The Total Economic Impact of the Symantec Enterprise Vault Netherlands Government Ministry

Transcription

1 Prepared for Symantec May 2006 The Total Economic Impact of the Symantec Enterprise Vault Project Director: Contributors: Jeffrey North, Senior Consultant, TEI Practice Jon Erickson, Senior Consultant, TEI Practice

2 TABLE OF CONTENTS Executive Summary...4 Purpose...4 Methodology...4 Approach...5 Key Findings...5 Disclosures...6 Symantec Enterprise Vault: Overview...7 Analysis...8 Interview Highlights...8 TEI Framework...9 Introduction...9 Framework Assumptions...9 Costs...9 Software...9 Hardware...10 Professional Services...10 Additional Software...10 Ongoing IT Support And Maintenance...11 Total Costs...11 Benefits...12 Labor Cost Savings: IT/Discovery...12 Labor Cost Savings: Security Staff/Investigations...13 Labor Cost Savings: IT/ Administration...13 Productivity Improvement: All Users

3 Total Benefits...15 Risk...15 Flexibility...18 TEI Framework: Summary...18 Study Conclusions...19 Appendix A: Total Economic Impact Overview...21 Benefits...21 Costs...21 Risk...21 Flexibility...21 Appendix B: Glossary...22 Appendix C: Adjusting For Investment Risk (Example)...23 Appendix D: About The Project Team Forrester Research, Inc. Circulation or disclosure in whole or in part of this report outside the authorized recipient organization is expressly forbidden without the prior written permission of Forrester Research, Inc. Forrester, Forrester Oval Program, Forrester Wave, Forrester's Ultimate Consumer Panel, WholeView 2, Technographics, TechRankings, and Total Economic Impact are trademarks of Forrester Research, Inc. All other trademarks are the property of their respective companies. Information is based on best available resources. Opinions reflect judgment at the time and are subject to change

4 Executive Summary In December 2005, Symantec commissioned Forrester Consulting to examine the total economic impact and potential return on investment (ROI) that enterprises may realize by deploying Enterprise Vault software. Enterprise Vault (EV) is an archiving platform for the long-term retention and management of unstructured content, most notably from and file systems. According to Symantec, Symantec Enterprise Vault software provides a flexible archiving framework to enable the discovery of content held within , file system and collaborative environments, while helping to reduce storage costs and simplifying management. Enterprise Vault manages content via automated, policy-controlled archiving to online stores for active retention and seamless retrieval of information. One of the key aims of Enterprise Vault is to allow seamless access to the archived content for the end user. With , for example, the end user need not be aware that content has been archived. In addition, the built-in search and discovery capabilities of Enterprise Vault are complemented by specialized client applications for corporate governance, risk management and legal protection. The customer profiled in this case study is a Dutch government ministry with annual expenditures of nearly 8 billion. This organization provides 65,000 staff with accounts and its Exchange environment encompasses more than 100,000 mailboxes. Its Enterprise Vault currently contains 10 terabytes of data; IT managers expect it to house 40 terabytes of data by This customer employed Symantec s Enterprise Vault as a solution for centralizing storage, ensuring that services can be restored within 4 hours after a system failure, and responding to requests for archived . These capabilities are critical, as this organization s charter includes matters of national security and defense, policing, and international affairs at the highest level. In conducting in-depth interviews with the customer, Forrester found that this company achieved a return on investment (ROI) of 1,180% with a payback period of one month. Purpose The purpose of this study is to provide readers with a framework to evaluate the potential financial impact of Enterprise Vault within their organizations. Forrester s aim is to show clearly all calculations and assumptions used in the analysis. Readers should use this study to better understand and communicate a business case for investing in Enterprise Vault. Forrester has constructed a financial framework to examine the benefits, costs, risks, and flexibility options and uses the customer interviews to validate these elements. The case study contents and analyses are driven by the information provided by Symantec s customer. Methodology Symantec selected Forrester for this project because of Forrester s industry expertise in information life-cycle management (ILM), enterprise content management (ECM) and Forrester s Total Economic Impact (TEI) methodology. TEI not only measures costs and cost reduction (areas that are typically accounted for within IT) but also weighs the enabling value of a technology in increasing the effectiveness of overall business processes

5 For this study, Forrester employed four fundamental elements of TEI in modeling Enterprise Vault: 1. Costs and cost reduction. 2. Benefits to the entire organization. 3. Risk. 4. Flexibility. Given the increasing sophistication that enterprises have regarding cost analyses related to IT investments, Forrester s TEI methodology serves an extremely useful purpose by providing a complete picture of the total economic impact of purchase decisions. Please see Appendix A for additional information on the TEI methodology. Approach Forrester used a four-step approach for this study: 1. Forrester gathered data from existing Forrester research relative to Symantec s Enterprise Vault and the message archiving market in general. 2. Forrester interviewed Symantec s Enterprise Vault marketing and sales personnel to fully understand the value proposition of Enterprise Vault solutions. 3. Forrester conducted a series of in-depth interviews with the customer and other organizations currently using Enterprise Vault solutions. 4. Forrester constructed a financial model representing data collected in the interviews. This model can be found in the TEI Framework section below. Key Findings Forrester s study yielded the following key findings: ROI. Based on the interviews with an existing customer, Forrester constructed a TEI framework and the associated ROI analysis illustrating the financial impact areas. As seen in Table 1, the ROI for this company is 1,180% with a breakeven point (payback period) of one month after deployment. Benefits. A major benefit to this customer has been securing a strict service level agreement for services while at the same time seeing labor cost savings (for the IT and Security departments) in the areas of administration and electronic discovery. This customer also quantified very significant labor productivity improvements related to management for its 65,000 employees Costs. The main costs for this implementation were expenditures for software and hardware of approximately 1.8 million over three years. In addition to purchasing Symantec s Enterprise Vault software, the customer engaged a total of 600 hours or 75 days of consulting services ( 135,000) from Symantec and Hewlett-Packard for design, installation, and training

6 Table 1 illustrates the original and risk-adjusted cash flow for the customer organization based on data obtained during the interview process. Forrester risk-adjusts these values to take into account the potential uncertainty that exists in estimating the costs and benefits of a technology investment. The risk-adjusted value is meant to provide a conservative estimation, incorporating any potential risk factors that may later impact the original cost and benefit estimates. For a more in-depth explanation of risk and risk adjustments used in this study, please see the Risk section. Table 1: ROI, Original and Risk-Adjusted Summary Financial Results Original Estimate Risk-Adjusted ROI 1352% 1180% Payback period (months) Total costs (PV) 2,319,377-2,439,182- Total benefits (PV) 33,675,706 31,231,287 Total (NPV) 31,356,329 28,792,105 Source: Forrester Research, Inc. Disclosures The reader should be aware of the following: The study is commissioned by Symantec and delivered by the Forrester Consulting group. Symantec reviewed and provided feedback to Forrester, but Forrester maintained editorial control over the study and its findings and did not accept changes to the study that contradicted Forrester s findings or obscured the meaning of the study. The customer names for the interviews were provided by Symantec. Forrester makes no assumptions as to the potential return on investment that other organizations will receive. Forrester strongly advises that readers should use their own estimates within the framework provided in the report to determine the appropriateness of an investment in Enterprise Vault. This study is not meant to be used as a competitive product analysis

7 Symantec Enterprise Vault: Overview According to Symantec, Enterprise Vault software provides a flexible archiving framework to enable the discovery of content held within , file systems, and collaborative environments, while helping to reduce storage costs and simplifying message management. Enterprise Vault manages content via automated, policy-controlled archiving to online stores for active retention and retrieval of information. The built-in search and discovery capabilities of Enterprise Vault are complemented by optional application modules for corporate governance, risk management, and legal protection. In discussions with Symantec, Forrester understands that there are five major benefits that make up the value proposition for Symantec s customers: application storage management; compliance retention and discovery; operational excellence; knowledge utilization; and upgrade, migration, and consolidation. Application Storage Management Enterprise Vault software acts as an online archive for older items that are moved from primary application storage according to customer-defined policies. The software securely retains archived data in such a way that it can be fully utilized and expired when it is no longer required. Messages are full-text indexed while message/information stores are reduced by 50% or more using compression and single-instance (de-duped) storage. It supports any Windows NTFS-compliant storage solution including magnetic or optical disks, Storage Area Network (SAN) or Network Attached Storage (NAS). Compliance Retention And Discovery Many organizations are required to keep all electronic information for long periods of time to enable policies for corporate governance. This typically includes , file share content, SharePoint content, and instant messages. Enterprise Vault can be used to act as a secure repository for items that need to be retained for defined periods of time for legal or regulatory reasons. The Discovery Accelerator module is a solution for organizations required to produce discovery of content in response to litigation. Operational Excellence Enterprise Vault archiving can increase the operational excellence of primary applications. Servicelevel agreements (SLAs) for backup can be improved via archiving because the majority of data is moved out of the Exchange stores allowing SLAs to be planned and achieved. In addition, end users can service their own requests for old and lost information without consuming help desk or administration resources. Enterprise Vault integrates seamlessly with Outlook, Exchange, and other frontline systems for quick and easy search and retrieval of archived items. Shortcuts and Webbased search functions give users fast access to all and content. Knowledge Utilization Enterprise Vault software acts as an "information warehouse" for personal and corporate data, which then can be mined as a knowledge resource using the built-in index and search technology. Special-purpose products such as Enterprise Vault Compliance and DiscoveryAccelerators then offer solutions to specific problems such as regulatory surveillance and legal discovery. Upgrade, Migration, And Consolidation Enterprise Vault can reduce Exchange or file server storage requirements, resulting in more users housed or supported on each server, thus allowing server consolidation

8 Analysis As stated in the Executive Summary, Forrester took a multistep approach to evaluate the impact that implementing Enterprise Vault can have on an organization: Interviews with Symantec marketing and sales personnel. In-depth interviews with the Senior Network Manager for Communications Services for a large government ministry that is currently using Enterprise Vault. Construction of a financial framework around the implementation of Enterprise Vault. Interview Highlights The customer profiled in this case study is a large Dutch government ministry. Headquartered at The Hague, the organization employs 65,000 staff in numerous locations in Holland and abroad. In early 2005, this customer installed Enterprise Vault with the Discovery Accelerator and Compliance Accelerator modules. The customer saw a need to address the problems of: Noncentralized storage and the challenges of administering in more than 200 locations housed in three separate data centers. Locating important information that was often hidden away in employees PST files and in attachments that are unsearchable using Exchange tools. Maintaining service levels with ever-growing databases. The interviews uncovered a number of important aspects of the customer s environment: The most important objective for installing Enterprise Vault and centralized archiving was the ability to meet the service-level agreement for restoration within 4 hours of a failure. Enterprise Vault was implemented as part of a major upgrade of desktop services across the organization. The Vault was installed as the customer was creating new infrastructure and consolidating data centers. When users were migrated, they received the new Vault functionality. Seamless integration was deemed extremely important to both the IT department and the end users. The Vault should require minimal IT administration, and users should be able to use the application without training or help desk support. Greatly improved discovery capabilities were identified as necessary after the basic functionality of EV Mailbox, the core functionality of the product, had been implemented. Compliance with external regulatory requirements was not an immediate need. Any leakage of sensitive information in this organization, however, needs to be uncovered quickly and easily without reliance on the IT department. The customer therefore implemented the Compliance Accelerator module in order to acquire greater internal security capabilities

9 10 terabytes of data were housed in the Vault at the end of the initial implementation phase. 40 terabytes of data are expected at the end of four years. TEI Framework Introduction From the information provided in the customer interviews, Forrester has constructed a TEI framework for those organizations considering implementation of Enterprise Vault. The objective of the framework is to identify the cost, benefit, flexibility, and risk factors that impact the investment decision. Framework Assumptions Table 2 lists the discount rate used in the present value (PV) and net present value (NPV) calculations and time horizon used for the financial modeling. Table 2: General Assumptions General Assumptions Value Discount rate 10% Length of analysis Three years Source: Forrester Research, Inc. Organizations typically use discount rates between 8% and 16% based on their current environment. Readers are urged to consult with their finance department to determine the most appropriate discount rate to use within their own organizations. In addition to the financial assumptions used to construct the cash flow analysis, Table 3 provides salary assumptions used within this analysis. Costs The key cost categories associated with the Enterprise Vault as reported by the customer are: 1) software license and maintenance fees; 2) hardware costs; 3) professional services fees for design, training, and installation of the solution; and 4) labor costs for administrative tasks. The project is measured on a three-year basis. The following are the cost inputs to the financial analysis. Software The customer selected Enterprise Vault along with the Off-line Vault, Archive Explorer, NTFS HSM Manager, Discovery Accelerator, and Compliance Accelerator modules. The cost of the software in this application is 631,000, plus an annual maintenance fee of 25% 1 or 157,750 per year. 1 Based on a 24 x 7 service window

10 Hardware 34 HP Fibre Channel blade servers were installed as part of the infrastructure upgrade and consolidation project. The customer estimated that 34 servers at a cost of 7,000 (per year) each were allocated for Enterprise Vault as follows: Nine Journal archiving servers, one per cluster. 15 Mailbox archiving servers, five per cluster. Three standby servers for resilience. Two servers for discovery and compliance. Five servers for a SQL cluster. Table 3: Hardware Costs Hardware Costs: Servers Year 1 Year 2 Year 3 Total No. of HP Fibre Channel servers Unit cost 7,000 7,000 7,000 Total 238, , , ,000 Source: Forrester Research, Inc Professional Services The customer engaged Symantec s Technical Support team as well as the hardware vendor s services for assistance in design, testing and installation. Six hundred hours of consulting services were utilized at a cost of 225 per hour and a total cost of 135,000. According to the customer, the value of Symantec Technical Support Services is being able to design and deliver the complete set of archiving functionalities at a much faster pace then would be possible without these services. The vast amount of knowledge from Symantec was primarily focused on achieving the business goals as stated in the overall design papers. Additional Software The customer reported that some additional software was acquired as part of the Enterprise Vault implementation. This software included Microsoft SQL 2000 Enterprise (5 nodes, 5,000 per node plus 20% annual maintenance fee) and operational management agents for fault management, security, etc. (34 nodes, 1,000 per year per node)

11 Table 4: Other Software Other Software Costs Year 0 Year 1 Year 2 Year 3 Total Microsoft SQL 2000 Enterprise (5 nodes) 25,000 5,000 5,000 5,000 40,000 Operational management agents (34 nodes) 34,000 34,000 34, ,000 Total 9,000 39,000 39, ,000 Source: Forrester Research, Inc Ongoing IT Support And Maintenance The customer estimates that the support and maintenance for this Enterprise Vault implementation requires approximately 2,500 hours at a fully loaded compensation rate of 95 per hour. This includes 24 x 7 operations support, engineering, development, service management, and help desk. Table 5: IT Staffing Costs IT Staffing Costs Year 1 Year 2 Year 3 Total Hours 2,500 2,500 2,500 7,500 Hourly rate per person Total 237, , , ,500 Source: Forrester Research, Inc Total Costs Table 6 summarizes the costs of purchasing, installing, and maintaining Enterprise Vault including attendant services and labor. Table 6: Total Costs Total Costs Year 0 Year 1 Year 2 Year 3 Total Enterprise Vault license 631, ,000 Enterprise Vault maintenance , , ,500 Professional services 135, ,000 Hardware Costs: Servers 0 245, , , ,000 IT staffing costs 0 237, , , ,000 Other software costs 25,000 39,000 39,000 39, ,500 Total 791, , , ,250 2,671,000 Source: Forrester Research, Inc

12 Benefits The most important benefit was the level of service. In case of failure, must be up and running in 4 hours. This is extremely hard to do in a typical environment, and very expensive. Using this product, we have the same hardware and better service. Senior Network Manager, Communications Services In interviews with the customer, the following key benefits of implementing the Enterprise Vault solution were identified: 1) meeting the service-level agreement (SLA) that stipulates functionality must be restored within four hours of a failure; 2) reducing IT labor costs for administration, especially for backup, restore, and disaster recovery; 3) ease of retrieving (sensitive) information via the Discovery and Compliance Accelerators; and 4) the value-added end user service like offline functionality, seamless integration within Outlook, and enhanced search features such as full-text indexing. The implementation of Enterprise Vault was a cornerstone to a larger data consolidation effort and infrastructure upgrade. In fact, the customer reported that the larger data consolidation objective was not feasible before implementing the Enterprise Vault archiving solution. With the archive in place, the customer also implemented NTFS HSM Migrator, a very cost-effective solution for automating the migration of first-level storage (fast Fibre Channel disks) to less costly S-ATA second-level storage. After assuring that the SLA for a 4-hour disaster recovery will be met, this customer was able to achieve additional benefits from EV, especially in processing discovery requests. Such tasks formerly involved several server restores from backup tapes. A typical request would take between 160 and 460 hours to complete, yet producing 100% of the requested material was never assured. In addition to labor cost savings, this customer also acquired a higher degree of certainty around: 1) the speed at which a request could be completed, and 2) the completeness of the messages and attachments that were discovered and delivered for review. The customer purchased the Discovery Accelerator module in addition to basic Enterprise Vault, so a restore can be performed once and retrieved or reprocessed many times. The data remains online, de-duped, and it can be retrieved at any time. This feature enables the customer to employ an automated case-based approach to and file discovery with audit trails. The customer thus reduced the amount of server space dedicated to storing requested and attachments. Enterprise Vault has eliminated any burden on the IT department to sort relevant and content. This function has been shifted from the IT department to the Intelligence group, who are able to conduct searches without IT assistance. The IT department also transferred the discovery and compliance responsibility to the security staff. Although the Compliance Accelerator has been implemented, there has been no immediate regulatory-related need for using it. Once the organization s information management policies are more firmly established and communicated to the end users, Compliance Accelerator will be used more to assure policy compliance. For this government ministry, the focus is on keeping sensitive information within the departmental boundaries and maintaining the appropriate security level. Labor Cost Savings: IT/Discovery The customer has benefited from large savings in labor costs associated with discovery. Prior to installing Enterprise Vault (which was installed concurrently with a major infrastructure rebuilding initiative), discovery requests required IT staff to go to four or five different locations, import data, search the data, and then export the data back to the sites. With Enterprise Vault, discovery searches are done in a single environment, thus reducing administrative costs

13 A typical discovery request that previously took many hours is now completed in minutes. The customer estimates that four large and eight smaller discovery exercises are conducted annually. The total amount of time saved annually is estimated to be 1,000 to 1,500 hours. Using a median amount of 1,300 hours results in an estimate of annual labor cost savings of 123,500. As described above, this responsibility has been transferred to the customer s security staff, for whom there have also been labor cost savings as described in the next section. Table 7: Labor Cost Savings: IT/Discovery Reduction In Labor: IT/Discovery Year 1 Year 2 Year 3 Total Number of hours saved 1,300 1,300 1,300 3,900 Rate per hour Labor cost savings: IT/discovery 123, , , ,500 Source: Forrester Research, Inc. Labor Cost Savings: Security Staff/Investigations One of the chief benefits of Enterprise Vault, when used with the Discovery Accelerator module, is faster production and efficient packaging of the output of discovery requests. This customer reported a savings of approximately 1,600 hours for the recipients of the raw data output from discovery efforts, typically the ministry s security personnel. Discovery Accelerator enables the precision search and collection of only messages and files that are relevant to a specific discovery request. It also reduces the time needed by security staff to prepare the data in discovery efforts for review by interested parties. Like corporate attorneys who benefit from Discovery Accelerator s packaging of case-based, court ready discovery data, the requestors of the data in this government ministry benefit from the same time-saving features. The resulting annual savings are shown in Table 8. Table 8: Labor Cost Savings: Security Staff/Discovery Investigations Labor Cost Savings: Security Staff/Discovery Investigations Year 1 Year 2 Year 3 Total Number of hours saved 1,600 1,600 1,600 Rate per hour Hours saved: discovery 152, , , ,000 Source: Forrester Research, Inc. Labor Cost Savings: IT/ Administration When users can find their own s and archiving is automatic, IT department resources are freed to focus on other priorities. The customer reported that Enterprise Vault saves 2,800 hours per year, valued at a fully loaded compensation rate of 95 per hour, for an annual labor cost savings of 266,

14 Table 9: Labor Cost Savings: IT/ Administration Labor Cost Savings: IT/ Year 1 Year 2 Year 3 Total Administration Number of hours saved 2,800 2,800 2,800 8,400 Rate per hour Labor cost saving: security staff/investigations 266, , , ,000 Source: Forrester Research, Inc. Productivity Improvement: All Users When users can find the information they need, knowledge management has been greatly improved as policy-driven archives replace years of content stored in individual user s PST files. In addition, when users do not have to create their own archives as they reach mailbox quotas, the result is greater overall communications and content efficiency throughout the organization. The Dutch ministry estimated that in a nonarchived environment with imposed quotas, users spend at least 2 minutes a day managing their inboxes: deciding what should be deleted or kept for future reference. The customer also established, however, that the 2 minutes is an extremely conservative estimate. The customer s research into the issue pointed to estimates from 1 to 50 minutes productivity loss per day due to management. This customer expressed skepticism that the 2 minutes gained by implementing the archiving solution will be regained for productivity improvement, yet the benefit was included as part of the soft side of the overall business case for implementing archiving solutions. Forrester includes this benefit in the financial framework by assuming that only 50% of the benefit will be realized by the organization as well as by introducing additional conservative calculations around this and the other benefits when adjusting for risk (see Risk section). The customer stated that there are additional user productivity improvements resulting from, for example, ease of finding stored information as a result of full-text indexing, Archive Explorer, and full offline capabilities that were not taken into account. The calculation for user productivity benefit is: 240 work days * 2 minutes per day = 8 hours per year. 8 hours * 65,000 users * 50 per hour (all-employee average fully loaded compensation rate) = 26,000,000. Forrester then applies the 50% discount factor, to produce the annual benefit of 13,000,000 shown in Table 10. Table 10: Productivity Improvement: All Users Productivity Improvement Per Year 1 Year 2 Year 3 Total Employee Number of workers 65,000 65,000 65,000 65,000 Average hourly rate per worker Number of hours saved annually Percent captured 50% 50% 50% 50% Incremental output per worker 13,000,000 13,000,000 13,000,000 39,000,000 Source: Forrester Research, Inc

15 Total Benefits Table 11 summarizes the benefits experienced by this customer of installing Enterprise Vault and shows the present value for each benefit category. Table 11: Total Benefits Year 1 Year 2 Year 3 Total Total Benefits Labor cost savings: IT/discovery 123, , , ,500 Labor cost savings: security staff/discovery investigations 152, , , ,000 Labor cost savings: IT/ 266, , , ,000 administration Incremental output per worker 13,000,000 13,000,000 13,000,000 39,000,000 Total 13,541,500 13,541,500 13,541,500 40,624,500 Source: Forrester Research, Inc. Risk Forrester defines two types of investment risk associated with this analysis. Implementation risk is the risk that a proposed technology investment may deviate from original resource requirements needed to implement and integrate the investment, resulting in higher costs than anticipated. Impact risk refers to the risk that the business or technology needs of the organization may not be met by the technology investment, resulting in lower overall total benefits. The greater the uncertainty, the wider the potential range of outcomes for cost and benefit estimates. Quantitatively capturing investment risk, by directly adjusting the financial estimates, results in more meaningful and accurate estimates and a more accurate projection of the return on an investment. The following implementation risks are identified as part of this analysis: Installation and testing could demand more days of consulting services. Data in Enterprise Vault could be lost or corrupted during initial rollout, requiring extensive (and expensive) restoration from backup tapes. Level of infrastructure investment could be higher than originally anticipated. The following impact risk is identified as part of the analysis: Extent of labor cost saving and productivity improvement could be lower than projected. Steps For Measuring Investment Risk In order to calculate the final risk-adjusted estimates, Forrester applies a multistep process examining the impact of bias and variance on cost and benefit estimates. Step 1: Calculate original cost and benefit estimates. This is the initial calculation of the cost and benefit estimates without accounting for the impact of investment risk

16 Step 2: Calculate the impact of bias for cost and benefit estimates. To account for the impact of bias (most organizations overestimate benefits and underestimate cost estimates) this step recalculates the original cost and benefit estimates by using the average of the original estimate (calculated in Step 1) and a low and a high estimate. Step 3: Calculate variance for cost and benefit estimates. This step measures the impact of variance on cost and benefit estimates. Variance is a measure of the possible range of outcomes for cost and benefit estimates. Higher variance implies a wider range of possible outcomes, increasing the uncertainty in cost and benefit estimates. The three steps are used to identify and incorporate the full impact of risk as part of a technology decision. The tables below illustrate the impact of implementation and impact risk on cost and benefit estimates. For more information on the application of risk, please see Appendix C. Table 12: Risk Adjustment: Costs Step 1 Step 2 Step 3 Costs: Risk Adjusted Original Estimate High Low Bias Adjustment Risk Adjusted % Value % Value Enterprise Vault license 631, , , % 631, % 631,000 Enterprise Vault maintenance 315, , , % 315, % 315,500 Professional services 135, , , % 136, % 144,422 Hardware costs: servers 714, , , % 714, % 722,573 IT staffing costs 712, , , % 779, % 822,295 Other software costs 142, , , % 150, % 168,050 Source: Forrester Research, Inc. The following assumptions are used to calculate the Original, High, and Low cost amounts in Table 12: Enterprise Vault License Since this amount has been determined by contract, no risk adjustment is applied. Enterprise Vault Maintenance As with the license cost, this amount has been determined by contract, therefore no risk adjustment is applied. Professional Services The Low, Original, and High estimates are set at 500, 600, and 700 hour, respectively. Similarly, the hourly rates are ranges from 200, 225, and 250 per hour. Hardware Costs: Servers The number of servers required for an implementation similar to this one would range from 32 to 36, with 34 the actual number used in the case of the Dutch ministry

17 IT Staffing Costs The Low, Original, and High estimates are set at 2,200, 2,500, and 3,500 hours, respectively. Other Software Costs No risk adjustments made. This is a very small piece of the project and thus adjusting for risk is de minimis. Table 13: Risk Adjustment: Benefits Step 1 Step 2 Step 3 Benefits: Risk Adjusted Original Estimate High Low Bias Adjustment Risk Adjusted % Value % Value Labor cost savings: IT/discovery 370, , , % 361, % 346,735 Labor cost savings: security staff/discovery investigations 456, , , % 456, % 432,730 Labor cost savings: IT/ administration 798, , , % 798, % 786,365 Incremental output per worker 39,000,000 39,000,000 32,500, % 36,833, % 36,109,858 Source: Forrester Research, Inc. The following assumptions have been used to calculate the Original, High, and Low benefit amounts in Table 13: Labor Cost Savings: IT/Discovery The Low, Original and High estimates are set at 2,600, 2,800, and 3,000 hours per year, respectively, at a fully loaded labor rate of 95. Labor Cost Savings: Security Staff/Discovery Investigations The Low, Original and High estimates are set at 1,000, 1,300, and 1,500 hours per year, respectively, at a fully loaded labor rate of 95. Labor Cost Savings: IT/ Administration The Low, Original and High estimates are set at 1,200, 1,600, and 2,000 hours per year, respectively, at a fully loaded labor rate of 95. Incremental Output Per Worker The Low, Original, and High estimates are set at 6.67, 8 and 8 hours per year (2 minutes per day * 5 days per week * 48 weeks per year), respectively, at a fully loaded labor rate of 50 for 65,000 employees. These amounts are then multiplied by 50%

18 Flexibility Flexibility, as defined by Forrester s TEI methodology, represents an investment in additional capacity or agility today that can be turned into future business benefits at some additional cost. Flexibility benefits typically increase with the scalability of the technology investment. This provides an organization with the right or the ability to engage in future initiatives but not the obligation to do so. In the case of Enterprise Vault, there are multiple scenarios in which a customer might choose to implement the Vault alone and decide at a later date to add Discovery Accelerator, Compliance Accelerator, the PST migration tool, or a combination of additional modules that sit on top of the core Enterprise Vault software. Forrester believes organizations that adopt Enterprise Vault can take advantage of these flexibility options. For the Dutch ministry this actually occurred when this customer initially implemented the core functionality of the EV product, and soon thereafter purchased and installed the Discovery Accelerator. This initiative, to greatly improve and speed up responses to Intelligence or Legal department requests for messages, represents a large gain with a small cost on top of the EV foundation. Quantifying the flexibility in this case (ex post facto), however, using the financial industry standard Black-Scholes or the binomial option pricing models, would require customer data that is not available at this time. The value of flexibility is unique to each organization, and the willingness to measure its value varies from company to company (see Appendix A for additional information regarding the flexibility calculation). TEI Framework: Summary Considering the financial framework constructed above, the results of the costs, benefits, and risk and sections can be used to determine a return on investment, net present value, and payback period, as shown in Tables 14 and 15 below. Tables 14 and 15 below show the risk-adjusted cost values, applying the risk adjustment method indicated in the Risks section and the values from Table 6 and 11 to the numbers in Tables 12 and 13, respectively. Table 14: Risk-Adjusted Costs Total Costs: Risk Adjusted Enterprise Vault license Enterprise Vault maintenance Year 0 Year 1 Year 2 Year 3 Total Present Value 631, , , , , , ,892 Professional services 144, , ,422 Hardware costs: Servers 0 240, , , , ,978 IT staffing costs 0 274, , , , ,642 Other software costs 37,262 39,000 39,000 39, , ,249 Total 812, , , ,706 2,790,052 2,439,182 Source: Forrester Research, Inc

19 Table 15: Risk-Adjusted Benefits Total Benefits: Risk Adjusted Year 1 Year 2 Year 3 Total Present Value Labor cost savings: IT/discovery 115, , , , ,426 Labor cost savings: security staff/discovery investigations 144, , , , ,712 Labor cost savings: IT/ 262, , , , ,858 administration Incremental output per worker 12,036,619 12,036,619 12,036,619 36,109,858 29,933,291 Total 12,558,563 12,558,563 12,558,563 37,675,688 31,231,287 Source: Forrester Research, Inc. It is important to note that values used throughout the TEI framework are based on in-depth interviews with one organization. Forrester makes no assumptions as to the potential return that other organizations will receive within their own environments. Forrester strongly advises that readers use their own estimates within the framework provided in this study to determine the expected financial impact of implementing Enterprise Vault. Study Conclusions Forrester s study of this Enterprise Vault customer yielded several important observations: Based on information collected in interviews with this current Enterprise Vault customer, Forrester found that large organizations can deploy EV in data consolidation initiatives and simultaneously: 1) hold steady or reduce IT administration costs of storage, and 2) provide the means for assuring that services an be restored very quickly after a failure. By building on the core capabilities of Enterprise Vault namely by deploying Discovery Accelerator large organizations can greatly reduce the cost of providing messages and content that are requested during the course of security or legal investigations. Such labor cost savings are proportionate to the amount of search and discovery required. Enterprise Vault can be deployed without burden on end users. Further, user productivity improvements accrue when users no longer: 1) reach storage size quotas, and 2) lose time searching for messages and attachments in their own archive files. Organizations benefit when important content is not hidden in users policy-less, selfcreated archive files. The financial analysis provided in this study illustrates the process for an organization to evaluate the value proposition of Enterprise Vault in its environment. Based on information collected in customer interviews, Forrester calculated a three-year risk-adjusted ROI of 1,180% for this customer s organization with a payback period of one month. All final estimates are risk-adjusted to incorporate potential uncertainty in the calculation of costs and benefits

20 Based on these findings, companies that consider implementing Enterprise Vault can see infrastructure cost savings and productivity benefits around storage and discovery. Using the TEI framework, many companies may find the potential for a compelling business case to make such an investment. Table 1: ROI, Original And Risk-Adjusted Summary Financial Results Original Estimate Risk-Adjusted ROI 1,352% 1,180% Payback period (months) Total costs (PV) 2,319,377-2,439,182- Total benefits (PV) 33,675,706 31,231,287 Total (NPV) 31,356,329 28,792,105 Source: Forrester Research, Inc

21 Appendix A: Total Economic Impact Overview Total Economic Impact is a methodology developed by Forrester Research, Inc., that enhances a company s technology decision-making processes and assists vendors in communicating the value proposition of their products and services to clients. The TEI methodology helps companies demonstrate, justify, and realize the tangible value of IT initiatives to both senior management and other key business stakeholders. The TEI methodology consists of four components to evaluate investment value: benefits, costs, risks, and flexibility. For the purpose of this analysis, the impact of flexibility was not quantified. Benefits Benefits represent the value delivered to the user organization IT and/or business units by the proposed product or project. Often product or project justification exercises focus just on IT cost and cost reduction, leaving little room to analyze the effect of the technology on the entire organization. The TEI methodology and the resulting financial model place equal weight on the measure of benefits and the measure of costs, allowing for a full examination of the effect of the technology on the entire organization. Calculation of benefit estimates involves a clear dialog with the user organization to understand the specific value that is created. In addition, Forrester also requires that there be a clear line of accountability established between the measurement and justification of benefit estimates after the project has been completed. This ensures that benefit estimates tie back directly to the bottom line. Costs Costs represent the investment necessary to capture the value, or benefits, of the proposed project. IT or the business units may incur costs in the forms of fully burdened labor, subcontractors, or materials. Costs consider all the investments and expenses necessary to deliver the proposed value. In addition, the cost category within TEI captures any incremental costs over the existing environment for ongoing costs associated with the solution. All costs must be tied to the benefits that are created. Risk Risk measures the uncertainty of benefit and cost estimates contained within the investment. Uncertainty is measured in two ways: the likelihood that the cost and benefit estimates will meet the original projections and the likelihood that the estimates will be measured and tracked over time. TEI applies a probability density function known as triangular distribution to the values entered. At a minimum, three values are calculated to estimate the underlying range around each cost and benefit. Flexibility Within the TEI methodology, direct benefits represent one part of the investment value. While direct benefits can typically be the primary way to justify a project, Forrester believes that organizations should be able to measure the strategic value of an investment. Flexibility represents the value that can be obtained for some future additional investment building on top of the initial investment already made. For instance, an investment in an enterprise-wide upgrade of an office productivity suite can potentially increase standardization (to increase efficiency) and reduce licensing costs. Additionally, an embedded collaboration feature may translate to greater worker productivity if activated. The collaboration can only be used with additional investment in training at some future point in time. The ability to capture that benefit has a present value that can be estimated. The flexibility component of TEI captures that value

22 Appendix B: Glossary Discount rate: The interest rate used in cash flow analysis to take into account the time value of money. Although the Federal Reserve Bank sets a discount rate, companies often set a discount rate based on their business and investment environment. Forrester assumes a yearly discount rate of 10% for this analysis. Organizations typically use discount rates between 8% and 16% based on their current environment. Readers are urged to consult their organization to determine the most appropriate discount rate to use in their own environment. Net present value (NPV): The present or current value of (discounted) future net cash flows given an interest rate (the discount rate). A positive project NPV normally indicates that the investment should be made, unless other projects have higher NPVs. Present value (PV): The present or current value of (discounted) cost and benefit estimates given at an interest rate (the discount rate). The PV of costs and benefits feed into the total net present value of cash flows. Payback period: The breakeven point for an investment. The point in time at which net benefits (benefits minus costs) equal initial investment or cost. Return on investment (ROI): A measure of a project expected return in percentage terms. ROI is calculated by dividing net benefits (benefits minus costs) by costs. A Note On Cash Flow Tables The following is a note on the cash flow tables used in this study (see the Example Table below). The initial investment column contains costs incurred at time 0 or at the beginning of Year 1. Those costs are not discounted. All other cash flows in years one through three are discounted using the discount rate shown in Table 2 at the end of the year. Present value (PV) calculations are calculated for each total cost and benefit estimate. Net present value (NPV) calculations are not calculated until the summary tables and are the sum of the initial investment and the discounted cash flows in each year. Example Table Category Year 0 Year 1 Year 2 Year 3 Total Source: Forrester Research, Inc

23 Appendix C: Adjusting For Investment Risk (Example) This example provides a high-level illustration of the measurement of investment risk to a single benefit estimate. The table below provides a high-level overview of the following steps. Step 1 Step 2 Step 3 Benefit Original Estimate High Low Bias Adjustment Risk Adjusted % Value % Value Benefit 1 2,000 2, % % 1395 Step 1: Calculate original cost and benefit estimates Suppose that an organization is trying to estimate the different types of benefits that might arise from a given technology investment. One potential expected benefit is savings per employee from the use of the technology. A sample benefit calculation is as follows: Ref. Metric Calculation Estimate A1 Number of employees 200 A2 Savings per employee 10 A3 Total yearly estimated savings A1 * A2 2,000 The 2,000 represents the organization s original estimate of the yearly impact of the technology investment. Step 2: Calculate the impact of bias for cost and benefit estimates In Step 2, we account for the impact of bias in our original cost and benefit estimates. To measure the impact of bias, we need to calculate the range of possible outcomes of our original estimate by estimating possible high/low variables around our original estimates. Ref. Metric Calculation Estimate Low High A1 Number of employees per year 200 A2 Savings per employee 10 A3 Total yearly estimated savings A1 * A2 2, ,400 B1 Bias Adjusted Estimate ( 2, ,400)/3 1,

24 In the case of our example, we have calculated our original estimate ( 2,000), our low estimate ( 400), and our high estimate ( 2,400). The unbiased estimate is calculated as the mean of the high and low estimates: [( 2, , ,400)/3 = 1,600]. The revised estimate is now 1,600. Reference A4 in the above table presents the revised estimate. Step 3: Calculate the impact of variance on cost and benefit estimates Once we have determined the impact of bias in our original estimates, the next step is to calculate the impact of variance. Variance measures the possible spread within our estimates. In the case of our example, the variance is based upon the low estimate ( 400), the high estimate ( 2,400), and the revised estimate ( 1,600). A wider spread would create higher uncertainty, and as a result, greater risk. To calculate the impact of variance, we need to use the following calculations: Table 5 Where [( Lx) + ( x2) + ( Hx) ] ( Lx) ( x2) ( Lx) ( Hx) ( x2) ( x2) ( Hx) Lx Low estimate = Var( x2) X2 Revised (biased adjusted) estimate 1,600 Hx High estimate 2, [( 400) + ( 1600) + ( 2400) ] ( 400) ( 1600) ( 400) ( 2400) ( 1600) ( 2400) The standard deviation represents the square root of the variance: ( x 2) = Var( x2) ( 2 ) = = 411 x 18 = The final calculation in our analysis is to create a measure for the impact of risk on the cost or benefit estimate. To do this, we use the following equation: Risk impact = Risk impact: [(standard deviation of estimate)/(unbiased estimate)] * ½ [ ( x2) ] 1 x