A Forrester Total Economic Impact™ Study Commissioned By VMware, April 2024
Managing a complex and ever-growing network requires a high degree of visibility into what changes and communications are occurring. Network engineers and administrators cannot strengthen, secure, and scale a network that they cannot see. VMware Cloud Foundation Network Operations monitors and maps overall network topology for VMware Cloud Foundation and VMware NSX to help organizations become less reactive and more forward-looking in their network management capabilities.
VMware Cloud Foundation Network Operations helps organizations gain end-to-end visibility across their virtual and physical networks. This increased visibility allows their customers to become more efficient in monitoring, optimizing, and securing network infrastructure across cloud environments. VMware Cloud Foundation Network Operations decreases the manual processes typically involved when managing and scaling an organization’s network, facilitating activities such as application discovery, workload migration, troubleshooting, and network segmentation planning.
VMware commissioned Forrester Consulting to conduct a Total Economic Impact™ (TEI) study and examine the benefits and potential financial impact enterprises may realize by deploying VMware Cloud Foundation Network Operations.1
To better understand the benefits and risks associated with this investment, Forrester interviewed four representatives with experience using VMware Cloud Foundation Network Operations. For the purposes of this study, Forrester aggregated the interviewees’ experiences and combined the results into a single composite organization.
Prior to using VMware Cloud Foundation Network Operations, interviewees said that they struggled to understand how various parts of their network were “talking” to one another, which made segmentation planning and firewall rule creation difficult. Gaining this type of network visibility demanded many hours of work and, even after much time and effort, often yielded questionably accurate results. Troubleshooting network issues was also a challenge, since it was hard to pinpoint where a given issue was occurring within the network.
After the investment in VMware Cloud Foundation Network Operations, the interviewees cited how the overall improvement in network visibility — including visibility on VMware Cloud Foundation, VMware NSX, certified public clouds, and virtual and physical networks — helped their organizations become proactive in consolidating and streamlining their network infrastructure. Notable improvements in time to resolution and troubleshooting were identified as key benefits of VMware Cloud Foundation Network Operations.
Quantified benefits. Three-year, risk-adjusted present value (PV) quantified benefits for the composite organization include:
Unquantified benefits. Benefits that provide value for the interviewees’ organizations but are not quantified for this study include:
The representative interviews and financial analysis found that a composite organization experiences benefits of $3.86 million over three years.
Increase in network mapping efficiency
Reduction in network monitoring time
Reduction in network outages
Reduction in troubleshooting time
From the information provided in the interviews, Forrester constructed a Total Economic Impact™ framework for those organizations considering an investment in VMware Cloud Foundation Network Operations.
The objective of the framework is to identify the benefit, flexibility, and risk factors that affect the investment decision. Forrester took a multistep approach to evaluate the impact that VMware Cloud Foundation Network Operations can have on an organization.
Interviewed VMware stakeholders and Forrester analysts to gather data relative to VMware Cloud Foundation Network Operations.
Interviewed four representatives at organizations using VMware Cloud Foundation Network Operations to obtain data with respect to 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, 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 VMware and delivered by Forrester Consulting. It is not meant to be used as a competitive analysis.
Forrester makes no assumptions as to the potential benefits 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 VMware Cloud Foundation Network Operations.
VMware 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.
VMware provided the customer names for the interviews but did not participate in the interviews.
Consulting Team:
Leigh Greene
| Role | Industry | Region | Markets Served |
|---|---|---|---|
| Network engineer | Insurance | North America | North America |
| IT infrastructure and security manager | Chemical | North America | Global |
| Network administrator and engineer | Aviation | North America | Global |
| Lead IT architecture analyst | Healthcare | North America | North America |
One of the primary reasons that interviewed decision-makers invested in VMware Cloud Foundation Network Operations was to gain end-to-end visibility into their organizations’ networks. Interviewees also cited security as another big driver for their organizations’ VMware Cloud Foundation Network Operations investment. Their companies wanted to take a proactive posture with their security protocols, using network segmentation to define firewall rules and avoid being the next ransomware headline.
The interviewees noted how their organizations struggled with common challenges, including:
Based on the interviews, Forrester constructed a TEI framework, a composite company, and a benefits 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 is a large, global manufacturing company headquartered in the United States with factories and production facilities across the globe and an annual revenue of $1 billion. The composite organization has an expansive network with 3,000 virtual machines, 150 hosts, and three data centers.
Deployment characteristics. The composite organization has global operations and a complex network to monitor and manage. On average, the number of VMs in the network grows by 20% year over year, while number of hosts increases by 5% on an annual basis.
| Ref. | Benefit | Year 1 | Year 2 | Year 3 | Total | Present Value |
|---|---|---|---|---|---|---|
| Atr | Increased network mapping efficiency | $1,323,000 | $264,600 | $317,520 | $1,905,120 | $1,659,962 |
| Btr | Decreased network outages | $357,000 | $510,000 | $510,000 | $1,377,000 | $1,129,204 |
| Ctr | Reduced time spent monitoring network | $283,500 | $340,200 | $408,240 | $1,031,940 | $845,601 |
| Dtr | Improved troubleshooting | $68,040 | $89,775 | $113,400 | $271,215 | $221,248 |
| Total benefits (risk-adjusted) | $2,031,540 | $1,204,575 | $1,349,160 | $4,585,275 | $3,856,015 | |
Evidence and data. VMware Cloud Foundation Network Operations’ network map provided the interviewees’ organizations with improved visibility into their data sources and a centralized, easy-to-use interface for laying out the foundation for network monitoring activities. Interviewees noted that this benefit significantly impacted ROI and helped their organizations quickly lay the foundation for their network monitoring activities, representing a massive improvement to their prior processes.
Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite organization:
Risks. Factors that could impact the size of this benefit for organizations include 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 $1.7 million.
| Ref. | Metric | Calculation | Year 1 | Year 2 | Year 3 |
|---|---|---|---|---|---|
| A1 | Number of VMs in network | Composite | 3,000 | 3,600 | 4,320 |
| A2 | Number of VMs actively mapping | Composite | 3,000 | 600 | 720 |
| A3 | Network engineer FTE fully burdened hourly salary | TEI standard | $70 | $70 | $70 |
| A4 | Hours per VM needed for flow mapping without VMware Cloud Foundation Network Operations | Interviews | 9 | 9 | 9 |
| A5 | Hours per VM needed for flow mapping with VMware Cloud Foundation Network Operations | Interviews | 2 | 2 | 2 |
| At | Increased network mapping efficiency | A2*A3*(A4-A5) | $1,470,000 | $294,000 | $352,800 |
| Risk adjustment | ↓10% | ||||
| Atr | Increased network mapping efficiency (risk-adjusted) | $1,323,000 | $264,600 | $317,520 | |
| Three-year total: $1,905,120 | Three-year present value: $1,659,962 | ||||
Evidence and data. Interviewees talked about how VMware Cloud Foundation Network Operations improved their organizations’ network performance, in some cases helping to reduce network issues by 50% within data center network fabrics and between VMs in the virtual network, such as communication between two VMs on the same server.
Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite organization:
Risks. Factors that could impact the size of this benefit for organizations include 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 $1.1 million.
| Ref. | Metric | Calculation | Year 1 | Year 2 | Year 3 | |
|---|---|---|---|---|---|---|
| B1 | Total hours of unplanned network outages per year | Interviews | 80 | 80 | 80 | |
| B2 | Cost per hour of network downtime | Interviews | $300,000 | $300,000 | $300,000 | |
| B3 | Percent of relevant network outages | Interviews | 5% | 5% | 5% | |
| B4 | Outage reduction after implementation | Interviews | 35% | 50% | 50% | |
| Bt | Decreased network outages | B1*B2*B3*B4 | $420,000 | $600,000 | $600,000 | |
| Risk adjustment | ↓15% | |||||
| Btr | Decreased network outages (risk-adjusted) | $357,000 | $510,000 | $510,000 | ||
| Three-year total: $1,377,000 | Three-year present value: $1,129,204 | |||||
Evidence and data. Interviewees saw a reduction in time spent monitoring network infrastructure after implementing and performing flow mapping with VMware Cloud Foundation Network Operations.
Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite organization:
Risks. Factors that could impact the size of this benefit for organizations include 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 $846,000.
| Ref. | Metric | Calculation | Year 1 | Year 2 | Year 3 |
|---|---|---|---|---|---|
| C1 | Number of VMs in network | Composite | 3,000 | 3,600 | 4,320 |
| C2 | Network engineer FTE fully burdened hourly salary | TEI standard | $70 | $70 | $70 |
| C3 | Average hours per VM needed for ongoing monitoring before implementation | Interviews | 2 | 2 | 2 |
| C4 | Average hours per VM needed for ongoing monitoring after implementation | Interviews | 0.5 | 0.5 | 0.5 |
| Ct | Reduced time spent monitoring network | C1*C2*(C3-C4) | $315,000 | $378,000 | $453,600 |
| Risk adjustment | ↓10% | ||||
| Ctr | Reduced time spent monitoring network (risk-adjusted) | $283,500 | $340,200 | $408,240 | |
| Three-year total: $1,031,940 | Three-year present value: $845,601 | ||||
Evidence and data. The tediousness and frustration of performing network troubleshooting was a common cause of irritation among the interviewees, who appreciated how much easier it was to collect information with VMware Cloud Foundation Network Operations, as well as how much faster they could solve problems.
Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite organization:
Risks. Factors that could impact the size of this benefit for organizations include 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 $221,000.
| Ref. | Metric | Calculation | Year 1 | Year 2 | Year 3 |
|---|---|---|---|---|---|
| D1 | Hours spent troubleshooting before implementation | Interviews | 1,800 | 1,900 | 2,000 |
| D2 | Hours spent troubleshooting after implementation | Interviews | 720 | 475 | 200 |
| D3 | Annual hours saved using VMware Cloud Foundation Network Operations to identify network issues | D1-D2 | 1,080 | 1,425 | 1,800 |
| D4 | Network engineer FTE fully burdened hourly salary | TEI standard | $70 | $70 | $70 |
| Dt | Improved troubleshooting | D3*D4 | $75,600 | $99,750 | $126,000 |
| Risk adjustment | ↓10% | ||||
| Dtr | Improved troubleshooting (risk-adjusted) | $68,040 | $89,775 | $113,400 | |
| Three-year total: $271,215 | Three-year present value: $221,248 | ||||
Interviewees mentioned the following additional benefits that their organizations experienced but were not able to quantify:
The value of flexibility is unique to each customer. There are multiple scenarios in which a customer might implement VMware Cloud Foundation Network Operations and later realize additional uses and business opportunities, including:
Flexibility would also be quantified when evaluated as part of a specific project (described in more detail in Appendix A).
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.”
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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