A Forrester Total Economic
Impact™ Study
Commissioned By Polycom And
Microsoft
Project Director:
Bob Cormier,
Vice President And
Principal Consultant
September 2016
The Total Economic
Impact Of Polycom
Solutions For Microsoft
Office 365 Cost Savings And Business Benefits Attributed To Polycom Solutions For Microsoft Office 365
Table Of Contents
Executive Summary .................................................................................... 1
Disclosures .................................................................................................. 2
TEI Framework And Methodology ............................................................ 3
Analysis ........................................................................................................ 4
Financial Summary ................................................................................... 15
Polycom Solutions For Microsoft Office 365: Overview ...................... 16
Appendix A: Total Economic Impact™ Overview ................................. 17
Appendix B: Glossary ............................................................................... 18
ABOUT FORRESTER CONSULTING
Forrester Consulting provides independent and objective research-based
consulting to help leaders succeed in their organizations. Ranging in scope from a
short strategy session to custom projects, Forrester’s Consulting services connect
you directly with research analysts who apply expert insight to your specific
business challenges. For more information, visit forrester.com/consulting.
© 2016, Forrester Research, Inc. All rights reserved. Unauthorized reproduction is strictly prohibited.
Information is based on best available resources. Opinions reflect judgment at the time and are subject to
change. Forrester®, Technographics
®, Forrester Wave, RoleView, TechRadar, and Total Economic Impact
are trademarks of Forrester Research, Inc. All other trademarks are the property of their respective
companies. For additional information, go to www.forrester.com.
1
Executive Summary
Polycom and Microsoft commissioned Forrester
Consulting to conduct a Total Economic Impact™ (TEI)
study to examine the potential return on investment (ROI)
enterprises may realize by deploying Polycom solutions
with Microsoft Office 365’s new voice services, including
Cloud PBX, PSTN calling, and PSTN conferencing. The
purpose of this study is to provide readers with a
framework to evaluate the financial impact of the
investment. To better understand the benefits, costs,
risks, and flexibility options associated with an investment
in Polycom solutions for Microsoft Office 365, Forrester
interviewed an existing customer (referred to as the
Organization as anonymity was requested) that is using
Polycom solutions for Microsoft Office 365 in a cloud PBX
environment. The Organization is an engineering,
consulting, and construction management firm serving clients in government and industry.
Prior to deploying Polycom solutions for Microsoft Office 365, the Organization had multiple unified communications (UC)
and telephony platforms. It was also using different versions of Microsoft Office. It transitioned to Microsoft Office 365 about
four years ago and recently started using Polycom’s voice desktop and conference portfolios supported and interoperated
with the Microsoft Office 365 cloud PBX services. The Organization’s high-level business objectives were to significantly
enhance collaboration and improve productivity. It also wanted the ability to accommodate nontraditional employees such as
home workers and be able to have a location-agnostic approach to its multidisciplinary teams.
For more information on Polycom’s solutions, see the Polycom Solutions For Microsoft Office 365: Overview section at end
of this study.
POLYCOM SOLUTIONS FOR MICROSOFT OFFICE 365 IMPROVE PRODUCTIVITY AND REDUCE COSTS
Our interviews and subsequent financial analysis found that the Organization experienced the risk-adjusted ROI, benefits,
and costs shown in Figure 1.
The analysis points to risk-adjusted benefits of $1,682,747 over three years versus implementation costs of $804,160,
equating to a net present value (NPV) of $878,587. This translates to three years of the following: benefits of $2,744 per
user, costs of $1,412 per user, and an NPV of $1,332 per user.
FIGURE 1
Financial Summary Showing Three-Year Risk-Adjusted Results
ROI: 109%
Benefits PV: $1,682,747
Costs PV: $804,160
NPV: $878,587
Source: Forrester Research, Inc.
Polycom solutions for Microsoft Office 365 will help
the Organization achieve the following benefits (risk-
and present value [PV]-adjusted) over three years:
Incremental revenue with enhanced collaboration
— more billable hours — $1,057,774.
Employee relocation cost savings — $14,371.
Improved productivity and collaboration — power
users — $536,674.
Phone purchase and installation cost savings —
$73,928.
Total cost savings and benefits — $1,682,747.
2
› Benefits. The Organization experienced the following benefits, which totaled $1,682,747 (risk- and PV-adjusted):
• Incremental revenue with enhanced collaboration — more billable hours — $1,057,774. The Organization will
achieve its primary goal of improved productivity and incremental revenue as a result of enhanced collaboration from
using Polycom solutions for Microsoft Office 365.
• Employee relocation cost savings — $14,371. With Polycom, the phones no longer need to be physically moved
when a user relocates offices, saving IT staff $30 per move.
• Improved productivity and collaboration — power users — $536,674. The Organization achieved improved
productivity resulting from streamlined communications both internally and externally.
• Phone purchase and installation cost savings — $73,928. Polycom phones allow cost savings on purchase and
installation.
› Costs. The Organization experienced the following costs, which totaled $804,160 (risk- and PV-adjusted):
• Polycom phone and Microsoft licensing costs — 675,362. This includes the cost to purchase Polycom VVX
phones. It also includes annual Microsoft license costs per phone.
• Skype for Business and Polycom phone user training costs — $73,169. This includes the labor and materials to
train users.
• Ongoing Polycom platform management costs — $55,629. These are the internal labor costs to maintain the
platform.
If risk-adjusted costs and benefits still demonstrate a compelling business case, it raises confidence that the investment is
likely to succeed because the risks that threaten the project have been taken into consideration and quantified. The risk-
adjusted numbers should be taken as “realistic” expectations, as they represent the expected value considering risk.
Assuming normal success at mitigating risk, the risk-adjusted numbers should more closely reflect the expected outcome of
the investment.
Disclosures
The reader should be aware of the following:
› The study is commissioned by Polycom and 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 return on investment 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 Polycom solutions for Microsoft Office 365.
› Polycom reviewed and provided feedback to Forrester, but Forrester maintained editorial control over the study and its
findings and did not accept changes to the study that contradict Forrester’s findings or obscure the meaning of the study.
› The customer name for the interviews was provided by Microsoft and Polycom. Neither company participated in the
customer interviews.
3
TEI Framework And Methodology
INTRODUCTION
From the information provided in the interviews, Forrester has constructed a Total Economic Impact (TEI) framework for
those organizations considering investing in Polycom solutions for Microsoft Office 365. The objective of the framework is to
identify the benefits, costs, flexibility, and risk factors that affect the investment decision.
APPROACH AND METHODOLOGY
Forrester employed four fundamental elements of TEI in modeling Polycom solutions for Microsoft Office 365: benefits,
costs, flexibility, and risks.
Forrester took a multistep approach to evaluate the impact that Polycom solutions for Microsoft Office 365 can have on the
interviewed Organization (see Figure 2). Specifically, we:
› Interviewed Polycom and Microsoft marketing, sales, and product management personnel to better understand the value
proposition for Polycom solutions for Microsoft Office 365.
› Conducted in-depth interviews with the chief technology officer of the Organization and five of his staff to obtain data with
respect to costs, benefits, risks, and flexibility options.
› Constructed a financial model representative of the interviews using the TEI methodology. The financial model is
populated with the cost and benefit data obtained from the interviews.
› Risk adjustment is a key part of the TEI methodology. While the interviewed Organization provided cost and benefit
estimates, some categories included a broad range of responses or had a number of outside forces that might have raised
the costs or lowered the benefits. For that reason, individual benefits and selected costs have been risk-adjusted and are
detailed in each relevant section.
Given the increasing sophistication that enterprises have regarding ROI analyses related to business technology
investments, Forrester’s TEI methodology serves to provide a complete picture of the total economic impact of purchase
decisions. Please see Appendix A for additional information on the TEI methodology.
FIGURE 2
TEI Approach
Source: Forrester Research, Inc.
Perform duediligence
Conductcustomerinterviews
Constructfinancial
model usingTEI framework
Write casestudy
4
Analysis
THE INTERVIEWED ORGANIZATION
For this study, we conducted interviews with the Organization’s chief technology officer and his staff.
› The Organization is an engineering, consulting, and construction management firm serving clients in government and
industry.
› The Organization has been using Microsoft Office 365 for about four years and Microsoft cloud PBX for about 18 months.
It recently added Polycom VVX phones to its environment. At interview time, the Organization had deployed Polycom
phones to 250 users, mostly billable consultants and back-office employees.
› Polycom collaboration solutions at the Organization integrate directly with Skype for Business and Microsoft Lync without
gateways, resulting in reduced complexity, lower costs, and a single workflow for a better user experience.
› The Organization’s transition to Polycom solutions for Microsoft Office 365 started with IM and Presence; it will then add
voice direct, then video calls, and then web and videoconferencing.
INTERVIEW HIGHLIGHTS
Situation
After an extensive vendor selection process, the Organization chose Polycom solutions for Microsoft Office 365 for its ability
to simplify collaboration across its staff using one UC platform for
voice and video communications.
Before the Polycom decision, the Organization had made
numerous investments in Microsoft applications and wanted a way
to streamline communications throughout its user base without
increasing UC complexity.
Goals And Objectives
The Organization’s high-level business objectives were to
significantly enhance collaboration and improve productivity; have
the ability to accommodate nontraditional employees such as home
workers; and be able to have a location-agnostic approach to its
multidisciplinary teams.
Another goal was to mitigate an operational pain point of having too
many technology silos to deal with. To be on a conference bridge,
employees had to use a conference system; to share a screen, one
would need a laptop; and to be able to chat, one would have to use
a separate or simpler device.
The Organization’s biggest challenge was improving productivity to
enable more billable hours among its consultants. Every productive
billable hour gained is an hour of incremental revenue, and that has a direct impact on the Organization’s financials and
ability to operate efficiently.
“Some of our high-level
business objectives were
enhanced collaboration, better
productivity, the ability to tap
into nontraditional workers,
and be able to have a location-
agnostic approach to our
multidisciplinary teams.”
~Chief technology officer, the Organization
5
The Organization cited the strong partnership and tight hardware and software integration between Microsoft and Polycom
with the two companies working together to make a seamless unified communications solution. That relationship was the
catalyst to initially explore Polycom solutions for Microsoft Office 365.
Interview Highlights
› The Organization’s Polycom phones integrate with SharePoint and Exchange, and the benefits are single sign-on and the
ability to leverage features such as Presence and voice calls or video calls directly from these devices. The Organization
wanted a device-agnostic approach.
› When the Organization considered desktop phones for its Microsoft Cloud PBX deployment, it chose Polycom’s Skype for
Business Edition VVX phones. According to Polycom, the phones come ready to install, with a minimum software release
required to install them with Office 365 and a preconfigured Skype for Business right out of the box. The Organization has
invested in VVX600 desktop phones as well as CX5500 unified conference stations. The CX5500 devices deliver a 360-
degree video camera experience, have 1080p active speaker tracking with Skype for Business, and can be used as a SIP
conference phone.
› During the interview, the chief technology officer agreed that Polycom collaboration solutions integrate directly with Skype
for Business and Microsoft Lync without gateways, resulting in reduced complexity. The solutions also lower costs and
offer a single workflow for a better user experience.
› The Organization also describes ease of use and access as a key benefit of using Polycom phones in conjunction with
Microsoft Lync. Polycom’s phones work directly with commonly used Microsoft applications, including Lync, SharePoint,
Office 365, and Active Directory. This provides an intuitive communications experience, allowing users to connect and
collaborate regardless of location or device.
› With a future goal of standardizing across a single UC platform, combined with the ease of configuration and management
of Polycom solutions for Microsoft Office 365, the Organization has realized IT labor savings in the areas of installation,
maintenance, and user relocation.
Solution And Deployment Schedule
› During Year 1 of our analysis, Polycom solutions for Microsoft Office 365 were deployed to 250 users, mostly billable
consultants and back-office workers within the Organization.
› At the end of Year 1, the Organization will invest in 500 additional Polycom VVX phones.
› At the end of Year 2, the Organization will purchase 250 additional phones, for a total of 1,000 phones deployed across the
enterprise during Year 3.
6
BENEFITS
The Organization experienced four benefits which were quantified in this case study:
› Incremental revenue with enhanced collaboration — more billable hours.
› Employee relocation cost savings.
› Improved productivity and collaboration — power users.
› Phone purchase and installation cost savings.
Incremental Revenue With Enhanced Collaboration — More Billable Hours
The Organization will achieve its primary goal of improved productivity and incremental revenue as a result of enhanced
collaboration from using Polycom solutions and Microsoft Office 365’s new voice services, including Cloud PBX, PSTN
calling, and PSTN conferencing.
The joint Polycom and Microsoft solution offers several time-saving functionalities that will allow the Organization’s
consultants to be billable (revenue) an incremental 0.5 to 1.0 hours each week. A major enhancement for the Organization is
ease of use; for example, the Polycom VVX phone connects to a Skype for Business meeting with a push-button, allowing
users to just click and connect from their device. In the past, users were faced with different communications silos, dealing
with three or four different types of systems. For example, to be on a conference bridge, users would have to use one
system; to share a screen, users needed to use a laptop; and for chats, users needed a separate device. Polycom
collaboration solutions integrate directly with Skype for Business and Microsoft Lync 2013 without gateways, resulting in
reduced complexity with a single workflow for a better user experience.
The Organization spent three months to go from pilot to production stage, and then it took another three months for user
adoption to get to the goal of a 70% adoption (minimum). Taking a conservative approach, the Organization predicted an
average of 0.5 incremental billable hours per consultant per week in the Year 1 ramp period. Year 2 is forecasted to be 0.75
incremental billable hours, and Year 3 at 1 billable hour. Forrester acknowledges that these potential time savings may not
always be billable; therefore, we assume that only 90% of the saved time is actually billable and have risk-adjusted this
benefit downward by 10%. See Table 1 for benefit calculations. See the section on Risks for more detail.
7
Employee Relocation Cost Savings
The Organization indicated that a key benefit from the Polycom solutions for Microsoft Office 365 was a reduction in time
spent on employee moves and changes. With the previous solution, a ticket was created to move or change the physical
phone from its existing location to the new location. With Polycom solutions for Microsoft Office 365 Cloud PBX, when users
change location they simply sign out of their existing phone and sign in to their new location’s phone. There is no longer a
need to physically move the phone, therefore reducing the IT support costs associated with moves and changes. The
Organization reported savings of $30 per move or change. (We calculate the installation benefits of adding brand-new
phones in Table 4).
Across organizations, the number of moves or changes per employee can vary. For this study, we assume that one-third
(33%) of the Organization’s phone users move every year (see Table 2). Forrester risk-adjusted the benefit downward by
10% to reflect variability in IT costs. See the section on Risks for more detail.
TABLE 1
Incremental Revenue With Enhanced Collaboration — More Billable Hours
Ref. Metric Calculation/Source Year 1 Year 2 Year 3
A1 Number of billable consultants using
Polycom solutions for Microsoft Office 365 Interviews 83 100 120
A2 Number of incremental billable hours per
week per consultant Interviews 0.50 0.75 1.00
A3 Number of work weeks in a year Average 46 46 46
A4 Average hourly billable rate Interviews $135 $135 $135
At Incremental revenue with enhanced
collaboration — more billable hours A1*A2*A3*A4 $257,715 $463,887 $742,219
Risk adjustment ↓10%
Atr
Incremental revenue with enhanced
collaboration — more billable hours
(risk-adjusted) $231,944 $417,498 $667,997
Source: Forrester Research, Inc.
8
Improved Productivity And Collaboration — Power Users
The Organization achieved improved productivity resulting from streamlined communications both internally and externally.
The joint Polycom and Microsoft solution offers several time-saving functionalities that when combined can save up to 1.5
hours per week for each “power” user. These include the ability to quickly find and connect with the right contact and the
ability to use Polycom phones to connect when the user cannot access their PC quickly. In some scenarios, users don’t need
a laptop — just an IP phone/conferencing device. Here are the features and functionality that the Organization’s power users
use to improve productivity and collaboration:
› With just an internet connection, Polycom VVX solutions integrate directly with Skype for Business and Microsoft Lync
2013 without gateways, resulting in reduced complexity and a single workflow for a more productive user experience.
› Polycom solutions follow the familiar Microsoft Outlook scheduling workflow, providing a "one click to join" experience for
meeting participants.
› Polycom solutions for Microsoft Office 365 provide a seamless user experience with voice, video, and content.
› Users can manage calling features right from Office 365, enabling call hold, transfer, voicemail, and call forwarding.
The Organization will make Polycom phones available to 250 users in Year 1; 750 users in Year 2; and 1,000 users in Year
3. However, the productivity benefits calculated in this study are limited to the 25% of the employee population considered
power users who will save between 1.0 and 1.5 hours per week. Forrester acknowledges that these time savings may not
always be used productively; therefore, we conservatively assume that only two-thirds (66%) of the saved time is “captured”
for ongoing productive use. See Table 3 for benefit calculations.
Productivity and collaboration benefits are very much dependent on how quickly and frequently the users leverage the
functionality provided by the solution. To adjust for factors such as the learning curve and employee turnover, this benefit
was risk-adjusted (reduced) by 8% in Table 3. See the section on Risks for more detail.
TABLE 2
Employee Relocation Cost Savings
Ref. Metric Calculation/Source Year 1 Year 2 Year 3
B1 Average number of Polycom phones
during the year Interview 250 750 1,000
B2 Number of moves and changes B1 * .333 83 250 333
B3 IT savings per move or change Interview $30 $30 $30
Bt Employee relocation cost savings B2 * B3 $2,498 $7,493 $9,990
Risk adjustment ↓10%
Btr Employee relocation cost savings
(risk-adjusted) $2,248 $6,743 $8,991
Source: Forrester Research, Inc.
9
TABLE 3
Improved Productivity And Collaboration — Power Users
Ref. Metric
Calculation/
Source Year 1 Year 2 Year 3
C1 Average number of employees with
Polycom VVX phones Interviews 250 750 1,000
C2 Number of power users (25%) C1 * .25 63 188 250
C3 Hourly wage Interviews —
$70,000 / 2,080 $33.65 $33.65 $33.65
C4 Time saved with Polycom solutions with
Microsoft Office 365 Hours per week 1.0 1.5 1.5
C5 Work weeks per year Average 46 46 46
C6 Productivity percent captured Interviews 66% 66% 66%
Ct Improved productivity and collaboration —
power users
(C2 * C3) * C5
*C6 $63,851 $287,329 $383,105
Risk adjustment ↓8%
Ctr Improved productivity and collaboration
— power users (risk-adjusted) $58,743 $264,343 $352,457
Source: Forrester Research, Inc.
Phone Purchase And Installation Cost Savings
The Organization reported an average per unit cost savings of $75 per Polycom VVX phone when compared with other
similar phones. The Organization will purchase 250 phones in Year 1; 500 phones in Year 2; and 250 phones in Year 3. In
addition, Polycom VVX phones are easier to install (new employee adds) because the base profile is preset for Lync and
Skype For Business by default, the phones are preloaded with qualified software, and the phones are preconfigured with
Lync and Skype for Business parameters. The Organization reported saving an average of $30 per new phone installation.
Forrester risk-adjusted these benefits downward by 15% to account for other organizations’ varying labor costs and phone
vendor volume discounts. See Table 4 for details.
10
TABLE 4
Phone Purchase And Installation Cost Savings
Ref. Metric
Calculation/
Source Year 1 Year 2 Year 3
D1 Number of phones purchased Interviews 250 500 250
D2 Average cost savings per phone purchase Interviews $75 $75 $75
D3 Cost savings on phones D1 * D2 $18,750 $37,500 $18,750
D4 Savings for reduced installation time per
phone (employee adds) Interviews $30 $30 $30
D5 Installation cost savings D1 * D4 $7,500 $15,000 $7,500
Dt Total phone purchase and installation cost
savings D3 + D5 $26,250 $52,500 $26,250
Risk adjustment ↓15%
Dtr Total phone purchase and installation
cost savings (risk-adjusted) $22,313 $44,625 $22,313
Source: Forrester Research, Inc.
Total Benefits
Table 5 shows the total of all benefits, as well as present values (PVs) discounted at 10%. Over three years, the
Organization expects risk-adjusted total benefits to be a PV of $1,682,747.
TABLE 5
Total Benefits (Risk-Adjusted)
Benefit Year 1 Year 2 Year 3 Total
Present
Value
Atr Incremental revenue with enhanced
collaboration — more billable hours $231,944 $417,498 $667,997 $1,317,439 $1,057,774
Btr Employee relocation cost savings $2,248 $6,743 $8,991 $17,982 $14,371
Ctr Improved productivity and collaboration —
power users $58,743 $264,343 $352,457 $675,542 $536,674
Dtr Total phone purchase and installation cost
savings $22,313 $44,625 $22,313 $89,250 $73,928
Total benefits (risk-adjusted) $315,247 $733,209 $1,051,758 $2,100,213 $1,682,747
Source: Forrester Research, Inc.
11
COSTS
The Organization incurred costs in three categories associated with Polycom solutions for Microsoft Office 365:
› Polycom phone units and Microsoft license costs.
› Skype for Business and Polycom phone user training costs.
› Ongoing Polycom platform management costs.
These represent costs experienced by the Organization for purchase and deployment of Polycom solutions for Microsoft
Office 365 and ongoing management associated with the solution.
Polycom Phone And Microsoft License Costs
The Organization will purchase Polycom VVX phones in each of the three years of our analysis at an average cost of $270.
In order to take advantage of the Microsoft Office 365 features and functionality available, the Organization must purchase
Microsoft licenses at an annual cost of $282.60 for each phone in use. The Organization had fixed price quotes for the
phones and licenses; therefore, no risk adjustment was made (see Table 6). In addition, the Organization had previously
incurred the costs of Microsoft licenses for Skype for Business; hence those costs were not included in this analysis.
Skype For Business And Polycom Phone User Training Costs
The Organization wanted to promote maximum user adoption of the features and functionality of Skype for Business and
Polycom phones. It invested time and materials to train new users as well as in ongoing training for more advanced features.
TABLE 6
Polycom Phone And Microsoft Licensing Costs
Ref. Metric Calculation Year 1 Year 2 Year 3
E1 Number of Polycom VVX phones purchased Interviews 250 500 250
E2 Average cost per VVX phone Polycom $270 $270 $270
E3 Total annual cost of Polycom VVX phones E1 * E2 $67,500 $135,000 $67,500
E4 Additional Microsoft annual license cost per
phone Microsoft $282.60 $282.60 $282.60
E5 Cumulative number of phones Cumulative
total E1 250 750 1,000
E6 Total annual Microsoft license cost per phone E4 * E5 $70,650 $211,950 $282,600
Et Total costs: phone units and Microsoft licenses E3 + E6 $138,150 $346,950 $350,100
Risk adjustment 0%
Etr Total costs: phone units and Microsoft
licenses (risk-adjusted) $138,150 $346,950 $350,100
Source: Forrester Research, Inc.
12
The Organization estimates it spent $25,000 in Year 1, and it projects to spend $25,000 in Year 2 and $35,000 in Year 3.
Forrester risk-adjusted this cost upward by 5% to acknowledge that the costs are estimates.
Ongoing Polycom Platform Management Costs
In addition to the transactional costs associated with managing each phone unit (including moves, adds, and changes), there
is a cost of managing and optimizing the overall bandwidth of the platform on a daily basis. The Organization estimates the
following labor hours associated with a telephony analyst: 10 hours per week in Year 1; 12 hours per week in Year 2; and 15
hours per week in Year 3. Forrester risk-adjusted this cost upward by 5% to accommodate hourly wage variances.
Total Costs
Table 9 shows the total of all costs as well as associated present values, discounted at 10%. Over three years, the
Organization expects costs to total $992,430, with a present value of $804,160.
TABLE 7
Skype For Business And Polycom User Training Costs
Ref. Metric Calculation Year 1 Year 2 Year 3
F1 User training costs Interviews $25,000 $25,000 $35,000
Ft Skype for Business and Polycom phone user
training costs F1 $25,000 $25,000 $35,000
Risk adjustment ↑5%
Ftr Skype for Business and Polycom phone
user training costs (risk-adjusted) $26,250 $26,250 $36,750
Source: Forrester Research, Inc.
TABLE 8
Ongoing Polycom Platform Management Costs
Ref. Metric Calculation Year 1 Year 2 Year 3
G1 Ongoing management of Polycom platform Hours/week 10 12 15
G2 Hourly cost of labor $70,000 /
2,080 $33.65 $33.65 $33.65
G3 Work weeks per year 52 52 52 52
Gt Ongoing Polycom platform management costs G1 * G2 * G3 $17,498 $20,998 $26,247
Risk adjustment ↑5%
Gtr Ongoing Polycom platform management
costs (risk-adjusted) $18,373 $22,047 $27,559
Source: Forrester Research, Inc.
13
FLEXIBILITY
Flexibility, as defined by TEI, represents an investment in additional capacity or capability that could be turned into business
benefit for some future additional investment. This provides an organization with the “right” or the ability to engage in future
initiatives and benefits but not the obligation to do so. Our Organization is already using Polycom VVX phones and is
forecasting heavy use of more advanced Polycom devices in the future such as:
› Polycom RealPresence Trio. This smart hub for group collaboration transforms the three-point conference phone into a
voice, content sharing, and video system that can fit into any team environment.
› Huddle Workspace Smart Hub. Connect face-to-face with remote teams, partners, and customers with this Microsoft
optimized room with easy integration with Microsoft Skype for Business and Office 365.
In addition, the Organization acquires other companies at the rate of two per year, and Polycom solutions for Microsoft Office
365 allow faster scaling of the cloud PBX environment and Polycom devices into those acquired companies. The
Organization will be replacing a 650-person footprint with Polycom solutions for Microsoft Office 365 over the next 18 to 24
months (future flexibility benefits are not included in this study).
The value of flexibility options is clearly unique to each customer, and the measure of their value varies from organization to
organization. For the purpose of this analysis, we have assumed that the Organization sees future value in upgrading to
more advanced Polycom devices and taking advantage of faster scaling with acquisitions, though the Organization was not
able to calculate the benefits at this time. The value of the flexibility option (when calculated) is based on the Black-Scholes
Option Pricing model. (For information regarding the flexibility calculation, please see Appendix A.)
RISKS
Forrester defines two types of risk associated with this analysis: “implementation risk” and “impact risk.” Implementation risk
is the risk that a proposed investment in Polycom solutions for Microsoft Office 365 may deviate from the original or expected
requirements, resulting in higher costs than anticipated. “Impact risk” refers to the risk that the business or technology needs
of the organization may not be met by the investment, resulting in lower overall total benefits. The greater the uncertainty, the
wider the potential range of outcomes for cost and benefit estimates. Note: Forrester chose to not risk-adjust vendor costs
because the Organization had received fixed price quotes for phones and licenses.
TABLE 9
Total Costs (Risk-Adjusted)
Cost Year 1 Year 2 Year 3 Total Present Value
Phone units and Microsoft license
costs $138,150 $346,950 $350,100 $835,200 $675,362
Skype for Business and Polycom
phone user training costs $26,250 $26,250 $36,750 $89,250 $73,169
Ongoing Polycom platform
management costs $18,373 $22,047 $27,559 $67,980 $55,629
Total costs (risk-adjusted) $182,773 $395,247 $414,409 $992,430 $804,160
Source: Forrester Research, Inc.
14
Highlighting implementation risk and impact risk by adjusting the costs and benefits results in more meaningful and accurate
estimates and a more accurate projection of the ROI. In general, risks affect costs by raising the original estimates, and they
affect benefits by reducing the original estimates. The risk-adjusted numbers should be taken as “realistic” expectations
since they represent the expected values considering risk.
The following implementation risk that affects costs is identified as part of the analysis:
› Vendor costs were not risk-adjusted due to fixed price quotes. However, readers should take into consideration
varying discounts for vendor hardware, software licensing, and services costs.
The following impact risks that affect benefits are identified as part of this analysis:
› Incremental revenue with enhanced collaboration — more billable hours. Forrester acknowledges that the time
savings may not always be billable; therefore, we assume that only 90% of the time saved is actually billable and have
risk-adjusted this benefit downward by 10%.
› Employee relocation cost savings. Across organizations, the number of moves or changes per employee can vary. For
this study, we assume that one-third (33%) of Polycom phone users move every year. To account for readers variances,
we risk-adjusted the benefit downward by 10%.
› Improved productivity and collaboration — power users. Productivity and collaboration benefits are very much
dependent on how quickly and frequently the users leverage the functionality provided by the solution. To adjust for factors
such as the learning curve and employee turnover, this benefit was risk-adjusted (reduced) by 8%.
› Phone purchase and installation cost savings. Forrester risk-adjusted these benefits downward by 15% to account for
other organizations’ varying labor costs and phone vendor volume discounts.
Table 10 shows the values used to adjust for risk and uncertainty in the cost and benefit estimates. The TEI model uses a
triangular distribution method to calculate risk-adjusted values. To construct the distribution, it is necessary to first estimate
the low, most likely, and high values that could occur within the current environment. The risk-adjusted value is the mean of
TABLE 10
Benefit And Cost Risk Adjustments
Benefits Adjustment
Incremental revenue with enhanced collaboration — more billable hours 10%
Employee relocation cost savings 10%
Improved productivity and collaboration — power users 8%
Phone purchase and installation cost savings 15%
Costs Adjustment
Phone units and Microsoft license 0%
Skype for Business and Polycom phone user training 5%
Ongoing Polycom platform management 5%
Source: Forrester Research, Inc.
Source: Forrester Research, Inc.
15
the distribution of those points. Readers are urged to apply their own risk ranges based on their own degree of confidence in
the cost and benefit estimates.
Financial Summary
The financial results calculated in the Benefits and Costs sections can be used to determine the ROI, NPV, and payback
period for the Organization’s investment in Polycom solutions for Microsoft Office 365. Table 11 below shows the risk-
adjusted ROI, NPV, and payback period values. These values are determined by applying the risk-adjustment values from
Table 10 in the Risks section to the total benefit and cost numbers in Table 5 and Table 9.
TABLE 11
Cash Flow Summary (Risk-Adjusted Estimates)
Year 1 Year 2 Year 3 Total Present Value
Total costs ($182,773) ($395,247) ($414,409) ($992,430) ($804,160)
Total benefits $315,247 $733,209 $1,051,758 $2,100,213 $1,682,747
Net benefits $132,474 $337,962 $637,348 $1,107,784 $878,587
ROI 109%
Payback period Seven months
Source: Forrester Research, Inc.
The ROI was a favorable 109%, and the payback period was a quick seven months.
If risk-adjusted costs, benefits, and ROI still demonstrate a compelling business case, it raises confidence that the
investment is likely to succeed because the risks that threaten the project have been taken into consideration and quantified.
The risk-adjusted numbers should be taken as “realistic” expectations, as they represent the expected value considering risk.
Assuming normal success at mitigating risk, the risk-adjusted numbers should more closely reflect the expected outcome of
the investment.
16
Polycom Solutions For Microsoft Office 365: Overview
According to Polycom, success with unified communications is about integrating all communications into a seamless
workflow that is easy to use. Polycom is a Microsoft UC partner that provides direct integration with more than 40 voice,
video, and content solutions that integrate with Skype for Business/Microsoft Lync, SharePoint, Exchange, and Office 365.
Why organizations should care:
› Direct integration. Polycom collaboration solutions integrate directly with Skype for Business/Microsoft Lync without
gateways, resulting in reduced complexity, lower costs, and a single workflow for a better user experience.
› Multivendor interoperability. Polycom technology enables Microsoft collaboration with video clients from multiple
vendors.
› Consistent workflows. Polycom solutions follow the familiar Microsoft Outlook scheduling workflow, providing a "one click
to join" experience for meeting participants.
Polycom solutions for Microsoft Office 365 are designed for:
› Microsoft Office 365 customers looking for collaborations solutions to complement their cloud service.
› Skype for Business Instant Message (IM) & Presence customers adding voice and/or video.
› Skype for Business customers adding video solutions for Skype for Business.
› Skype for Business customers migrating off of other conferencing services.
› Microsoft Lync customers expanding a current deployment or upgrading to Skype for Business.
17
Appendix A: Total Economic Impact™ Overview
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.
The TEI methodology consists of four components to evaluate investment value: benefits, costs, flexibility, and risks.
BENEFITS
Benefits represent the value delivered to the user organization — IT and/or business units — by the proposed product or
project. Often, product or project justification exercises focus just on IT cost and cost reduction, leaving little room to analyze
the effect of the technology on the entire organization. The TEI methodology and the resulting financial model place 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. Calculation of benefit estimates involves a clear dialogue with the user organization to understand
the specific value that is created. In addition, Forrester also requires that there be a clear line of accountability established
between the measurement and justification of benefit estimates after the project has been completed. This ensures that
benefit estimates tie back directly to the bottom line.
COSTS
Costs represent the investment necessary to capture the value, or benefits, of the proposed project. IT or the business units
may incur costs in the form of fully burdened labor, subcontractors, or materials. Costs consider all the investments and
expenses necessary to deliver the proposed value. In addition, the cost category within TEI captures any incremental costs
over the existing environment for ongoing costs associated with the solution. All costs must be tied to the benefits that are
created.
FLEXIBILITY
Within the TEI methodology, direct benefits represent one part of the investment value. While direct benefits can typically be
the primary way to justify a project, Forrester believes that organizations should be able to measure the strategic value of an
investment. Flexibility represents the value that can be obtained for some future additional investment building on top of the
initial investment already made. For instance, an investment in an enterprisewide upgrade of an office productivity suite can
potentially increase standardization (to increase efficiency) and reduce licensing costs. However, an embedded collaboration
feature may translate to greater worker productivity if activated. The collaboration can only be used with additional
investment in training at some future point. However, having the ability to capture that benefit has a PV that can be
estimated. The flexibility component of TEI captures that value.
RISKS
Risks measure the uncertainty of benefit and cost estimates contained within the investment. Uncertainty is measured in two
ways: 1) the likelihood that the cost and benefit estimates will meet the original projections and 2) the likelihood that the
estimates will be measured and tracked over time. TEI applies a probability density function known as “triangular distribution”
to the values entered. At a minimum, three values are calculated to estimate the underlying range around each cost and
benefit.
18
Appendix B: Glossary
Discount rate: The interest rate used in cash flow analysis to take into account the time value of money. Although the
Federal Reserve Bank sets a discount rate, companies often set a discount rate based on their business and investment
environment. Forrester assumes a yearly discount rate of 10% for this analysis. Organizations typically use discount rates
between 8% and 16% based on their current environment. Readers are urged to consult their respective organizations to
determine the most appropriate discount rate to use in their own environment.
Net present value (NPV): The present or current value of (discounted) future net cash flows given an interest rate (the
discount rate). A positive project NPV normally indicates that the investment should be made, unless other projects have
higher NPVs.
Present value (PV): The present or current value of (discounted) cost and benefit estimates given at an interest rate (the
discount rate). The PV of costs and benefits feed into the total NPV of cash flows.
Payback period: The breakeven point for an investment. This is the point in time at which net benefits (benefits minus costs)
equal initial investment or cost.
Return on investment (ROI): A measure of a project’s expected return in percentage terms. ROI is calculated by dividing
net benefits (benefits minus costs) by costs.
A NOTE ON CASH FLOW TABLES
The following is a note on the cash flow tables used in this study (see the example table below). The initial investment
column contains costs incurred at “time 0” or at the beginning of Year 1. Those costs are not discounted. All other cash flows
in Years 1 through 3 are discounted using the discount rate (shown in Framework Assumptions section) at the end of the
year. PV calculations are calculated for each total cost and benefit estimate. NPV calculations are not calculated until the
summary tables are the sum of the initial investment and the discounted cash flows in each year.
FRAMEWORK ASSUMPTIONS
Table 12 provides the model assumptions that Forrester used in this analysis.
The discount rate used in the PV and NPV calculations is 10%, and the time horizon used for the financial modeling is three
years. Organizations typically use discount rates between 8% and 16% based on their current environment. Readers are
urged to consult with their respective company’s finance department to determine the most appropriate discount rate to use
within their own organizations.
TABLE [EXAMPLE]
Example Table
Ref. Metric Calculation Year 1 Year 2 Year 3
Source: Forrester Research, Inc.
19
TABLE 12
Model Assumptions
Ref. Metric Calculation Value
H1 Hours per week 40
H2 Work weeks per year 46
H3 Hours per year (M-F, 9-5) 2,080
H4 Average hourly billable rate $135
H5 Average annual salary — IT and
power users $70,000
H6 Average hourly salary — IT and power
users (H5/2,080 hours) $33.65
Source: Forrester Research, Inc.