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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

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© 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


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


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


Btr Employee relocation cost savings

(risk-adjusted) $2,248 $6,743 $8,991


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


Ctr Improved productivity and collaboration

— power users (risk-adjusted) $58,743 $264,343 $352,457


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


Dtr Total phone purchase and installation

cost savings (risk-adjusted) $22,313 $44,625 $22,313


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


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


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


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


TABLE 8

Ongoing Polycom Platform Management Costs


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


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


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%



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


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



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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


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