The Total Economic Impact™ Of Smartsheet Professional Services
Cost Savings And Business Benefits Enabled By Smartsheet Professional Services
A FORRESTER TOTAL ECONOMIC IMPACT STUDY COMMISSIONED BY SMARTSHEET, APRIL 2025
As out-of-the-box Smartsheet solutions provide a basic foundation for planning, creating, and managing projects, organizations face the challenge of effectively customizing these solutions to quickly scale with their business needs. Smartsheet Professional Services addresses these challenges to help organizations fully leverage the capabilities of their platform, thus building a stronger, more flexible project management foundation.
Smartsheet Professional Services is a consultancy service provided by Smartsheet to help organizations strategize, implement, run, and innovate with their Smartsheet platform. Smartsheet Professional Services offers tailored roadmaps, seamless integration and migration services, and optimized solutions for faster innovation. The Smartsheet Professional Services team brings knowledge of product and solution best practices and serves as trusted advisors, playing a critical role in facilitating customer success.
Smartsheet commissioned Forrester Consulting to conduct a Total Economic Impact™ (TEI) study and examine the potential return on investment (ROI) enterprises may realize by engaging with Smartsheet Professional Services.1 The purpose of this study is to provide readers with a framework to evaluate the potential financial impact of Smartsheet Professional Services on their organizations.
Return on investment (ROI)
171%
Net present value (NPV)
$218K
To better understand the benefits, costs, and risks associated with this investment, Forrester interviewed five decision-makers with experience engaging with Smartsheet Professional Services. For the purposes of this study, Forrester aggregated the interviewees’ experiences and combined the results into a single composite organization that is a global, multibillion-dollar company with 3,000 employees and engages with Smartsheet Professional Services for their expertise around implementation to quickly and effectively leverage the full-breadth of the platform, maximize efficiencies, and realize business value sooner.
Interviewees said that prior to using Smartsheet Professional Services, their organizations had limited expertise and resources to implement the platform as quickly and efficiently as possible. To ensure that they would build a strong, flexible platform, interviewees pursued an engagement with Smartsheet Professional Services.
After engaging with Smartsheet Professional Services, the interviewees noted their organizations were self-sufficient and equipped to leverage the platform to its full capabilities. Key results from the investment include accelerated implementation, project management team efficiencies, and accelerated profit.
Key Findings
Quantified benefits. Three-year, risk-adjusted present value (PV) quantified benefits for the composite organization include:
- Accelerated implementation by 50%. The composite organization engages with Smartsheet Professional Services to assist in the implementation of various components of the platform. Without the guidance of Smartsheet Professional Services, the composite would expect implementation to take eight months. With the engagement, the implementation is completed in four months. The accelerated implementation savings are worth more than $77,000 to the composite organization.
- Provided more than $223,000 in project management team efficiencies. The composite organization’s project management organization (PMO) receives training from the Smartsheet engagement, which enables efficiencies across project managers. As a result of the Smartsheet Professional Services expertise on best practices, project managers gain 10% efficiencies beyond the efficiencies gained from Smartsheet as a platform alone. Over the course of three years, project management team efficiencies are worth more than $223,000 to the composite organization.
- Accelerated profit by four months. The Smartsheet platform enables the composite organization to increase revenue-generating projects through automation. As a result of accelerated implementation, the composite realizes business value four months sooner than if it did not engage with Smartsheet Professional Services. The accelerated profit is worth $45,000 to the composite organization.
Unquantified benefits. Benefits that provide value for the interviewees’ organizations but are not quantified for this study include:
- Access to Smartsheet expertise with domain knowledge and internal best practices. Interviewees discussed how they wanted to learn from experts who were experienced with both the Smartsheet platform and PMO industry standards.
- Improved data quality, visibility, and support for integrations enabling organizations to scale. Interviewees discussed how their Smartsheet Professional Services engagement ensured that they automated their reporting as efficiently as possible and increased their visibility of their portfolio practices.
- Better end user experience enabling adoption and self-sufficiency. Interviewees discussed that their engagement with Smartsheet Professional Services helped them to architect using out-of-the-box features, with a focus on configuration over customization.
- Hands on training, shared best practices, and support for change management. Interviewees discussed how their engagement with Smartsheet Professional Services enabled their users to have a better experience with the platform as they received proper training, time for knowledge exchange, detailed documentation, and support to drive change management.
Costs. Three-year, risk-adjusted PV costs for the composite organization include:
- Smartsheet professional services engagement fee. The engagement fee is dependent on the services provided. The engagement fee for the composite organization is less than $79,000.
- Internal planning and implementation costs. Two project manager FTEs spend 50% of their time planning and implementing Smartsheet during the composite organization’s engagement. Internal planning and implementation costs are approximately $49,000 to the composite organization.
The representative interviews and financial analysis found that a composite organization experiences benefits of $345,000 over three years versus costs of $128,000, adding up to a net present value (NPV) of $218,000 and an ROI of 171%.
Key Statistics
-
Return on investment (ROI)
171%
-
Benefits PV
$345K
-
Net present value (NPV)
$218K
-
Payback
7 months
Benefits (Three-Year)
Accelerated implementation savings Project management team efficiencies Accelerated profit
TEI Framework And Methodology
From the information provided in the interviews, Forrester constructed a Total Economic Impact™ framework for those organizations considering an engagement with Smartsheet Professional Services.
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 Smartsheet Professional Services can have on an organization.
-
Due Diligence
Interviewed Smartsheet stakeholders and Forrester analysts to gather data relative to their Smartsheet Professional Services engagements.
-
Interviews
Interviewed five people at organizations using Professional Services to obtain data about costs, benefits, and risks.
-
Composite Organization
Designed a composite organization based on characteristics of the interviewees’ organizations.
-
Financial Model Framework
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.
-
Case Study
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.
Disclosures
Readers should be aware of the following:
This study is commissioned by Smartsheet 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 engagement with Smartsheet Professional Services.
Smartsheet 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.
Smartsheet provided the customer names for the interviews but did not participate in the interviews.
Consulting Team:
Nikoletta Stergiou
Drivers leading to the Professional Services investment
Interviews
| Role | Industry | Region | Company Size | Engagement Type |
|---|---|---|---|---|
| Director, portfolio management | Pharmaceuticals | HQ in the UK; global operations | 89,900 employees $45.8 billion |
Control center |
| Program manager, product and strategy | Media and entertainment | HQ in the US; global operations | 57,000 employees $39.2 billion |
Control center |
| Manager business strategist | Food and beverage | HQ in the US; global operations | 5,200 employees $1.7 billion |
Project management office Resource management Customer portal |
| Senior project manager | Telecommunications | HQ in Canada | 3,300 employees $1.0 billion |
Control center |
| Marketing project and systems manager | Industrial equipment | HQ in the US | 1,500 employees $680.8 million |
Control center |
Key Challenges
Interviewees noted that their organizations lacked the in-house resources or platform knowledge to implement Smartsheet at scale. They risked months of experimentation, partial adoption, or suboptimal configuration, which led to lost time and frustration among users. The interviewees noted common challenges, including:
- Limited resources to implement solutions that scale. Interviewees reported that their organizations’ teams were small, which impacted their ability to use internal resources to reach the scale they needed quickly. The marketing project and systems manager at an industrial equipment organization highlighted how they would have had to hire additional headcount to achieve the same results as they did with their engagement: “We implemented Smartsheet in about six months with Professional Services help. If we had not had Professional Services help, it would have required us to hire a Smartsheet admin.”
- Lack of expertise to fully leverage capabilities of the platform. Interviewees stated their organizations’ goals to scale and leverage the full breadth of the Smartsheet Platform as quickly as possible. Interviewees has discussions around design, architecture, integrations, implementation plans, and challenges to drive decisions that would best align with their project strategies. The manager business strategist at a food and beverage organization highlighted that implementing the platform and learning from experts ensured that they maintained best practices across their reporting: “Smartsheet Professional Services made our whole solution optimal from the very beginning with their best practices. As we migrate out to other areas of the organization, we are confident that we have been trained from the best of class to keep moving their solution philosophy through.”
- Limited knowledge to build a stronger, more flexible platform foundation. Interviewees noted that while Smartsheet is customizable, the Smartsheet Professional Services team helped their organizations to architect using out-of-the-box features and industry standard configurations which helped set their teams up for future innovation and feature adoption. The senior project manager at a telecommunications organization highlighted how Smartsheet Professional Services supplemented limited expertise in the platform to meet their needs: “This engagement was complex but was delivered in a very fast fashion with Smartsheet Professional Services. Although Smartsheet as a platform is very customizable, without their consulting team, we would not have the entire automated solution because we don’t have the internal expertise to know how it all works.”
- Limited end-to-end accountability from internal support. According to interviewees, their organizations did not have the internal knowledge necessary to cater Smartsheet to their business needs. The program manager of product and strategy at a pharmaceuticals organization highlighted that there were some tricky steps that they had to overcome that would have been more challenging without the guidance of professional services: “There were some tricky pieces that Smartsheet Professional Services helped troubleshoot that we could not have done ourselves. Now we’re on our own and managing it okay, but I think the lasting value from this engagement is the training that we received and the desk side support from our dedicated Professional Services contact.”
Investment Objectives
The interviewees’ organizations engaged with Smartsheet Professional Services to:
- Access expertise for best practices to leverage full breadth of the Smartsheet platform.
- Improve user and customer experiences for adoption and innovation.
- Provide efficient implementation with experts to handle design, architecture, integrations, implementations plans and set-up, saving time and resources.
- Enable self-sufficiency through training and enablement for long-term success..
Composite Organization
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 interviewees’ 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 and engagement. The global, multibillion-dollar organization has 3,000 employees and invests in the Smartsheet platform. The composite wants to quickly implement the platform across their project management organization (PMO) which consists of 15 project managers. The composite engages Smartsheet Professional Services for their expertise around implementation to quickly and effectively leverage the full breadth of the platform, maximize efficiencies, and realize business value sooner.
Quantified benefit data as applied to the composite
Total Benefits
| Ref. | Benefit | Year 1 | Year 2 | Year 3 | Total | Present Value |
|---|---|---|---|---|---|---|
| Atr | Accelerated implementation savings | $84,796 | $0 | $0 | $84,796 | $77,087 |
| Btr | Project management team efficiencies | $89,775 | $89,775 | $89,775 | $269,325 | $223,257 |
| Ctr | Accelerated profit | $49,500 | $0 | $0 | $49,500 | $45,000 |
| Total benefits (risk-adjusted) | $224,071 | $89,775 | $89,775 | $403,621 | $345,344 | |
Accelerated Implementation Savings
Evidence and data. Interviewees discussed how leveraging the expertise and guidance from Smartsheet Professional Services played a critical role in helping their teams accelerate their implementation of the Smartsheet platform.
- The manager business strategist at a food and beverage organization described how their team was able to get up and running within three months of their engagement: “We knew enough on our own that we were not capable of turning on the solution in the speed we wanted. So they gave us three months. We didn’t want to spend six to eight months of having dedicated people figuring out this software platform, going to training, understanding all in-depthness, [and] understanding the whole complete package to even see what we want to use out of it.”
- The marketing project and systems manager at an industrial equipment organization discussed how the engagement with professional services sped up implementation by at least 50%: “Since I wasn’t familiar with Smartsheet, it would have taken me a ton of training to even start implementing Control Center. We could have hired someone from the engineering side who could have easily done it, but that’s expensive. So, if I had to do it on my own, it would have been at least a year compared to our six-month engagement.”
Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite organization:
- The expected number of months for implementation without Smartsheet Professional Services is eight months.
- With Smartsheet Professional Services, implementation is 50% faster.
- Without Smartsheet Professional Services, three project manager FTEs would spend 75% of their time on implementation, which is an internal labor cost of $24,940.
Risks. Forrester recognizes that these results may not be representative of all experiences. The impact of this benefit will vary depending on:
- The expected number of months for implementation due to team resources and needs.
- Internal labor costs due to how many FTEs are needed and their salaries.
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 $77,000.
Accelerated Implementation Savings
| Ref. | Metric | Source | Year 1 | Year 2 | Year 3 | |
|---|---|---|---|---|---|---|
| A1 | Implementation time before Smartsheet Professional Services (months) | Composite | 8 | |||
| A2 | Percentage decrease in implementation time with Smartsheet Professional Services (months) | Interviews | 50% | |||
| A3 | Implementation time avoided with Smartsheet Professional Services (months) | A1*A2 | 4 | |||
| A4 | Internal labor costs per month without Smartsheet Professional Services | Composite | $24,940 | |||
| At | Accelerated implementation savings | A3*A4 | $99,760 | $0 | $0 | |
| Risk adjustment | ↓15% | |||||
| Atr | Accelerated implementation savings (risk-adjusted) | $84,796 | $0 | $0 | ||
| Three-year total: $84,796 | Three-year present value: $77,087 | |||||
Project Management Team Efficiencies
Evidence and data. Interviewees highlighted how Smartsheet Professional Services enabled their project managers to achieve further efficiencies even after their engagement due to gaining valuable insights and learning best practices that could be applied to optimize current and future processes.
- The marketing project and systems manager at an industrial equipment organization described the strategic design, implementation plans, communication, and training process throughout the engagement: “They came onsite multiple times where we had workshops that we did in person with all of our marketing managers. They helped us build the back end of our reporting so that we could repeat deliverables with the same best practice standards. They guided us and made us assist in creating solutions, which was super helpful when we had to transfer the knowledge to the rest of our team. They were very agile with their methodology.”
- The senior project manager at a telecommunications organization highlighted that they saved FTE effort on having dedicated support for the platform as a result of implementing correctly with Smartsheet Professional Services: “For Smartsheet, we are saving a ton of effort because we don’t need a dedicated support person since the system is tuned up in the most efficient way possible. We don’t have any support calls because we have implemented the platform correctly with the Professional Services team and have not experienced any issues.”
Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite organization:
- The composite organization has 15 project managers.
- As a result of the Smartsheet Professional Services, the increase in project manager efficiencies attributable to the engagement is 10%.
- The average fully burdened annual salary for a project manager is $133,000.
- There is a 50% productivity recapture to account for improved work-life balance.
Risks. Forrester recognizes that these results may not be representative of all experiences. The impact of this benefit will vary depending on:
- The number of project managers impacted by the Smartsheet Professional Services engagement.
- The project manager fully burdened salary.
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 $223,000.
Project Management Team Efficiencies
| Ref. | Metric | Source | Year 1 | Year 2 | Year 3 | |
|---|---|---|---|---|---|---|
| B1 | Number of project managers | Composite | 15 | 15 | 15 | |
| B2 | Project manager productivity increase attributable to Smartsheet Professional Services | Interviews | 10% | 10% | 10% | |
| B3 | Fully burdened annual salary for a project manager | Bureau of Labor Statistics | $133,000 | $133,000 | $133,000 | |
| B4 | Productivity recapture | TEI methodology | 50% | 50% | 50% | |
| Bt | Project management team efficiencies | B1*B2*B3*B4 | $99,750 | $99,750 | $99,750 | |
| Risk adjustment | ↓10% | |||||
| Btr | Project management team efficiencies (risk-adjusted) | $89,775 | $89,775 | $89,775 | ||
| Three-year total: $269,325 | Three-year present value: $223,257 | |||||
Accelerated Profit
Evidence and data. Interviewees discussed the impact that an accelerated implementation with Smartsheet Professional Services had on realizing business value sooner, either through new project creation or entering new markets.
The marketing project and systems manager at an industrial equipment organization described the impact of the engagement as it related to their capacity to complete their projects, which could have revenue implications for their organization: “If we didn’t implement Control Center correctly, I would have only been able to handle about 20 projects a month without any way of increasing capacity. But now, after engaging with Smartsheet Professional Services to ensure we’ve implemented everything to their best practice standards, we have been able to scale up the number of projects we can handle, and I have the bandwidth to do other things.”
Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite organization:
- The average revenue realized per project with implementation without Smartsheet Professional Services is $100,000.
- The increase in the number of revenue-generating projects with Smartsheet is 15 projects.
- Smartsheet Professional Services accelerate business value by four months.
- The profit margin is 11%.
Risks. Forrester recognizes that these results may not be representative of all experiences. The impact of this benefit will vary depending on:
- The average net benefits realized from implementation without Smartsheet due to the revenue impact of projects.
- The number of revenue-generating projects.
- The project margin across industries.
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 $45,000.
Accelerated Profit
| Ref. | Metric | Source | Year 1 | Year 2 | Year 3 | |
|---|---|---|---|---|---|---|
| C1 | Average revenue per project realized from implementation without Smartsheet Professional Services | Interviews | $100,000 | |||
| C2 | Increase in number of revenue-generating projects with Smartsheet | Interviews | 15 | |||
| C3 | Months of accelerated business value with Smartsheet Professional Services | A3 | 4 | |||
| C4 | Accelerated revenue per month | (C1*C2*C3)/12 | $500,000 | |||
| C5 | Profit margin | TEI methodology | 11% | |||
| Ct | Accelerated profit | C4*C5 | $55,000 | $0 | $0 | |
| Risk adjustment | ↓10% | |||||
| Ctr | Accelerated profit (risk-adjusted) | $49,500 | $0 | $0 | ||
| Three-year total: $49,500 | Three-year present value: $45,000 | |||||
Unquantified Benefits
Interviewees mentioned the following additional benefits that their organizations experienced but were not able to quantify:
- Access to Smartsheet expertise with domain knowledge and internal best practices. Interviewees discussed how they wanted to learn from experts who were experienced in both the Smartsheet platform and PMO industry standards. The manager business strategist at a food and beverage organization highlighted Smartsheet’s industry knowledge, commenting: “Smartsheet Professional Services comes in with people who know the solution and what works well elsewhere in the industry. They come in with best practices so we can also understand what the industry learns, follows, and actually does.”
- Improved data quality, visibility, and support for integrations enabling organizations to scale. Interviewees discussed how their Smartsheet Professional Services engagement ensured that they automated their reporting as efficiently as possible and increased their visibility of their portfolio practices. The director of portfolio management at a pharmaceuticals organization discussed the impact of the engagement on their real-time reporting: “In the past, even though I’ve used Smartsheet, I would be asked to show a certain sort of analysis of something around these projects. It would always be a hugely manual process for me to figure out how to do it, get the data, clean the data, and then generate the charts that were useful to show senior management. Whereas now, we’re building it in as a real-time reporting capability.”
- Better end user experience enabling adoptions and self-sufficiency.. Interviewees noted how Smartsheet Professional Services helped them to architect using out-of-the-box features, with a focus on configuration over customization. The director of portfolio management as a pharmaceuticals organization discussed the impact of the engagement on their real-time reporting: “Everything is running like a well-oiled sports car. I think if you were to look at the dashboards that we present to our executive leadership, everything falls into a dashboard very nicely. All the data that comes from the project plan feeds the dashboard where in the past, this would not have been possible without the Professional Services team because it was an out-of-the-box solution.”
- Hands on training, shared best practices, and support for change management. Interviewees discussed that their engagement with Smartsheet Professional Services enabled their users to have a better experience with the platform as they received proper training, time for knowledge exchange, detailed documentation, and support to drive change management. The senior project manager at a telecommunications organization commented: “We had end-user training on how we should interact with the solution including how intake is done, how the tool is created, how it is shared, what are the different objects within the toolkit, how they can collaborate, etc.”
Flexibility
The value of flexibility is unique to each customer. There are multiple scenarios in which a customer might engage with Smartsheet Professional Services and later realize additional uses and business opportunities, including:
- Embedding self-sufficiency and skills for innovation. Interviewees noted how Smartsheet Professional Services delivered a stronger, more flexible platform foundation, setting them up for future innovation and feature adoption. The director of portfolio management at a pharmaceuticals organization highlighted, “I’m using that time to build out this new solution in an ever more sophisticated way.”
- Pursuing future engagements. Interviewees highlighted their interest in pursuing future engagements with Smartsheet Professional Services to continue learning from experts. The senior project manager at a telecommunications organization discussed their regret in not utilizing Professional Services for implementing resource management as it would have saved a lot of effort learning from the Smartsheet Professional Services team: “If we had gone through their consulting services entirely on resource management, I think that would have saved a ton of time at our end with respect to experimenting that resource management and then not getting the results we wanted as quickly as possible.”
Flexibility would also be quantified when evaluated as part of a specific project (described in more detail in Appendix A).
Quantified cost data as applied to the composite
Total Costs
| Ref. | Cost | Initial | Year 1 | Year 2 | Year 3 | Total | Present Value |
|---|---|---|---|---|---|---|---|
| Dtr | Smartsheet Professional Services engagement fee | $78,750 | $0 | $0 | $0 | $78,750 | $78,750 |
| Etr | Internal planning and implementation costs | $48,752 | $0 | $0 | $0 | $48,752 | $48,752 |
| Total costs (risk-adjusted) | $127,502 | $0 | $0 | $0 | $127,502 | $127,502 | |
Smartsheet Professional Services Engagement Fee
Evidence and data. Interviewees discussed their engagement costs as they related to the design, architecture, integrations, implementation plans, and configuration of various parts of the Smartsheet platform.. Use cases discussed included Control Center, Resource Management, and Customer Portal.
Pricing may vary. Contact Smartsheet for additional details.
Modeling and assumptions. Based on the interviews, Forrester assumes the engagement costs are $75,000.
Risks. Forrester recognizes that these results may not be representative of all experiences. The impact of this benefit will vary depending on the use cases of an organization.
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 $79,000.
Smartsheet Professional Services Engagement Fee
| Ref. | Metric | Source | Initial | Year 1 | Year 2 | Year 3 | |
|---|---|---|---|---|---|---|---|
| D1 | Smartsheet Professional Services engagement fee | Composite | $75,000 | ||||
| Dt | Smartsheet Professional Services engagement fee | D1 | $75,000 | $0 | $0 | $0 | |
| Risk adjustment | ↑5% | ||||||
| Dtr | Smartsheet Professional Services engagement fee (risk-adjusted) | $78,750 | $0 | $0 | $0 | ||
| Three-year total: $78,750 | Three-year present value: $78,750 | ||||||
Internal Planning And Implementation Costs
Evidence and data. Interviewees discussed the design, architecture, integrations, implementation plans, and configuration efforts during their engagement with Smartsheet Professional Services. . They reiterated that the guidance and support they received from Professional Services helped accelerate the implementation process and required fewer FTEs and time spent toward this engagement compared to what would have been required without Professional Services.
Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite organization:
- Four months are spent on planning and implementation.
- Two project managers dedicate 50% of their time toward this initiative.
- The fully burdened monthly rate for a project manager is $11,080.
Risks. Forrester recognizes that these results may not be representative of all experiences. The impact of this benefit will vary depending on:
- The time spent on planning and implementation due to engagement type.
- The number of FTEs and time spent due to engagement type.
- The fully burdened monthly rate for a project manager.
Results. To account for these risks, Forrester adjusted this cost upward by 10%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $49,000.
Internal Planning And Implementation Costs
| Ref. | Metric | Source | Initial | Year 1 | Year 2 | Year 3 | |
|---|---|---|---|---|---|---|---|
| E1 | Time spent on planning and implementation (months) | A3 | 4 | ||||
| E2 | Number of project managers on planning and implementation | Composite | 2 | ||||
| E3 | Time spent on internal planning and implementation | Composite | 50% | ||||
| E4 | Fully burdened monthly rate for a project manager | Composite | $11,080 | ||||
| Et | Internal planning and implementation costs | E1*E2*E3*E4 | $44,320 | $0 | $0 | $0 | |
| Risk adjustment | ↑10% | ||||||
| Etr | Internal planning and implementation costs (risk-adjusted) | $48,752 | $0 | $0 | $0 | ||
| Three-year total: $48,752 | Three-year present value: $48,752 | ||||||
Consolidated Three-Year, Risk-Adjusted Metrics
Cash Flow Chart (Risk-Adjusted)
Total costs Total benefits Cumulative net benefits Initial Year 1 Year 2 Year 3-
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.
Cash Flow Analysis (Risk-Adjusted Estimates)
| Initial | Year 1 | Year 2 | Year 3 | Total | Present Value | |
|---|---|---|---|---|---|---|
| Total costs | ($127,502) | $0 | $0 | $0 | ($127,502) | ($127,502) |
| Total benefits | $0 | $224,071 | $89,775 | $89,775 | $403,621 | $345,344 |
| Net benefits | ($127,502) | $224,071 | $89,775 | $89,775 | $276,119 | $217,842 |
| ROI | 171% | |||||
| Payback | 7 months | |||||
Appendix A: Total Economic Impact
Total Economic Impact is a methodology developed by Forrester Research that enhances a company’s technology decision-making processes and assists solution providers in communicating their value proposition to clients. The TEI methodology helps companies demonstrate, justify, and realize the tangible value of business and technology initiatives to both senior management and other key stakeholders.
Total Economic Impact Approach
-
Benefits represent the value the solution delivers to the business. The TEI methodology places equal weight on the measure of benefits and costs, allowing for a full examination of the solution’s effect on the entire organization.
-
Costs comprise all expenses necessary to deliver the proposed value, or benefits, of the solution. The methodology captures implementation and 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. 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.
Appendix B: Endnotes
1 Total Economic Impact is a methodology developed by Forrester Research that enhances a company’s technology decision-making processes and assists solution providers in communicating their value proposition to clients. The TEI methodology helps companies demonstrate, justify, and realize the tangible value of business and technology initiatives to both senior management and other key stakeholders.
PDF 