future Of The Office, Forrester Research, Inc., September 7, 2022.
Master Hybrid Meetings With These Five Steps, Forrester Research, Inc., March 6, 2023.
The Forrester Wave™: Unified Communications As A Service (UCaaS), Q3 2023, Forrester Research, Inc., September 19, 2023.
The Future Of Work Requires A Better Collaboration Model, Forrester Research, Inc., July 17, 2023.
APPENDIX C: ENDNOTES
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: Jose Maria Barrero, Nicholas Bloom, Steven J. Davis, The Evolution of Working from Home, Stanford Institute for Economic Policy Research, July 2023.
3 Source: Nicholas Bloom, Ruobing Han, James Liang, How Hybrid Working From Home Works Out, National Bureau of Economic Research, January 2023.
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