The Total Economic Impact™ Of Microsoft 365 E5

A FORRESTER TOTAL ECONOMIC IMPACT™ STUDY COMMISSIONED BY MICROSOFT

The Total Economic Impact™

Of Microsoft 365 E5

Cost Savings And Business Benefits

Enabled By Microsoft 365 E5

AUGUST 2023

THE TOTAL ECONOMIC IMPACT™ OF MICROSOFT 365 E5

Table Of Contents

Executive Summary ................................................. 1

The Microsoft 365 E5 Customer Journey .............. 6

Key Challenges ...................................................... 6

Investment Objectives ............................................ 7

Composite Organization ......................................... 7

Analysis Of Benefits ................................................ 9

Reduced Risk Of A Data Breach ............................ 9

Improved Security Management .......................... 11

Legacy Software And Infrastructure Cost Savings

.............................................................................. 14

Endpoint Deployment And Management Time

Savings ................................................................. 15

IT Administration And Help Desk ......................... 17

Improved Regulatory Audit And Compliance

Management ........................................................ 19

Reduced Travel And Expense ............................. 20

End-User Productivity Improvements ................... 21

Unquantified Benefits ........................................... 23

Flexibility ............................................................... 23

Analysis Of Costs .................................................. 24

Initial Planning And Implemenation ...................... 24

Microsoft Licensing Cost ...................................... 25

Ongoing Management Costs ............................... 26

Additional Bandwidth Investment ......................... 27

Financial Summary ................................................ 28

Appendix A: Total Economic Impact ................... 29

Appendix B: Interview And Survey Demographics

................................................................................. 30

Appendix C: Endnotes .......................................... 31

Consulting Team:

Richard Cavallaro

Carmen Serradilla Ortiz

THE TOTAL ECONOMIC IMPACT™ OF MICROSOFT 365 E5

Executive Summary

Amid emerging security threats and the new ways employees work, organizations face a

difficult balancing act in continuing to deliver high-quality experiences to their customers.

They must improve the hybrid experience and tools for their employees, consolidate their

ever-growing technology stacks, and reduce IT spending while simultaneously extending

security functionality and enabling security teams to be more proactive against emerging

threats.

Microsoft commissioned Forrester Consulting to

conduct a Total Economic Impact™ (TEI) study and

examine the potential return on investment (ROI)

enterprises may realize by deploying Microsoft 365

E5.

The purpose of this study is to provide readers

with a framework to evaluate the potential financial

impact of Microsoft 365 E5 on their organizations.

This study is focused on the cost savings and

business benefits organizations can achieve with

Microsoft 365 E5 through improvement to security

posture and reduced risk of a data breach or security

incident, optimization of IT and security teams,

optimization of solution stacks supporting their

employees, and the resulting user productivity

benefits.

With Microsoft 365 E5, organizations gain additional

telephony, analytics, and security functionality.

Microsoft 365 Enterprise E5 is the most feature-rich

version of Microsoft 365 and consists of Office 365

applications and Enterprise Mobility + Security

(EMS). It provides the collaboration, productivity,

automation, and security features enterprise

customers may need to support their digital business

transformation initiatives under one license while

streamlining its deployment and utilization.

To better understand the benefits, costs, and risks

associated with this investment, Forrester interviewed

14 representatives of organizations with experience

using Microsoft 365 E5 over three years (most

recently in 2023) and surveyed another 920

respondents with experience using the platform. For

the purposes of this study, Forrester aggregated the

experiences of the interviewees and survey

respondents and combined the results into a single

composite organization.

Prior to licensing Microsoft 365 E5, interviewees’

organizations typically maintained hybrid

environments consisting of a mixture of Microsoft

Office (Microsoft 365 Apps) and third-party solutions.

Managing third-party solutions required significant

investments and time from IT and security teams

because disparate tools required relationships with

multiple vendors and inherently yielded management

inefficiencies. Gaps in security functionality were also

present given the disparate nature of these solutions,

which exposed the organizations to risk.

The interviewees’ organizations aimed to reduce

costs, free up FTE resources, and improve their

users’ productivity, all while extending security

functionality to improve their security postures.

The interviewees and survey respondents said that

after investing in Microsoft 365 E5, their

Return on investment (ROI)

190%

Net present value (NPV)

$45,078,548

KEY STATISTICS

THE TOTAL ECONOMIC IMPACT™ OF MICROSOFT 365 E5

EXECUTIVE SUMMARY

organizations realized savings by retiring on-

premises infrastructure, and they also saved on

licensing costs and solutions maintenance and

management. The new features and functionality

provided by Microsoft 365 E5 improved employee

productivity through additional functionality and

consolidation of the solutions supporting hybrid work.

The organizations accomplished all of this while

strengthening their security postures through built-in

protections offered by Microsoft 365 E5. This allowed

security personnel to shift from reactive to proactive

security activities.

KEY FINDINGS

Quantified benefits. Three-year, risk-adjusted

present value (PV) quantified benefits for the

composite organization include:

• 60% efficiency improvement for teams that

manage security. The composite organization’s

IT teams use Microsoft 365 E5’s improved threat

telemetry, automation, and intelligent remediation

capabilities to solve issues faster and to address

potential threats before they escalate. Entra ID

provides further security savings for the

organization’s identity access management (IAM)

teams, including conditional access. The

composite organization cuts the time required to

manage its security environment in half, saving it

a risk-adjusted $4.4 million over three years.

• Reduced risk of a data breach by 50%. In

addition to helping with compliance and saving

time for the composite’s IT and security

personnel, extension of security functionality

within Microsoft 365 E5 also reduces both the

likelihood and potential damage of a security

breach. The organization realizes savings around

remediation, response, and reporting labor as

well as fines, damages, compliance costs,

customer compensation, and lost revenues.

These are worth a risk-adjusted $2.5 million over

three years for the composite organization.

• Per-user licensing savings of $86.25 per

month. The composite organization uses

Microsoft 365 E5 to phase out a multitude of

legacy solutions, including collaboration tools,

telephony, analytics solutions, and security tools.

Consolidating these solutions under Microsoft

365 E5 enables the composite organization to

retire all these prior solutions while either

retaining or improving their capabilities. This

saves the composite an estimated $86.25 per E5

user monthly (35% savings per user across all E5

users), which adds up to a three-year, risk-

adjusted total of $23.2 million.

• 30% reduction in hours required to deploy

and manage software, and a 75% reduction in

time to configure endpoints. Microsoft 365 E5

provides the composite organization with features

like single sign-on (SSO), multifactor

authentication (MFA), and Microsoft Intune, and

this makes it much easier and faster to set up

and support software, troubleshoot, and make

updates. Windows Autopilot also provides low-

touch endpoint configuration capabilities that

save the organization even more time. Over the

course of three years, this yields a risk-adjusted

total of $4.2 million for the composite.

• 50% reduction in help desk calls and a 15%

decrease in ticket resolution time. Because

Microsoft E5 is easier for the composite to use

than previous solutions due to self-service

options and automated fixes for the most

common issues, it sees a dramatic reduction in

help desk calls around many issues over the

course of three years. For those issues that still

require help from IT, Microsoft Intune enables

significantly faster remediation. This saves the

composite organization a risk-adjusted total of

$1.6 million over three years.

• 40% savings in audit and compliance

management. Microsoft 365 E5’s advanced

audit and discovery capabilities help the

THE TOTAL ECONOMIC IMPACT™ OF MICROSOFT 365 E5

EXECUTIVE SUMMARY

composite’s security and compliance personnel

to better understand and implement policies,

audit the organization’s environment, and comply

with increasingly stringent regulations.

Consolidating onto the Microsoft platform makes

this process faster and smoother, which saves

the composite organization a risk-adjusted $2.9

million over three years.

• Reduced travel and expense budget. The

composite organization was already moving

toward hybrid work, but using the hybrid and

remote working capabilities of Microsoft 365 E5

helped it further adopt this trend and cut down on

travel expenditures. This saves the composite

organization a risk-adjusted total of $6.2 million

over three years.

• Improved overall productivity for end users.

Microsoft 365 E5 provides multiple kinds of

savings on frequent, repeated actions for the

composite organization’s end users. In particular,

collaborative document-sharing and chat

capabilities them work together and

communicate, and Entra ID SSO provides

savings in logging into multiple services. Over

three years, these efficiency gains save the

composite organization a risk-adjusted $23.9

million over three years.

Unquantified benefits. Benefits that provide value

for the composite organization but are not quantified

in this study include:

• Transitioning from capex to opex. Because

Microsoft 365 E5 is a purely software-as-a-

service (SaaS) offering and the composite

organization eliminates its legacy and on-

premises commitments, this enables the

composite to grow or shrink its environment as

needed without incurring hardware or labor costs.

• Reduced likelihood of regulatory fines. In

addition to saving time on preparing for audits

and security breaches, Microsoft 365 E5’s

security features also help the composite

organization avoid noncompliance penalties and

other regulatory issues for failing to comply with

increasingly strict regulations.

• Developer efficiency gains. Microsoft

Authentication Library (MSAL) enables the

composite’s developers to more easily add

identity capabilities to applications, which saves

time on authentication. Microsoft Graph API

offers developers a single endpoint to access

Entra ID APIs.

Costs. Three-year, risk-adjusted PV costs for the

composite organization include:

• Initial implementation and planning costs of

$1.2 million. These costs include both the labor

time of a small team that plans and executes the

implementation of Microsoft 365 E5 and six

months’ worth of professional services fees.

• Microsoft licensing costs of $18 million. The

composite organization pays a monthly fee for its

users to use the bulk of the 365 E5 platform. It

also pays an additional fee for analytics.

• Ongoing management costs of $4.2 million.

The composite organization pays ongoing

professional services fees for management of

365 E5 along with labor costs for a small team

dedicated to ongoing management.

• Additional bandwidth investment of $410,000.

To accommodate features like Microsoft Teams

voice, cloud storage, document sharing, and

conferencing solutions, the composite

organization invests in additional bandwidth.

The representative interviews and financial analysis

found that a composite organization experiences

benefits of $68.42 million over three years versus

costs of $23.8 million, adding up to a net present

value (NPV) of $45.08 million and an ROI of 190%.

THE TOTAL ECONOMIC IMPACT™ OF MICROSOFT 365 E5

EXECUTIVE SUMMARY

“In terms of security capabilities,

we now have a far wider and deeper

breadth of integrated capabilities.

Things aren’t piecemeal anymore”

— VP of IT, security, and compliance, holding company

ROI

190%

BENEFITS PV

$68.42M

NPV

$45.08M

PAYBACK

<6 months

$2.5M

$4.4M

$23.2M

$4.2M

$1.6M

$2.9M

$6.2M

$23.9M

Reduced risk of a data breach

Improved security management

Legacy software and infrastructure cost

savings

Endpoint deployment and management time

savings

IT administration and help desk

Improved regulatory audit and compliance

management

Reduced travel and expense

End-user productivity improvements

Benefits (Three-Year)

THE TOTAL ECONOMIC IMPACT™ OF MICROSOFT 365 E5

EXECUTIVE SUMMARY

TEI FRAMEWORK AND METHODOLOGY

From the information provided in the interviews,

Forrester constructed a Total Economic Impact™

framework for those organizations considering an

investment in Microsoft 365 E5.

The objective of the framework is to identify the cost,

benefit, flexibility, and risk factors that affect the

investment decision. Forrester took a multistep

approach to evaluate the impact that Microsoft 365

E5 can have on an organization.

Forrester Consulting conducted an online survey of

351 cybersecurity leaders at global enterprises in the

US, the UK, Canada, Germany, and Australia.

Survey participants included managers, directors,

VPs, and C-level executives who are responsible for

cybersecurity decision-making, operations, and

reporting. Questions provided to the participants

sought to evaluate leaders' cybersecurity strategies

and any breaches that have occurred within their

organizations. Respondents opted into the survey via

a third-party research panel, which fielded the survey

on behalf of Forrester in November 2020.

DUE DILIGENCE

Interviewed Microsoft stakeholders and

Forrester analysts to gather data relative to

Microsoft 365 E5.

INTERVIEWS AND SURVEY

Interviewed 14 representatives and surveyed

920 respondents at organizations using

Microsoft 365 E5 to obtain data with respect to

costs, benefits, and risks.

COMPOSITE ORGANIZATION

Designed a composite organization based on

characteristics of the interviewees and survey

respondents.

FINANCIAL MODEL FRAMEWORK

Constructed a financial model representative of

the interviews using the TEI methodology and

risk-adjusted the financial model based on

issues and concerns of the interviewees.

CASE STUDY

Employed four fundamental elements of TEI in

modeling the investment impact: benefits, costs,

flexibility, and risks. Given the increasing

sophistication of ROI analyses related to IT

investments, Forrester’s TEI methodology

provides a complete picture of the total

economic impact of purchase decisions. Please

see Appendix A for additional information on the

TEI methodology.

DISCLOSURES

Readers should be aware of the following:

This study is commissioned by 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 ROI

that other organizations will receive. Forrester strongly

advises that readers use their own estimates within the

framework provided in the study to determine the

appropriateness of an investment in Microsoft 365 E5.

Microsoft reviewed and provided feedback to Forrester,

but Forrester maintains editorial control over the study

and its findings and does not accept changes to the study

that contradict Forrester’s findings or obscure the

meaning of the study.

Microsoft provided the customer names for the interviews

but did not participate in the interviews.

THE TOTAL ECONOMIC IMPACT™ OF MICROSOFT 365 E5

The Microsoft 365 E5 Customer Journey

Drivers leading to the Microsoft 365 E5 investment

KEY CHALLENGES

Forrester interviewed 14 representatives and

surveyed 920 respondents with experience using

Microsoft 365 E5 at their organizations. For more

details on these individuals and the organizations

they represent, see Appendix B.

Both interviewees and survey respondents noted how

their organizations struggled with common

challenges, including:

• Unsustainable security and communications

costs. Many of the interviewees’ organizations

struggled with the maintenance and licensing

costs of their legacy solutions, especially as

hybrid and remote work became more common

and on-premises solutions became less viable.

This confusing web of redundant, suboptimal

solutions led to increased security costs, both in

official spending and increased risk from shadow

IT as a way to solve departmental problems.

• Disrupted productivity. Using multiple

redundant, aging solutions didn’t just produce

costs in the form of maintenance and licensing

fees, it also made accomplishing basic tasks

frustrating and tedious while reducing productivity

without adequately meeting the needs of the

organizations. The CIO of a banking organization

told Forrester: “I [was tired] of hearing garbage

about how you couldn’t use Teams on this

terminal or you couldn’t stream because it’s

broken or the mics and cameras don’t work well.”

Additionally, using legacy infrastructure meant

that making security improvements and

empowering and helping users often came at the

expense of the other.

• Difficulty proactively remediating and

reducing threats. Prior security solutions lacked

modern capabilities such as providing visibility

into telemetry of user activity, threats that could

impact data, or timelines for effective

remediation. The issue of redundant solutions

from multiple vendors also impacted security

teams, which made it difficult to consolidate

information for triage and analysis. This was

especially problematic because security was a

high priority for many of the interviewees’

“Ultimately, the infrastructure we

had prior was highly insufficient

and unreliable. … We had a lean

staff and technology that didn’t

work well together.”

CIO, banking

“If we were fully on-premises,

having an MDM [master data

management solution] and being

able to say, ‘If you want access

to that resource, you have to use

an approved device even though

you just came in through a back

door.’ … You can’t do that at our

size. There’s just no way.”

CIO, banking

THE TOTAL ECONOMIC IMPACT™ OF MICROSOFT 365 E5

THE MICROSOFT 365 E5 CUSTOMER JOURNEY

organizations The director of IT for a healthcare

organization stated: “From a security perspective,

we definitely want to bolster the security offerings

within our organization. We recognize that this is

something critical for us.”

INVESTMENT OBJECTIVES

The interviewees’ and survey respondents’

organizations searched for a solution that could:

• Replace a patchwork of legacy solutions with a

single, easy-to-use product suite.

• Help realize cost savings and IT efficiencies by

moving to Cloud.

• Aid security teams by automating tasks,

simplifying management, and providing the

capabilities needed to protect against breaches

and regulatory penalties.

• Aid IT by eliminating the need to maintain a

convoluted legacy environment.

• Equip employees with robust collaboration tools,

easier day-to-day usage, and better productivity

and performance.

COMPOSITE ORGANIZATION

Based on the interviews and survey results, Forrester

constructed a TEI framework, a composite company,

and an ROI analysis that illustrates the areas

financially affected. The composite organization is

representative of the 14 interviewees and 920

respondents from two Forrester surveys, and it is

used to present the aggregate financial analysis in

the next section. The composite organization has the

following characteristics:

Description of composite. The composite

organization is based in the United States and has

global operations. It has 40,000 total employees,

including 10,000 with Microsoft 365 E5 licenses and

30,000 with M365 E3 licenses.

Prior to moving to Microsoft 365 E5, the composite

organization’s users typically had M365 E3 licenses

and a combination of on-premises and SaaS calling

and security solutions. The composite also used a

number of third-party chat, video, and

55.9%

51.1%

46.3%

40.8%

34.8%

27.0%

18.0%

Software compatibility issues

High total cost of the licenses

Employee productivity issues

due software inefficiencies

Time spent on license

management and

troubleshooting

Security risks related from

disparate software stack

Communication issues due to

software inefficiencies

Disrupted project workflows

due to software inefficiencies

Challenges Related To Vendor License

Management Across Multiple Vendors

Base: 920 representatives of organizations with experience using

Microsoft 365 E5

Source: A commissioned study conducted by Forrester Consulting on

behalf of Microsoft, August 2023

THE TOTAL ECONOMIC IMPACT™ OF MICROSOFT 365 E5

THE MICROSOFT 365 E5 CUSTOMER JOURNEY

teleconferencing systems as well as threat-hunting

and remediation tools.

Deployment characteristics. The composite

organization adopts most of the functionality under

Microsoft 365 E5. It leverages all of the security, IAM,

analytics, and communication features available

through Microsoft 365 E5.

Key Assumptions

• 10,000 E5 users

• Average IT worker salary of

$130,000 per year

• Average knowledge worker

salary of $73,000 per year

• Six help desk calls per user

annually

THE TOTAL ECONOMIC IMPACT™ OF MICROSOFT 365 E5

Analysis Of Benefits

Quantified benefit data as applied to the composite

REDUCED RISK OF A DATA BREACH

Evidence and data. Interviewees explained to

Forrester that Microsoft 365 E5 significantly improved

their organizations’ overall security postures and

helped mitigate the risk of data breaches due to tools

like Entra ID, Microsoft Defender Advanced Threat

Protection (ATP), Office 365 ATP, Azure ATP, and

Microsoft Cloud App Security. The organizations

realized savings around remediation, response, and

reporting labor, as well as around fines, damages,

compliance costs, customer compensation, and lost

revenues.

• The VP of IT, security, and compliance for the

holding company said: “[Microsoft 365 E5] has

strengthened our security posture because there

are things we didn’t know that we can now fix. …

You see more, [and] the visibility has been a

great help.”

• The CDO of the restaurant chain told Forrester:

“We realized two major benefits. One is the ease

of identification and increased trust. I have more

trust than before because I’m actually capturing

more of the incidents. The resolution is much

better as well, so the breaches are very limited,

and it’s proven to be working very well.”

• The director of IT for a healthcare organization

expressed confidence that their organization’s

Total Benefits

Ref.

Benefit

Year 1

Year 2

Year 3

Total

Present

Value

Atr

Reduced risk of a data

breach

$999,405

$2,998,214

$2,485,371

Btr

Improved security

management

$1,755,000

$5,265,000

$4,364,425

Ctr

Legacy software and

infrastructure cost savings

$9,315,000

$27,945,000

$23,165,026

Dtr

Endpoint deployment and

management time savings

$1,678,758

$5,036,275

$4,174,823

Etr

IT administration and help

desk

$655,500

$1,966,500

$1,630,131

Ftr

Improved regulatory audit and

compliance management

$1,170,000

$3,510,000

$2,909,617

Gtr

Reduced travel and expense

$2,500,000

$7,500,000

$6,217,130

Htr

End-user productivity

improvements

$9,308,520

$9,626,561

$9,953,600

$28,888,682

$23,896,414

Total benefits (risk-adjusted)

$27,382,183

$27,700,224

$28,027,263

$83,109,670

$68,842,937

“[With Microsoft 365 E5,] our

organizational security is night-

and-day improved.”

CIO, banking

THE TOTAL ECONOMIC IMPACT™ OF MICROSOFT 365 E5

ANALYSIS OF BENEFITS

security posture will continue to improve due to

further improvements from Microsoft. They said,

“Microsoft, of course, is also going to be

changing out their features [and] providing more

functionality.”

• The CIO for the banking organization was

especially impressed that Microsoft 365 E5

provided this security without negative impact

despite the company’s large size: “If we were

[still] fully on-premises, [had] an MDM, and [had]

to say ‘If you want access to that resource,

you’ve got to be on an approved device even

though you just came in through a back door,’…

there’s no way we could [reproduce] that on-

premises.”

Modeling and assumptions. For the composite

organization, Forrester assumes the following:

• The average data breach value for the composite

organization is just over $850,000 across labor,

compliance, and business revenue costs.

• The composite organization experiences an

average of 2.6 material breaches per year.

• Microsoft 365 E5 security tools reduces the

composite’s likelihood of a breach by 50%.

Risks. Factors that could affect the impact of this

benefit include:

• The organization’s average cost of a data breach.

• The organization’s inherent risk of a data breach.

• The extent to which the organization can improve

on its baseline security posture and capabilities

by implementing Microsoft 365 E5.

Results. To account for these risks, Forrester

adjusted this benefit downward by 10%, yielding a

three-year, risk-adjusted total PV of $2.5 million.

“We valued the reduced risk of a

security breach due to adopting

[Microsoft 365] E5 in the tens of

millions of dollars a year, which

was enough to justify our

investment in E5 by itself.”

Director, manufacturing

“We can use Defender all the

way through. We’re using

Defender for endpoints. We’re

using Defender for cloud. We’re

using Defender for storage. Now

we have a single platform where

we have visibility into everything

we do.”

CIO, banking

THE TOTAL ECONOMIC IMPACT™ OF MICROSOFT 365 E5

ANALYSIS OF BENEFITS

IMPROVED SECURITY MANAGEMENT

Evidence and data. Interviewees and survey

respondents said one of the key features of Microsoft

365 E5 is its expanded suite of security tools that

includes tools for identity and threat protection

(Microsoft 365 Defender, Microsoft Defender for

Endpoint, Microsoft Defender for Office 365,

Microsoft Defender for Identity, Microsoft Cloud App

Security, and Entra ID), and tools for information

protection and compliance (Microsoft Advanced

Compliance and Microsoft Information Protection).

These tools both improved organizational security

postures by reducing the threat of security incidents

and saved time and effort for security teams by

eliminating redundant tools.

• The CIO for the banking organization told

Forrester: “Microsoft 365 E5 simplified our entire

security stack and made it so I didn’t have to hire

15 different people to manage all of these

different services. I can just find a Microsoft IT

professional and solve all of those problems.”

• The CDO for a restaurant chain explained how

Entra ID helped simplify their organization’s

security management: “Conditional access has

been great for our security team. Managing our

users is much easier with Entra ID Premium and

Power Apps. We’ve been able to automate our

provisioning and deprovisioning efforts, reducing

the burden on our IT team considerably. [Before,]

we had around 25 people working only on access

management. [With Entra ID,] we only have four

or five people doing this work. Everyone else is

now focused on other security activities.”

Reduced Risk Of A Data Breach

Ref.

Metric

Source

Year 1

Year 2

Year 3

Users

Composite

10,000

Average remediation and reporting labor

cost per material breach

Forrester

research

$199,346

Average cost of response and

notification, fines, damages, compliance

costs, and customer compensation per

material breach

Forrester

research

$269,550

Average lost business revenues and

additional costs to acquire customers per

material breach

Forrester

research

$385,296

Total estimated cost of a significant

material breach

A2+A3+A4

$854,192

Average annual incidence of significant

material data breaches

Forrester

research

2.6

Annualized cost of data breaches

A5*A6

$2,220,899

Reduction in likelihood of a data breach

Interviews

50%

Reduced risk of a data breach

A7*A8

$1,110,450

Risk adjustment

↓10%

Atr

Reduced risk of a data breach (risk-

adjusted)

$999,405

Three-year total: $2,998,214

Three-year present value: $2,485,371

THE TOTAL ECONOMIC IMPACT™ OF MICROSOFT 365 E5

ANALYSIS OF BENEFITS

• The director of IT for a healthcare organization

told Forrester: “[Microsoft 365 E5] helps take care

of some easy wins from a security perspective.

… You can save money by taking recommended

actions yourself so you don’t have to hire a third-

party company to do mediation of validation.”

• The director of IT for a manufacturing

organization broke down how these tools helped

improve overall security posture: “The benefit

[Microsoft 365 E5 provides] from a security

perspective is enhanced visibility — especially

when it comes to the end user. Because the user

is your biggest security risk, the closer I can get

to telemetry off of user behavior, the more secure

I feel we are.”

• The VP of IT, security, and compliance for the

holding company told Forrester: “[Because of

Microsoft 365 E5,] we’re spending more time

[and] more focus on things like user awareness.

We’ve changed the dynamics of the team. The

resources that were [previously] involved in triage

have been reduced. We have fewer open

tickets.”

Modeling and assumptions. For the composite

organization, Forrester assumes the following:

• The composite organization has a team of 25

FTEs that manages security operations.

• The average annual salary of a security team

member is $130,000.

• Efficiency gains with automatic threat detection

and remediation, along with reduced research

and implementation time for security changes

reduces the time the FTEs spend managing the

environment by 60%.

Risks. Factors that could affect the impact of this

benefit include:

• The size of the organization’s security team.

• Labor rates.

• The organization’s security posture.

• The organization’s existing security automations.

Results. To account for these risks, Forrester

adjusted this benefit downward by 10%, yielding a

three-year, risk-adjusted total PV of $4.4 million.

“Our security teams are a lot

more proactive. We’re now

spending more time on security

awareness for users. We’ve

changed the dynamic of the

team. The resources that have

traditionality been dedicated to

incident triage have been

reallocated.”

VP of IT, security, and compliance,

holding company

THE TOTAL ECONOMIC IMPACT™ OF MICROSOFT 365 E5

ANALYSIS OF BENEFITS

Improved Security Management

Ref.

Metric

Source

Year 1

Year 2

Year 3

FTEs dedicated to managing the security

environment

Composite

Average annual salary of a security FTE

TEI standard

$130,000

Reduction in time required to manage the

security environment due to M365 E5

Survey and

interviews

60%

Improved security management

B1*B2*B3

$1,950,000

Risk adjustment

↓10%

Btr

Improved security management (risk-

adjusted)

$1,755,000

Three-year total: $5,265,000

Three-year present value: $4,364,425

69.7%

65.0%

50.0%

39.0%

26.5%

Automation of patch roll

outs and security

Moving from on-prem to

cloud services

Secure score and

compliance score

Threat intelligence

Identity and access

management

M365 E5 Contributions To Increase In Accuracy

And/Or Speed Of Security Audits

Base: 920 representatives of organizations with experience using

Microsoft 365 E5

Source: A commissioned study conducted by Forrester Consulting on

behalf of Microsoft, August 2023

THE TOTAL ECONOMIC IMPACT™ OF MICROSOFT 365 E5

ANALYSIS OF BENEFITS

LEGACY SOFTWARE AND INFRASTRUCTURE

COST SAVINGS

Evidence and data. Interviewees said one of the

largest benefit areas for their organizations was

saving on retiring previous solutions and

consolidating with Microsoft 365 E5. These savings

were around productivity, communication, security,

telephony, and analytics tools. Retired solutions

ranged from video conferencing solutions, antivirus

and security monitoring subscriptions, Microsoft

Exchange servers, and more. Additionally, the

organizations also saved time on the management of

these licenses because they only needed manage

one vendor partner (Microsoft). Additionally,

connectivity between these solutions (e.g. security

tools working in concert with one another impacting

security staff as quantified in benefit B) increases the

impact of and user experience for these solutions.

Modeling and assumptions. For the composite

organization, Forrester assumes the following:

• Before using Microsoft 365 E5, the composite

organization held licenses for several redundant

enterprise chat and web conferencing solutions.

With Microsoft 365 E5, the composite cancels

these licenses and standardizes under Teams.

This saves $17.50 per user per month.

• The composite organization previously paid

substantial telephony costs. But by switching to

Microsoft 365 E5 and encouraging employees to

switch to Teams and its voice over internet

protocol (VoIP) features, it saves $12 per user

per month.

• For the 10% of the composite organization’s

users with paid analytics licenses, Microsoft 365

E5 enables monthly per-user savings of $8.75

due to Power BI.

• By migrating its security and communication

applications from on-premises deployment to the

cloud, the composite organization saves $8 per

user per month. This includes spending on server

software, hardware replacements, energy costs,

and FTE management time.

Risks. Factors that could affect the impact of this

benefit include:

• The cost associated with the organization’s

existing security and communication solutions.

• The size of the organization and its ability to

negotiate discounts.

• The organization’s adoption rate of Microsoft 365

E5 solutions.

Results. To account for these risks, Forrester

adjusted this benefit downward by 10%, yielding a

three-year, risk-adjusted total PV (discounted at 10%)

of $23.2 millio

“When you break it down, it is

more affordable [to license

Microsoft 365 E5] than to

manage the independent

licenses.”

Director of IT, healthcare

THE TOTAL ECONOMIC IMPACT™ OF MICROSOFT 365 E5

ANALYSIS OF BENEFITS

ENDPOINT DEPLOYMENT AND MANAGEMENT

TIME SAVINGS

Evidence and data. Microsoft Endpoint Manager —

a unified endpoint management tool that allows

organizations to deploy, manage, and secure all

employee corporate and personal devices — is

included with Microsoft 365 E5. The platform also

includes Microsoft Intune, which simplifies the

deployment and management of software and

security updates to managed devices, and Windows

Autopilot, which lets organizations procure,

preconfigure, and ship secure, enterprise-ready

Windows devices directly to end users from both

manufacturers and reseller partners.

• Interviewees and survey respondents told

Forrester that these features reduced the number

of resources required for managing and

supporting new software.

• In addition, interviewees took advantage of Entra

ID and SharePoint migration to onboard users on

new devices faster than before Microsoft 365 E5.

• Microsoft Endpoint Manager also features

Conditional Access and configuration capabilities,

which further reduce configuration work for IT

“With Intune, we can associate

a user not just with their

laptop, but with their phone

and other devices…so there’s

expansion from the endpoint.

Before, we didn’t have any

visibility.”

VP of IT, security, and

compliance, holding company

Legacy Software And Infrastructure Cost Savings

Ref.

Metric

Source

Year 1

Year 2

Year 3

End users

Composite

10,000

Per user monthly collaboration license

cost

Survey and

interviews

$17.50

Monthly telephony license cost per user

Survey and

interviews

$12.00

Monthly security tools license cost per

user

Survey and

interviews

$40.00

Monthly analytics license cost per user

Composite

$8.75

Monthly on-premises costs per user for

hardware and software

Composite

$8.00

Total legacy software and infrastructure

cost savings

C2*(C4+C5+C6+

C7)*12

$86.25

Legacy software and infrastructure cost

savings

C1*C7*12

$10,350,000.00

Risk adjustment

↓10%

Ctr

Legacy software and infrastructure cost

savings (risk-adjusted)

$9,315,000

Three-year total: $27,945,000

Three-year present value: $23,165,026

THE TOTAL ECONOMIC IMPACT™ OF MICROSOFT 365 E5

ANALYSIS OF BENEFITS

administrators, both for user-level and

departmental-level requests.

• Interviewees and survey respondents told

Forrester that these savings extended across

devices, with no difference in difficulty whether

the devices were mobile, PC, or Macs.

Modeling and assumptions. For the composite

organization, Forrester assumes the following:

• The composite organization previously spent an

average of 18,700 hours per year managing new

software with its legacy solutions.

• Microsoft Endpoint Manager lets the composite’s

administrators manage configuration and

deployment of software and updates to end

users, which saves 30% of their time.

• One-third of employees need to spend 1 hour of

labor on new endpoint configurations each year.

Microsoft 365 E5 reduces this time by 75%.

• The composite’s IT and end users previously

needed to spend an average of 6 hours to set up

a new laptop. Microsoft 365 E5 reduces this time

by 75%.

• The average fully loaded hourly salary of an IT

resource is $58.

• The average hourly salary of an end user is $35.

Risks. Factors that could affect the impact of this

benefit include:

• Prior effort required for management and

deployment.

• Degree of time savings realized by Microsoft 365

E5.

• Employee salaries.

Results. To account for these risks, Forrester

adjusted this benefit downward by 10%, yielding a

three-year, risk-adjusted total PV of $4.2 million.

“Which of the following categories of software

applications did your organization eliminate or

reduce expenditure on since switching to Microsoft

365 E5?”

61.5%

52.4%

46.0%

42.1%

41.5%

37.8%

36.9%

36.2%

33.8%

33.2%

30.0%

26.9%

Security management

Web conferencing

Information protection

Identity and access

Malware protection

Threat protection

Device and app

management

Antivirus

Compliance

Data loss prevention (DLP)

Advanced analytics

Telephony

Base: 920 representatives of organizations with experience using

Microsoft 365 E5

Source: A commissioned study conducted by Forrester Consulting on

behalf of Microsoft, August 2023

THE TOTAL ECONOMIC IMPACT™ OF MICROSOFT 365 E5

ANALYSIS OF BENEFITS

IT ADMINISTRATION AND HELP DESK

Evidence and data. Both interviewees and survey

respondents told Forrester that Microsoft 365 E5

significantly reduced help desk calls and shortened

the resolution times for the remaining calls and

tickets via self-service and automation.

• Interviewees told Forrester that security-related

support tickets decreased due to fewer technical

issues around security solutions and fewer false

positives. Many incidents that did occur were

automatically detected and remediated by

Microsoft 365 E5. The VP of IT, security, and

compliance for a holding company told Forrester:

“[With Microsoft 365 E5,] we have fewer open

tickets. Before, we always struggled with a

backlog of open and unresolved tickets.”

• The CDO at a restaurant chain concurred and

stated, “Microsoft 365 E5 reduces the number of

tickets you receive.”

• Interviewees said using these new methods of

management, including Intune, significantly

improved the remote work experiences at their

organizations. One told Forrester that support

tickets from remote workers decreased by 40%,

while another said: “[We] probably spent 25%

more time supporting remote workers than the

Endpoint Deployment And Management Time Savings

Ref.

Metric

Source

Year 1

Year 2

Year 3

Time dedicated to new software

deployment and management (hours)

Survey

18,700

Reduction due to efficiency gains

provided by M365 E5

Survey and

interviews

30%

Time reallocated from software

management (hours)

D1*D2

5,610

Time spent configuring new endpoints

(hours)

Composite

3,333

Reduced endpoint configuration due to

M365

Interviews

2,500

Time required to setup a user on a new

laptop before M365 (hours)

Composite

IT end-user setup time savings

C1/3*D6*75%

14,999

End-user setup time savings

C1/3*D6*75%

14,999

Fully loaded hourly salary of an IT end

user

Assumption

$58

D10

Fully loaded hourly salary of an end user

Assumption

$35

D11

Total IT time savings

(D3+D5+D7)*D9

$1,340,322

D12

End-user savings

D8*D10

$524,965

Endpoint deployment and management

time savings

D11+D12

$1,865,287

Risk adjustment

↓10%

Dtr

Endpoint deployment and management

time savings (risk-adjusted)

$1,678,758

Three-year total: $5,036,275

Three-year present value: $4,174,823

THE TOTAL ECONOMIC IMPACT™ OF MICROSOFT 365 E5

ANALYSIS OF BENEFITS

office workers. Now that we have a standard

suite of tools that can be controlled and managed

across endpoints and geographies, we’ve seen a

reduction in the support needs of our remote

workers.”

Modeling and assumptions. For the composite

organization, Forrester assumes the following:

• The composite organization processes 60,000

annual help desk calls, and 50% are resolved via

self-service and automation.

• Calls that can’t be resolved by self-service are

resolved 15% faster due to expanded security

tools like Microsoft Endpoint Manager.

• An average support ticket takes 30 minutes of IT

and user time to resolve.

• The fully loaded salary of an IT admin or end

user is $40 per hour.

• This means a support ticket leads to $20 in

internal costs for the composite.

• IT administrators and end users recapture the

time they previously lost while resolving tickets.

Risks. Factors that could affect the impact of this

benefit include:

• The self-service tools the organization used

before switching to Microsoft 365 E5.

• The organization’s benchmark IT productivity.

Results. To account for these risks, Forrester

adjusted this benefit downward by 5%, yielding a

three-year, risk-adjusted total PV of $1.6 million.

IT Administration And Help Desk

Ref.

Metric

Source

Year 1

Year 2

Year 3

Help desk calls

C1*6

60,000

Percent of calls eliminated due to E5

tools and automations

Composite

50%

Tickets deflected due to E5

E1*E2

30,000

Reduction in ticket resolution time for

remaining tickets

Composite

15%

Cost per call

Composite

$20

IT administration and help desk

(E3*E5) +(E1*(1-

E2) *E4*E5)

$690,000

Risk adjustment

↓5%

Etr

IT administration and help desk (risk-

adjusted)

$655,500

Three-year total: $1,966,500

Three-year present value: $1,630,131

“We’ve reduced the time it takes

to audit our IT infrastructure by

50%.”

Director of technology, licensing,

and business development, media

THE TOTAL ECONOMIC IMPACT™ OF MICROSOFT 365 E5

ANALYSIS OF BENEFITS

IMPROVED REGULATORY AUDIT AND

COMPLIANCE MANAGEMENT

Evidence and data. Data privacy regulations have

continued to tighten, which impacts how the

interviewees’ and survey respondents’ organizations

do business with the threat of fines and harsh

penalties. Interviewees and respondents told

Forrester that Microsoft 365 E5’s compliance and

data retention tools were an important factor in their

company’s decision to adopt the platform.

• The director of IT for the healthcare organization

told Forrester: “[I value Microsoft 365 E5’s]

retention capabilities, auditing capabilities, [and]

eDiscovery. … It’s huge for financial and

regulatory landscape plans. … Microsoft’s AI

capabilities [are] able to tell us how secure our

environment is, what sort of changes [we] need

to make, [and] how to make sure [we’re] up to

date.”

• The director at a manufacturing firm explained

how Microsoft 365 E5’s ability to retain and recall

documentation reduced audit time and improved

accuracy: “Microsoft Secure Score reduced the

time it took us to be compliant with the CCPA and

GDPR And Entra ID and [Microsoft 365] E5 really

enhance our security capabilities. They’ve helped

reduce the cost to perform our twice-yearly

security audits by hundreds of thousands of

dollars in internal labor and consulting costs.”

• The director of the manufacturing firm stated,

“The security and compliance features [within

Microsoft 365 E5] really appealed to us [as a

method to protect proprietary information].”

• In addition to time savings, the organizations also

realized savings on licensing and third-party

reviews. The head of collaboration cloud

technologies for an energy company told

Forrester, “[Because of Microsoft 365,] we’ve

been able to sunset some legacy data

repositories because we can now store them on

[SharePoint].”

Modeling and assumptions. For the composite

organization, Forrester assumes the following:

• The composite requires 25 FTEs to perform work

related to regulator and compliance audits.

• These FTEs are a mixture of IT, legal, and

business employees who earn average loaded

salaries of $130,000 per year.

• Microsoft 365 E5 saves the composite

organization 40% of the time spent on regulatory

audit and compliance management.

Risks. Factors that could affect the impact of this

benefit include:

• The organization’s industry, region, and size.

• The amount of labor the organization requires to

meet compliance.

Results. To account for these risks, Forrester

adjusted this benefit downward by 10%, yielding a

three-year, risk-adjusted total PV of $2.9 million.

“We can unify compliance and

security. … From a visibility and

discovery perspective, it gives

us the insight to try different

policies.”

Director of IT, healthcare

THE TOTAL ECONOMIC IMPACT™ OF MICROSOFT 365 E5

ANALYSIS OF BENEFITS

REDUCED TRAVEL AND EXPENSE

Evidence and data. The improved telephony and

communication features of Microsoft 365 E5 enabled

interviewees’ and survey respondents’ organizations

to reduce their spend on travel and expenses while

retaining high levels of productivity. These expenses

included airfare and meals for employees and clients.

• An interviewee from a manufacturing firm said,

“Our CIO initially forecast $12 million a year in

savings from reduced travel for board members,

our C-suite, and officers.”

• The CIO for the professional services firm told

Forrester that during the first year of their

organization’s E5 migration, it reduced its travel

costs by 10%.

• The head of architecture at a media firm told

Forrester: “Travel is very expensive for us; we

spend millions on travel. Our initial estimates are

to reduce travel for internal meetings by 30% to

50%, which will result in undeniably large savings

for us.”

Modeling and assumptions. For the composite

organization, Forrester assumes the following:

• The composite organization’s annual travel

expense budget is $25 million, or 10% of its

annual budget.

• The composite organization reduces its activities

that incur travel expenses by 25%.

• These savings come from varying sources,

including reduced internal and regional meetings,

fewer sales calls, and fewer conferences.

• 50% of these savings are attributed to Microsoft

365 E5.

Risks. Factors that could affect the impact of this

benefit include:

• The organization’s location and size.

• The organization’s industry and its capability for

remote work.

• The organization’s workforce makeup and

benchmark travel expenses.

Results. To account for these risks, Forrester

adjusted this benefit downward by 20%, yielding a

three-year, risk-adjusted total PV of $6.2 million.

Improved Regulatory Audit And Compliance Management

Ref.

Metric

Source

Year 1

Year 2

Year 3

FTEs dedicated to performing regulatory

and compliance audits

Composite

Average annual salary of an audit and

compliance FTE

TEI standard

$130,000

Improved audit and compliance

management

Survey and

interviews

40%

Improved regulatory audit and

compliance management

F1*F2*F3

$1,300,000

Risk adjustment

↓10%

Ftr

Improved regulatory audit and

compliance management (risk-adjusted)

$1,170,000

Three-year total: $3,510,000

Three-year present value: $2,909,617

THE TOTAL ECONOMIC IMPACT™ OF MICROSOFT 365 E5

ANALYSIS OF BENEFITS

END-USER PRODUCTIVITY IMPROVEMENTS

Evidence and data. Interviewees and survey

respondents told Forrester that Microsoft 365 E5

provides a wide suite of collaboration and

communication solutions that helped boost

productivity by making communication and

collaboration easier, regardless of location. They

cited efficiency-driving access to Power BI Pro (which

is included in E5 licensing) as a significant reason for

investment for select users.

• The director of IT for a manufacturing firm said

Teams’ enhanced collaboration tools were

transformative for their organization: “When

[users] realize what they have at their disposal,

there’s this lightbulb that goes off, and people

really understand this collaboration within a team

[and] within a context, and then all of the files and

everything related to that conversation are all

being captured in one spot. Those are fun

moments because typically, they would be

running things back and forth with emails.”

• Power BI further boosted productivity by

uncovering insights that organizations never had

access to before. The CIO for the banking

organization elaborated: “It’s been absolutely

fantastic. I’m surprised to see my president on a

regular basis will grab his cellphone and pull up a

report right there in a meeting. There’s no fluffing

anything. He can find hard numbers for anything

right there.”

• The VP of digital workplace at a financial services

firm concurred, stating: “The growth in adoption

for Power BI is phenomenal. Power BI has been

really good for our businesspeople who aren’t

technical. We’ve used Power BI to visualize data

and make better decisions. … We’re seeing

people creating forms very quickly. People are

able to put a form together and send it out to the

entire organization to analyze the data with

Power BI very quickly. This allows people to be

more efficient. We’ve seen security teams, HR,

and others use Power Apps to automate tasks

and save time.”

Modeling and assumptions. For the composite

organization, Forrester assumes the following:

• The composite organization sees a productivity

improvement of 3% due to Microsoft 365 E5,

which equals weekly savings of 62 minutes per

worker.

• Seamless SSO saves an additional 10 minutes

per worker per week.

Reduced Travel And Expense

Ref.

Metric

Source

Year 1

Year 2

Year 3

Total travel and expense budget

Composite

$25,000,000

Percent reduction due to increased

remote work

Survey and

interviews

25%

Attribution percentage

Survey and

interviews

50%

Reduced travel and expense

G1*G2*G3

$3,125,000

Risk adjustment

↓20%

Gtr

Reduced travel and expense (risk-

adjusted)

$2,500,000

Three-year total: $7,500,000

Three-year present value: $6,217,130

THE TOTAL ECONOMIC IMPACT™ OF MICROSOFT 365 E5

ANALYSIS OF BENEFITS

• Users experience less downtime, fewer stability

issues due to security products, and easier

remote work.

Risks. Factors that could affect the impact of this

benefit include:

• The organization’s number of users.

• Average labor rates.

• Cultural and organizational change management

barriers.

• The organization’s preexisting solutions and

benchmark productivity.

Results. To account for these risks, Forrester

adjusted this benefit downward by 15%, yielding a

three-year, risk-adjusted total PV of $23.9 million.

End-User Productivity Improvements

Ref.

Metric

Source

Year 1

Year 2

Year 3

End users

10,000

Weekly improved efficiency with

collaborative document sharing and chat

(minutes)

Composite

Weekly time savings from Entra ID SSO

Composite

Efficiency gain per user (hours)

((H2+H3)/60)

*52

62.4

63.3

64.1

Average hourly rate of a knowledge

worker

TEI standard

35.10

35.80

36.50

Productivity recapture

TEI standard

50%

End-user productivity improvements

H1*H4*H5*H6

$10,951,200

$11,325,366

$11,710,118

Risk adjustment

↓15%

Htr

End-user productivity improvements

(risk-adjusted)

$9,308,520

$9,626,561

$9,953,600

Three-year total: $28,888,682

Three-year present value: $23,896,414

52.9%

39.5%

34.7%

30.8%

28.6%

28.0%

26.4%

24.2%

23.9%

23.4%

22.8%

IT processes

Business intelligence/data

management

Customer service

Inventory management and

distribution

Marketing and customer

acquisition

Sales

Financial analysis, reporting,

and capital Management

Hiring and onboarding

Customer onboarding

Manufacturing

Compliance/regulatory/legal

“Since moving to Microsoft 365, has your organization

automated workflows for any of the following business

processes?”

Base: 920 representatives of organizations with experience using

Microsoft 365 E5. Source: A commissioned study conducted by

Forrester Consulting on behalf of Microsoft, August 2023

THE TOTAL ECONOMIC IMPACT™ OF MICROSOFT 365 E5

ANALYSIS OF BENEFITS

UNQUANTIFIED BENEFITS

Interviewees mentioned the following additional

benefits that their organizations experienced but were

not able to quantify:

• Transitioning from capex to opex. Because

Microsoft 365 E5’s is a purely SaaS offering, it

allows organizations the flexibility to scale their

deployments without worrying about making or

abandoning major investments in hardware or

licensing costs.

• Reduced likelihood of regulatory fines. Using

better tools around compliance, audit

preparation, and security reduces the risk of

experiencing events that could result in violations

of compliance regulations and paying the

accompanying fines and legal costs.

• Developer efficiency gains. Microsoft

Authentication Library (MSAL) enables the

composite’s developers to more easily add

identity capabilities to applications, which saves

time on authentication. Microsoft Graph API

offers developers a single endpoint to access

Entra ID APIs.

FLEXIBILITY

The value of flexibility is unique to each customer.

There are multiple scenarios in which a customer

might implement Microsoft 365 E5 and later realize

additional uses and business opportunities, including:

• Increased business agility. The improved

collaboration provided by Microsoft 365 E5 along

with the regular additional features and upgrades

Microsoft releases and the reduced need to

manage infrastructure can make an organization

more able to quickly adjust to changing business

realities, seize new opportunities, and improve

overall agility.

• Faster adoption of the newest offerings from

Microsoft 365. By subscribing to Microsoft 365

E5, organizations can utilize innovations to

existing Microsoft 365 products and new releases

on the platform much more quickly than they

could otherwise.

Flexibility would also be quantified when evaluated as

part of a specific project (described in more detail in

Appendix A).

THE TOTAL ECONOMIC IMPACT™ OF MICROSOFT 365 E5

Analysis Of Costs

Quantified cost data as applied to the composite

INITIAL PLANNING AND IMPLEMENATION

The interviewees and survey respondents told

Forrester that implementing Microsoft 365 E5

required their organizations to use internal teams that

worked part-time alongside professional services

partners.

Modeling and assumptions. For the composite

organization, Forrester assumes the following:

• Five FTEs spend six months planning and

executing the implementation.

• The blended average annual salary for an

implementing FTE is $125,000.

• The composite organization also pays for

professional services.

Risks. Factors that could affect the impact of this

cost include:

• The quantity and roles of the FTEs who work on

the organization’s implementation.

• The length of the implementation

• The organization’s need for and cost of

professional services.

Results. To account for these risks, Forrester

adjusted this cost upward by 10%, yielding a three-

year, risk-adjusted total PV (discounted at 10%) of

$1.2 million.

Total Costs

Ref.

Cost

Initial

Year 1

Year 2

Year 3

Total

Present

Value

Itr

Initial planning and

implementation

$1,168,750

Jtr

Microsoft licensing cost

$7,244,937

$21,734,811

$18,017,086

Ktr

Ongoing management

costs

$1,760,000

$1,628,000

$5,016,000

$4,168,595

Ltr

Additional bandwidth

investment

$164,850

$494,550

$409,958

Total costs (risk-

adjusted)

$1,168,750

$9,169,787

$9,037,787

$28,414,111

$23,764,389

THE TOTAL ECONOMIC IMPACT™ OF MICROSOFT 365 E5

ANALYSIS OF COSTS

MICROSOFT LICENSING COST

Evidence and data. Microsoft charges for 365 E5 on

an ongoing per-user monthly fee for usage and also

charges an additional fee for analytics.

Modeling and assumptions. For the composite

organization, Forrester assumes the following:

• The composite organization pays $57 per user

per month for Microsoft 365 E5.

• The composite pays an additional monthly fee of

$4,995 for access to analytics.

Risks. Factors that could affect the impact of this

cost include:

• The organization’s number of Microsoft 365 E5

users.

• The organization’s need for analytics.

Results. To account for these risks, Forrester

adjusted this cost upward by 5%, yielding a three-

year, risk-adjusted total PV of $18 million.

Initial Planning And Implementation

Ref.

Metric

Source

Initial

Year 1

Year 2

Year 3

FTEs involved with implementation

Composite

Average annual salary of an FTE

involved with implementation

TEI standard

$125,000

Percent of time dedicated to

implementation

Composite

50%

Professional services

Composite

$750,000

Initial planning and implementation

(I1*I2*I3) +I4

$1,062,500

Risk adjustment

↑10%

Itr

Initial planning and implementation (risk-

adjusted)

$1,168,750

Three-year total: $1,168,750

Three-year present value: $1,168,750

THE TOTAL ECONOMIC IMPACT™ OF MICROSOFT 365 E5

ANALYSIS OF COSTS

ONGOING MANAGEMENT COSTS

Evidence and data. The interviewees and survey

respondents explained to Forrester that managing

Microsoft 365 E5 requires ongoing effort from a small

team of FTEs and ongoing professional services.

Modeling and assumptions. For the composite

organization, Forrester assumes the following:

• Five IT FTEs work full-time on management in

Year 1. This number decreases to four FTEs in

years 2 and 3.

• The composite pays ongoing professional

services fees of $1 million per year.

Risks. Factors that could affect the impact of this

cost include:

• The number and types of FTEs required for

ongoing management.

• The amount of professional services the

organization requires.

Results. To account for these risks, Forrester

adjusted this cost upward by 10%, yielding a three-

year, risk-adjusted total PV of $4.2 million.

Microsoft Licensing Cost

Ref.

Metric

Source

Initial

Year 1

Year 2

Year 3

Microsoft 365 E5 users

Composite

10,000

Monthly licensing costs for Microsoft 365

Microsoft

$57

Additional analytics licensing costs

$4,995*12

months

$59,940

Microsoft licensing cost

J1*(J2*12)+J3

$6,899,940

Risk adjustment

↑5%

Jtr

Microsoft licensing cost (risk-adjusted)

$7,244,937

Three-year total: $21,734,811

Three-year present value: $18,017,086

THE TOTAL ECONOMIC IMPACT™ OF MICROSOFT 365 E5

ANALYSIS OF COSTS

ADDITIONAL BANDWIDTH INVESTMENT

Evidence and data. Interviewees and survey

respondents said to take full advantage of the

additional telephony and communications capabilities

of Microsoft 365 E5, their organizations invested in

additional bandwidth.

Modeling and assumptions. Forrester assumes the

composite organization pays $157,000 per year for

additional bandwidth.

Risks. A factors that could affect the impact of this

cost is the amount of additional bandwidth the

organization requires to fully use Microsoft 365 E5.

Results. To account for these risks, Forrester

adjusted this cost upward by 5%, yielding a three-

year, risk-adjusted total PV of $410,000.

Ongoing Management Costs

Ref.

Metric

Source

Initial

Year 1

Year 2

Year 3

IT FTEs dedicated to ongoing

management

Composite

Average annual salary of an IT FTE

TEI standard

$120,000

Ongoing professional services costs

Composite

$1,000,000

Ongoing management costs

K1*K2+K3

$1,600,000

$1,480,000

Risk adjustment

↑10%

Ktr

Ongoing management costs (risk-

adjusted)

$1,760,000

$1,628,000

Three-year total: $5,016,000

Three-year present value: $4,168,595

Additional Bandwidth Investment

Ref.

Metric

Source

Initial

Year 1

Year 2

Year 3

Additional bandwidth investment

Composite

$0$$

$157,000

Additional bandwidth investment

$157,000

Risk adjustment

↑5%

Ltr

Additional bandwidth investment (risk-

adjusted)

$164,850

Three-year total: $494,550

Three-year present value: $409,958

THE TOTAL ECONOMIC IMPACT™ OF MICROSOFT 365 E5

Financial Summary

CONSOLIDATED THREE-YEAR RISK-ADJUSTED METRICS

-$20.0 M

-$10.0 M

$10.0 M

$20.0 M

$30.0 M

$40.0 M

$50.0 M

$60.0 M

Initial Year 1 Year 2 Year 3

Cash

flows

Cash Flow Chart (Risk-Adjusted)

Total costs Total benefits Cumulative net benefits

These risk-adjusted ROI,

NPV, and payback period

values are determined by

applying risk-adjustment

factors to the unadjusted

results in each Benefit and

Cost section.

The financial results calculated in the

Benefits and Costs sections can be

used to determine the ROI, NPV, and

payback period for the composite

organization’s investment. Forrester

assumes a yearly discount rate of 10%

for this analysis.

Cash Flow Analysis (Risk-Adjusted Estimates)

Initial

Year 1

Year 2

Year 3

Total

Present

Value

Total costs

($1,168,750)

($9,169,787)

($9,037,787)

($28,414,111)

($23,764,389)

Total benefits

$27,382,183

$27,700,224

$28,027,263

$83,109,670

$68,842,937

Net benefits

($1,168,750)

$18,212,396

$18,662,437

$18,989,476

$54,695,559

$45,078,548

ROI

190%

Payback

<6 months

THE TOTAL ECONOMIC IMPACT™ OF MICROSOFT 365 E5

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 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.

TOTAL ECONOMIC IMPACT APPROACH

Benefits represent the value delivered to the

business by the product. The TEI methodology

places equal weight on the measure of benefits and

the measure of costs, allowing for a full examination

of the effect of the technology on the entire

organization.

Costs consider all expenses necessary to deliver the

proposed value, or benefits, of the product. The cost

category within TEI captures incremental costs over

the existing environment for ongoing costs

associated with the solution.

Flexibility represents the strategic value that can be

obtained for some future additional investment

building on top of the initial investment already made.

Having the ability to capture that benefit has a PV

that can be estimated.

Risks measure the uncertainty of benefit and cost

estimates given: 1) the likelihood that estimates will

meet original projections and 2) the likelihood that

estimates will be tracked over time. TEI risk factors

are based on “triangular distribution.”

The initial investment column contains costs incurred at “time

0” or at the beginning of Year 1 that are not discounted. All

other cash flows are discounted using the discount rate at the

end of the year. PV calculations are calculated for each total

cost and benefit estimate. NPV calculations in the summary

tables are the sum of the initial investment and the

discounted cash flows in each year. Sums and present value

calculations of the Total Benefits, Total Costs, and Cash Flow

tables may not exactly add up, as some rounding may occur.

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.

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.

RETURN ON INVESTMENT (ROI)

A project’s expected return in

percentage terms. ROI is calculated by

dividing net benefits (benefits less costs)

by costs.

DISCOUNT RATE

The interest rate used in cash flow

analysis to take into account the

time value of money. Organizations

typically use discount rates between

8% and 16%.

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.

THE TOTAL ECONOMIC IMPACT™ OF MICROSOFT 365 E5

Appendix B: Interview And Survey Demographics

Interviews

Role

Industry

Region

E5 Users

Interview Year

Director of IT

Healthcare

15,000

2023

CIO

Banking

180

2023

Director of IT

Manufacturing

400

2023

VP of IT, security, and

compliance

Holding company

8,000

2023

Head of collaboration cloud

technologies

Energy

Global

50,000

2020

Head of architecture

Media

20,000

2020

CIO

Professional services

400

2020

CTO

Government

Middle East

2,000

2020

CDO

Restaurant

Global

17,000

2020

Technology infrastructure

decision-maker

Government

750

2020

SVP of IT

Clothing

Global

3,800

2020

VP of digital workplace

Financial services

12,500

2020

Director

Manufacturing

2,750

2020

Director of technology, licensing,

and business development

Media

500

2020

17.5%

16.4%

16.3%

12.9%

4.2%

Australia

France

Germany

Japan

Canada

“What geographic region are you located in?”

THE TOTAL ECONOMIC IMPACT™ OF MICROSOFT 365 E5

Appendix C: Endnotes

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.

Source: Forrester Consulting Cost Of A Cybersecurity Breach Survey, Q1 2021.

Ibid.

Base: 920 representatives of organizations with experience using Microsoft 365 E5

Source: A commissioned study conducted by Forrester Consulting on behalf of Microsoft, August 2023

14.3%

11.4%

10.8%

9.1%

6.7%

5.9%

5.4%

5.1%

4.6%

3.8%

2.7%

2.4%

1.7%

Retail

Manufacturing and materials

Financial services and banking/capital markets

Healthcare

Energy, utilities, and waste management

Government

IT professional services

Insurance

Travel/tourism/hospitality

Electronics manufacturing

Business services

Consumer product manufacturing

Oil and gas

Chemicals and metals manufacturing

Medical fields

Public sector and nonprofit

“What industry are you in?”

THE TOTAL ECONOMIC IMPACT™ OF MICROSOFT 365 E5