A Forrester Total Economic Impact™
Study Commissioned By Google
September 2018

The Total Economic
Impact™ Of Google
Chrome OS Devices For
Knowledge Workers
Cost Savings And Business Benefits
Enabled By Chrome Devices For
Knowledge Workers

Table Of Contents
Executive Summary
Key Findings

1
1

TEI Framework And Methodology

3

The Chrome Devices For Knowledge Workers Customer Journey
Interviewed Organizations
Key Challenges

4

Key Results

5

Composite Organization

6

Analysis Of Benefits
Benefit 1: Hardware And Software Cost Avoidance

7
7

Benefit 2: Improved Employee Productivity

8

Benefit 3: IT Management And Services Savings

9

Analysis Of Costs
Cost 1: Hardware And Software License Costs

11
11

Cost 2: Implementation Costs

12

Cost 3: Change Management And Training Costs

12

Financial Summary
Google Chrome Devices For Knowledge Workers: Overview
Appendix A: Total Economic Impact

Project Director:
Steve Odell

4
4

14
15
16

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Executive Summary
Chrome Benefits

Hardware and software cost
avoidance:$10.7 million

Improved employee productivity:$3.1 million

Google commissioned Forrester Consulting to conduct a Total Economic
Impact™ (TEI) study and examine the potential return on investment (ROI)
enterprises may realize by deploying Chrome devices for knowledge
workers. The purpose of this study is to provide readers with a framework
to evaluate the potential financial impact of the Chrome devices on theirorganizations.
Google Chrome devices like Chromebooks and Chromeboxes provide
organizations a cloud-native and easy-to-deploy alternative to traditional
laptops and desktops. This is significant as employees increasingly rely on
cloud-based business applications to do their jobs and need technologythat supports productivity at and away from their desks and offices.1 To
better understand the benefits, costs, and risks associated with thisinvestment, Forrester surveyed 236 organizations and interviewed sevencustomers with years of experience using Chrome devices.
Forrester developed a composite organization based on data gatheredfrom the customer interviews to reflect the total economic impact that
Chrome devices could have on an organization. The composite
organization is representative of the organizations that Forresterinterviewed and surveyed and is used to present the aggregate financial
analysis in this study. All values are reported in risk-adjusted three-year
present value (PV) unless otherwise indicated.

Key Findings
Quantified benefits. The following benefits reflect the financial analysis
associated with the composite organization.

IT management and services
savings:$2.2 million› Hardware and software cost avoidance totaling $10.7 million.
Organizations noted that the Chrome hardware and software licenses
cost less than their legacy devices.
› Improved employee productivity totaling $3.1 million. Organizations
noted that due to the cloud-native quality of Chrome devices, employees
experienced less device downtime compared to legacy devices.
› IT management and services savings totaling $2.2 million.
Organizations noted that Chrome devices required significantly lesseffort to deploy than legacy devices, and the cloud-native quality of
Chrome devices resulted in significantly less IT management andservice effort.
Costs. The following costs reflect the financial analysis associated withthe composite organization.
› Hardware and software license costs totaling $6.1 million. This isbased on a hardware cost of $700 per device and an annual Chrome
Enterprise license cost of $50 per device.
› Deployment costs of $586,500. In addition to hardware and software
costs, organizations noted that, while minimal, there was effort
associated with deploying Chrome devices.
› Training costs totaling $599,150. Use of Chrome devices can be
intuitive, and 94% of information workers say browser-based
applications are as easy or easier to use than client apps.2 However,since their use is a departure from legacy devices, training is required forknowledge workers moving to Chrome devices.

1 | The Total Economic Impact™ Of Google OS Devices For Knowledge Workers

Forrester’s survey of and interviews with existing customers andsubsequent financial analysis found that a composite organization basedon these organizations experienced benefits of $16.0 million over three
years versus costs of $7.2 million, adding up to a net present value (NPV)of $8.8 million and an ROI of 121%.

ROI
121%

IT management and services savings,$2,190,743

Benefits PV$16.0 million

Improved employee
productivity,$3,095,832

NPV$8.8 million$16.0 million
three-year total benefits
PV

Payback< 6 months
Hardware and softwaresavings, $10,721,938

Benefits (Three-Year)

Financial Summary$10.7M
Payback:<6 months

Total
benefits
PV,$16.0M

$3.1M

Total
costs PV,
$7.2M

InitialYear 1

Year 2

Year 3

2 | The Total Economic Impact™ Of Google OS Devices For Knowledge Workers$2.2M

Hardware andsoftware savings

Improved
employeeproductivity

IT management
and services
savings

TEI Framework And Methodology
From the information provided in the interviews, Forrester has constructeda Total Economic Impact™ (TEI) framework for those organizations
considering implementing Google Chrome devices for knowledge workers.
The objective of the framework is to identify the cost, benefit, flexibility, andrisk factors that affect the investment decision. Forrester took a multistep
approach to evaluate the impact that Google Chrome devices forknowledge workers can have on an organization:

The TEI methodology
helps companies
demonstrate, justify,
and realize thetangible value of IT
initiatives to bothsenior management
and other key
businessstakeholders.

DUE DILIGENCE
Interviewed Google stakeholders and Forrester analysts to gather data
relative to Chrome devices for knowledge workers.
CUSTOMER INTERVIEWS
Surveyed 236 organizations and interviewed seven customers using
Chrome devices to obtain data with respect to costs, benefits, and risks.
COMPOSITE ORGANIZATION
Designed a composite organization based on characteristics of theinterviewed organizations.
FINANCIAL MODEL FRAMEWORK
Constructed a financial model representative of the interviews using the
TEI methodology and risk-adjusted the financial model based on issues
and concerns of the interviewed organizations.
CASE STUDY
Employed four fundamental elements of TEI in modeling Google Chrome
devices for knowledge workers’ impact: benefits, costs, flexibility, andrisks. Given the increasing sophistication that enterprises have regarding
ROI analyses related to IT investments, Forrester’s TEI methodology
serves to provide a complete picture of the total economic impact ofpurchase decisions. Please see Appendix A for additional information on
the TEI methodology.

DISCLOSURES
Readers should be aware of the following:This study is commissioned by Google and delivered by Forrester Consulting. It
is not meant to be used as a competitive analysis.
Forrester makes no assumptions as to the potential ROI that otherorganizations will receive. Forrester strongly advises that readers use their own
estimates within the framework provided in the report to determine theappropriateness of an investment in Google Chrome devices for knowledge
workers.
Google reviewed and provided feedback to Forrester, but Forrester maintains
editorial control over the study and its findings and does not accept changes tothe study that contradict Forrester’s findings or obscure the meaning of thestudy.
Google provided the customer names for the interviews but did not participate
in the interviews.

3 | The Total Economic Impact™ Of Google OS Devices For Knowledge Workers

The Chrome Devices For Knowledge
Workers Customer Journey
BEFORE AND AFTER THE CHROME DEVICES FOR KNOWLEDGE
WORKERS INVESTMENT

Interviewed Organizations
For this study, Forrester surveyed 236 organizations and conductedseven interviews with Google Chrome devices customers. Interviewed
customers include the following:
INDUSTRYNUMBER OF
EMPLOYEESNUMBER OF CHROME
DEVICES OR USERS

ANNUAL REVENUE

Healthcare

3,000

3,000

PrivateRetail

60,00015,000$20 billion

Manufacturing

50,00030,000$7 billion

Retail

200,000

35,000$15 billion

Manufacturing80,00070,000$30 billion

HR consulting

4,000

4,000

PrivateResearch

1,400

40

PrivateKey Challenges
Workers value devices that foster productivity, flexibility, andconvenience. Above all, employees want devices that enable continuous
productivity; they can’t afford to wait around for an issue to be fixed
before continuing their work. Flexibility and easy, cross-device
experiences are a must.3
As such, organizations faced some key challenges in their deploymentsof devices for knowledge workers, and these led to their investment in
Chrome devices. Organizations hoped to improve:› Usability and employee experience.
› Speed.
› IT and end user productivity.
In addition, Forrester’s survey across 97 customers using Chrome
devices for knowledge workers revealed the following objectives forchoosing Google Chrome devices.

4 | The Total Economic Impact™ Of Google OS Devices For Knowledge Workers

“What drove your organization to move to Chrome devices?”

To improve usability and employee experience

62%

Improve speed

48%

Improve IT productivity

46%

Improve end user productivity

39%

Increased security

36%

Improve stability

31%

Lower cost of IT management (administration)

30%

Disaster recovery

3%

None of the above/Don't Know

2%

Other

0%

Base: 97 organizations using Google Chrome devices for knowledge workers
Source: A commissioned study conducted by Forrester Consulting on behalf of Google, February 2018

Key Results
The interviews revealed that the investment in Chrome devices forknowledge workers addressed the challenges organizations were facing
and provided additional benefits:› Hardware and software cost avoidance. Organizations noted that
the Chrome hardware and software licenses cost less than their legacy
devices.
› Improved employee productivity. Organizations noted that due tothe cloud-native quality of Chrome devices, employees experienced
less device downtime compared to legacy devices. This reduced
downtime was due to automatic updates and fewer device, security,and server issues.
› IT management and services savings. Organizations noted that
Chrome devices required significantly less effort to deploy than legacy
devices, and the cloud-native quality of Chrome devices resulted insignificantly less IT management and service effort.

5 | The Total Economic Impact™ Of Google OS Devices For Knowledge Workers

Composite Organization
Based on the interviews, Forrester constructed a TEI framework, acomposite company, and an associated ROI analysis that illustrates theareas financially affected. The composite organization is representativeof the companies that Forrester interviewed and surveyed and is used topresent the aggregate financial analysis in the next section. The
composite organization that Forrester synthesized from the data has thefollowing characteristics:
Description of composite. The composite organization is a global
business with regional offices and locations across multiple countries.
The organization has 50,000 total employees, 35% of whom (or 17,500)
are considered knowledge workers, who need to be on a connected
device and access company data and information to conduct day-to-day
business activities. Of those 17,500 knowledge workers, 7,000 are
operating on Chrome devices.
The composite organization has 75,000 total endpoints, which consist ofdesktops, kiosks, tablets, laptops, and mobile devices. The composite
organization deployed Chrome browser as its default browser three
years ago to support its corporate objective of a cloud-first strategy andhas since been deploying other Chrome devices and collaboration
solutions.

6 | The Total Economic Impact™ Of Google OS Devices For Knowledge Workers

Key assumptions• $5 billion annual revenue• 50,000 employees• 17,500 knowledge
workers• 7,000 knowledge workers
on Chrome devices

Analysis Of Benefits
QUANTIFIED BENEFIT DATA AS APPLIED TO THE COMPOSITE

Total BenefitsREF.

BENEFITYEAR 1YEAR 2

YEAR 3TOTAL

PRESENTVALUE

Atr

Hardware and softwaresavings$10,640,000$665,000$665,000$11,970,000$10,721,938

Btr

Improved employee
productivity$1,244,880$1,244,880$1,244,880$3,734,640$3,095,832

Ctr

IT management and services
savings$1,648,350$438,750$438,750$2,525,850$2,190,743

Total benefits (risk-adjusted)$13,533,230$2,348,630$2,348,630$18,230,490$16,008,513

Benefit 1: Hardware And Software Cost Avoidance

The table above shows the total of all
benefits across the areas listed below,
as well as present values (PVs)discounted at 10%. Over three years,
the composite organization expects
risk-adjusted total benefits to have a
PV of $16.0 million.

Organizations noted that the Chrome hardware and software licenses
cost less than their legacy devices.
Based on the customer interviews, Forrester estimates:› The composite organization purchased and deployed 7,000 Chrome
devices for knowledge workers, in place of legacy devices.
› Legacy hardware costs averaged $1500 per device.
› Legacy annual software licenses costs averaged $100 per device.

Impact risk is the risk that the businessor technology needs of theorganization may not be met by theinvestment, resulting in lower overall
total benefits. The greater theuncertainty, the wider the potential
range of outcomes for benefit
estimates.

This benefit can vary due to uncertainty related to:› The number of devices that are deployed.
› Average hardware costs of legacy devices.
› Average software license costs for legacy devices.
To account for these risks, Forrester adjusted this benefit downward by
5%, yielding a three-year risk-adjusted total PV of $10.7 million.

Benefit 1: Hardware And Software Cost Avoidance Calculation TableREF.

METRICCALC.

YEAR 1YEAR 2

YEAR 3

A1

Number of new devices

Input

7,000

0

0

A2

Number of total devices

A2prior+A1

7,000

7,000

7,000

A3

Legacy hardware cost per device

Input$1,500$1,500$1,500A4

Legacy software license costs per device

Input

$100

$100

$100

At

Hardware and software cost avoidanceA1*A3+A2*A4$11,200,000$700,000$700,000

Risk adjustment↓5%$10,640,000$665,000$665,000

Atr

Hardware and software cost avoidance (riskadjusted)

7 | The Total Economic Impact™ Of Google OS Devices For Knowledge Workers

Benefit 2: Improved Employee Productivity
Organizations noted that due to the cloud-native quality of Chrome
devices, employees experienced less device downtime compared tolegacy devices. This reduced downtime was due to automatic updates
being applied without requiring applications and the device to shut down
first, and fewer device, security, and server issues. Also, lower boot time
and the nearly always-on nature of Chrome devices saved employees
time every day.

$3.1 million
three-year
benefit PV

Based on the customer interviews, Forrester estimates:› The composite organization had 7,000 Chrome devices in use forknowledge workers.
› Workers saved 30 minutes for each device each week due to reduced
downtime.
› The average fully burdened salary for knowledge workers was$38/hour.

Improved employee productivity:
19% of total benefits› Employees captured 20% of the avoided downtime and used it for
productive work.
This benefit can vary due to uncertainty related to:› The number of devices deployed.
› Avoided downtime.
› Employee salary.
› Productivity capture.
To account for these risks, Forrester adjusted this benefit downward by
10%, yielding an annual benefit of $1.2 million with a three-yearrisk-adjusted total PV of over $3.1 million.

Benefit 2: Improved Employee Productivity Calculation TableREF.

METRICCALC.

YEAR 1YEAR 2

YEAR 3

B1

Number of knowledge workers

A2

7,000

7,000

7,000

B2

Hours saved per worker per week due toreduced downtime from auto-updates andreduced device, security, and server issues

Input

0.5

0.5

0.5

B3

Average fully burdened hourly salary forknowledge workers

Input

$38

$38

$38

B4

Productivity capture

Forrester
assumption

20%

20%

20%

Bt

Improved employee productivity

B1*B2*52*B3*B4$1,383,200$1,383,200$1,383,200

Risk adjustment↓10%$1,244,880$1,244,880$1,244,880

Btr

Improved employee productivity(risk-adjusted)

8 | The Total Economic Impact™ Of Google OS Devices For Knowledge Workers

Benefit 3: IT Management And Services Savings
Organizations described the following benefits related to IT management
and services savings:› Chrome devices required significantly less effort to deploy than legacy
devices.
› The cloud-native quality of Chrome devices resulted in significantly
less IT management and service effort related to update policies andend user service desk tickets.

$2.2 million
three-year
benefit PV

Based on the customer interviews, Forrester estimates:› The composite organization purchased and deployed 7,000 Chrome
devices for knowledge workers, in place of legacy devices.
› Legacy devices required 4 hours to image and deploy initially.
› Thirteen IT FTEs had previously managed and serviced legacy devices
for knowledge workers.
› IT productivity improved 75% with Chrome devices.
› IT administrators captured 50% of the improved productivity for moreproductive work.
› The average fully burdened salary for IT administrators was $48/hour.
This benefit can vary due to uncertainty related to:› Number of devices deployed.
› Time required to deploy and manage legacy devices.
› Productivity improvement and productivity capture with Chrome
devices.
› Average IT administrator fully burdened salary.
To account for these risks, Forrester adjusted this benefit downward by
10%, yielding a three-year risk-adjusted total PV of $2.2 million.

9 | The Total Economic Impact™ Of Google OS Devices For Knowledge Workers

IT savings:
14% of total benefits

Benefit 3: IT Management And Services Savings: Calculation TableREF.

METRICCALC.

YEAR 1YEAR 2

YEAR 3

C1

Number of new devices

A1

7,000

0

0

C2

Deployment time for legacy devices (hours per
device)

4

4

4

C3

IT administrator fully burdened hourly rate

$48

$48

$48

C4

Subtotal: avoided device deployment costs$1,344,000

$0

$0

C5

Number of IT FTEs required for legacy devices

13

13

13

C6

IT administrator fully burdened annual salary$100,000$100,000$100,000

C7

Improved IT productivity with Chrome devices

75%

75%

75%

C8

Productivity capture

50%

50%

50%

C9

Subtotal: IT staff improved productivity

C5*C6*C7*C8$487,500$487,500$487,500Ct

IT management and services savings

C4+C9$1,831,500$487,500$487,500

Risk adjustment↓10%$1,648,350$438,750$438,750

Ctr

C1*C2*C3

IT management and services savings(risk-adjusted)

10 | The Total Economic Impact™ Of Google OS Devices For Knowledge Workers

Analysis Of Costs
QUANTIFIED COST DATA AS APPLIED TO THE COMPOSITE

Total Costs
REF.

COST

INITIAL

YEAR 1YEAR 2

YEAR 3TOTAL

PRESENT
VALUE

Dtr

Hardware and software
license costs$5,145,000$367,500$367,500$367,500$6,247,500$6,058,918

Etr

Implementation costs$586,500

$0

$0

$0

$586,500$586,500

Ftr

Change management andtraining costs$599,150

$0

$0

$0

$599,150$599,150

Total costs (risk-adjusted)$6,330,650$367,500$367,500$367,500$7,433,150$7,244,568

Cost 1: Hardware And Software License Costs

The table above shows the total of all
costs across the areas listed below, as
well as present values (PVs)discounted at 10%. Over three years,
the composite organization expects
risk-adjusted total costs to have a PVof $7.2 million.

Organizations described both hardware and software license costs
associated with Chrome devices.
Based on the customer interviews, Forrester estimates for the composite
organization:› Chrome devices for knowledge workers cost $700 per device.
› Chrome Enterprise licenses cost $50 per device annually.

Implementation risk is the risk that a
proposed investment may deviate fromthe original or expected requirements,
resulting in higher costs than
anticipated. The greater theuncertainty, the wider the potential
range of outcomes for cost estimates.

This cost can vary due to uncertainty related to:› Number of devices deployed.
› Associated hardware and software license costs.
To account for these risks, Forrester adjusted this cost upward by 5%,
yielding a three-year risk-adjusted total PV of nearly $6.1 million.

Cost 1: Hardware And Software License Costs: Calculation TableREF.

METRICCALC.

INITIAL

D1

Number of new devices

A1

7,000

D2

Chrome hardware cost per device

Input

$700

D3

Number of total devices

D4
Dt

Dtr

YEAR 1YEAR 2

YEAR 3D3prior+D1

7,000

7,000

7,000

Chrome OS software license costs
per device

Input

$50

$50

$50

Hardware and software licensecosts

D1*D2+D3*D4$4,900,000$350,000$350,000$350,000

Risk adjustment↑5%$5,145,000$367,500$367,500$367,500

Hardware and software license
costs (risk-adjusted)

11 | The Total Economic Impact™ Of Google OS Devices For Knowledge Workers

Cost 2: Implementation Costs
The cost to implement depends on the size of the implementation andthe number of users. For the composite organization, Forrester assumes
that implementation lasted six months. During this time, six full-time
resources were dedicated to the deployment along with a Googlerecommended third-party integrator.
For this study, Forrester assumes that:› The monthly cost of the third-party integrator averaged $35,000.

Six months
Total implementationand deployment time

› The fully loaded labor rate for an internal IT FTE was $100,000.
The implementation and configuration costs will vary with:› The complexity of the deployment and the project timeline.
› The cost of resources within an organization and the third-party
integrator chosen, if necessary.
To account for these risks, Forrester adjusted this cost upward by 15%,
yielding a risk-adjusted total PV of $586,500.

Cost 2: Implementation Costs Calculation TableREF.

METRICCALC.

INITIAL

E1

Implementation timeMonths6

E2

Internal resources required

FTEs

6

E3

IT administrator fully burdened
annual salaryC6$100,000

E4

Professional service fees per month

Input$35,000

Et

Implementation costs

E1*E4+(E1/12)*E2*E3

Risk adjustment

↑15%

Etr

Implementation costs(risk-adjusted)

YEAR 1YEAR 2

YEAR 3$510,000

$0

$0

$0

$586,500

$0

$0

$0

Cost 3: Change Management And Training Costs
One of the greatest risks to fully realizing the benefits of Chrome devices
for knowledge workers is lack of use and adoption. The interviewed
organizations all described a cultural shift that took place as they
deployed Chrome devices. This cultural change, as with any usertechnology, was met by three types of users:› The champions, who are quick to adopt, innovate, and get creative
about how they utilize the new technology.
› The skeptics, who aren’t so sure about the new technology and areslower to adopt, but when they do, they quickly realize the benefits of
the new system and become champions.
› Lastly, the laggards; these employees are set in their ways, don’t want
to change the way they work, and typically resist adoption and learninga new technology.
All three groups can present challenges and opportunities, so it’s
12 | The Total Economic Impact™ Of Google OS Devices For Knowledge Workers

important to hire a good change management team and ensure thatproper training and support are provided throughout the deployment.
Forrester assumes that:› The composite organization hired a third-party change management
team at a cost of $42,500 per month for six months.
› Users received 1 hour of formal training and could schedule follow-on
training as needed.
The change management and training cost will vary with:› The culture of an organization and employees’ willingness to adopt
new technologies.
› The number of hours provided for formal training and the follow-on
support.
To account for these risks, Forrester adjusted this cost upward by 15%,
yielding a three-year risk-adjusted total PV of $599,150.

Cost 3: Change Management And Training Costs Calculation TableREF.

METRIC

F1

Months for change management

6

F2

Change management costs permonth$42,500

F3

Subtotal: change management
services

F4

Number of knowledge workers

F5

Average fully burdened hourlysalary for knowledge workers

F6

Hours of training per worker

F7

Subtotal: internal training costs

F4*F5*F6$266,000

Ft

Change management and training
costs

F3+F7

Risk adjustment

↑15%

Ftr

Change management and training
costs (risk-adjusted)

CALC.

F1*F2

INITIAL

YEAR 1YEAR 2

YEAR 3$521,000

$0

$0

$0

$599,150

$0

$0

$0

$255,000
7,000

B3

$38
1

13 | The Total Economic Impact™ Of Google OS Devices For Knowledge Workers

Financial Summary
CONSOLIDATED THREE-YEAR RISK-ADJUSTED METRICS

Cash Flow Chart (Risk-Adjusted)

The financial results calculated in the
Benefits and Costs sections can beused to determine the ROI, NPV, andpayback period for the composite
organization’s investment. Forrester
assumes a yearly discount rate of 10%
for this analysis.

Total costs
Total benefits
Cumulative net benefits
Cash
flows

$15.0 M

$10.0 M

$5.0 M

These risk-adjusted ROI,
NPV, and payback period
values are determined byapplying risk-adjustment
factors to the unadjusted
results in each Benefit andCost section.

-$5.0 M-$10.0 M
InitialYear 1

Year 2

Year 3

Cash Flow Table (Risk-Adjusted)

INITIAL

YEAR 1YEAR 2

YEAR 3TOTAL

PRESENT
VALUE

Total costs($6,330,650)($367,500)($367,500)($367,500)($7,433,150)($7,244,568)

Total benefits$0$13,533,230$2,348,630$2,348,630$18,230,490$16,008,513

Net benefits($6,330,650)$13,165,730$1,981,130$1,981,130$10,797,340$8,763,945

ROI

121%

Payback period< 6 months

14 | The Total Economic Impact™ Of Google OS Devices For Knowledge Workers

Google Chrome Devices For Knowledge Workers:
Overview
The following information is provided by Google. Forrester has not validated any claims and does not endorse
Google or its offerings.
CHROME ENTERPRISE
Chrome Enterprise includes Google's managed Chrome OS offering for enterprise customers.
Chrome OS is a cloud-native operating system running on a variety of form factors including Chromebooks,
Chromeboxes, and Chromebases. It features built-in security, and provides regular, automatic updates that run
in the background to keep devices up-to-date. It boots quickly and provides a continuous experience acrossdevices, and enables user access to enterprise applications via the web, managed Google Play store, or thirdparty virtualization providers.
Chrome OS can be paired with the Chrome Enterprise license which can be purchased for an annual, per device
fee to manage Chrome devices in addition to enabling third party integrations with EMM and identity providers.

For more information, visit chrome.com/os

15 | The Total Economic Impact™ Of Google OS Devices For Knowledge Workers

Appendix A: Total Economic Impact
Total Economic Impact is a methodology developed by Forrester
Research that enhances a company’s technology decision-making
processes and assists vendors in communicating the value propositionof 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 businessstakeholders.

Total Economic Impact Approach
Benefits represent the value delivered to the business by the
product. The TEI methodology places equal weight on themeasure 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 beobtained 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.

Present value (PV)The present or current
value of (discounted) cost andbenefit estimates given at aninterest rate (the discount rate).
The PV of costs and benefits feed
into the total NPV of cash flows.

Net present
value (NPV)The present or current value of(discounted) future net cash flows
given an interest rate (the discountrate). A positive project NPV
normally indicates that theinvestment should be made, unlessother projects have higher NPVs.

Return on
investment (ROI)
A project’s expected return inpercentage terms. ROI is
calculated by dividing net benefits(benefits less costs) by costs.

Discountrate

Risks measure the uncertainty of benefit and cost estimates
given: 1) the likelihood that estimates will meet original
projections and 2) the likelihood that estimates will be
tracked over time. TEI risk factors are based on “triangular
distribution.”

The initial investment column contains costs incurred at “time 0” or at the
beginning of Year 1 that are not discounted. All other cash flows are discounted
using the discount rate at the end of the year. PV calculations are calculated foreach total cost and benefit estimate. NPV calculations in the summary tables are
the sum of the initial investment and the discounted cash flows in each year.
Sums and present value calculations of the Total Benefits, Total Costs, andCash Flow tables may not exactly add up, as some rounding may occur.

16 | The Total Economic Impact™ Of Google OS Devices For Knowledge Workers

The interest rate used in cash flow
analysis to take into account thetime value of money. Organizations
typically use discount rates
between 8% and 16%.

Payback
periodThe breakeven point for aninvestment. This is the point in timeat which net benefits (benefits
minus costs) equal initialinvestment or cost.

Appendix B: Endnotes
1 Source: “Rethink Technology In The Age Of The Cloud Worker,” a commissioned study conducted by Forrester

on behalf of Google, May 2018.
2 Source: Ibid.
3 Source: Ibid.

17 | The Total Economic Impact™ Of Google OS Devices For Knowledge Workers