ROI TOOL INSTRUCTIONS (V4.1)

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1 $360,000 $350,000 $340,000 $330,000 $320,000 $310,000 $300,000 $290,000 $359,245 $322,171 $356,995 Current Solution Cost $320,140 Proposed Solution Cost $354,813 $318,170 $352,696 $316,258 $350,642 Year 1 Total Year 2 Total Year 3 Total Year 4 Total Year 5 Total $314,405 CISCO IP TELEPHONY ROI TOOL INSTRUCTIONS (V4.1) Voice Cost Comparison 5 Year Cash Flow I. PURPOSE AND USAGE Purpose The purpose of this tool is to proactively and easily estimate the cost saving for a customer to migrate to IP Telephony based on limited input and default data where actual data is unknown. The objective is to complete a preliminary ROI quickly then review with the customer to convince them to seriously consider IPT and/or get them engaged in a cost validation process to demonstrate cost savings. How it works The spreadsheet calculates the customers current cost, proposed Cisco IPT cost and cost savings based on whatever assumptions are entered. If no assumptions are entered, it will default the calculations listed in the default column. The calculations and algorithms were developed based on Cisco experience with customer ROI s and input from the Advanced Technology team. General Usage 1. Open up the ROI tool Excel file. 2. Indicate if Public Sector Customer in the Defaults and Lease Rates worksheet which will ensure correct Lease Rate Factors. Public Sector customers will have tax exempt capital lease rates used, private sector customers will have operating lease rates used. 3. Indicate if a Centrex Customer in the Defaults and Lease Rates worksheet which will ensure the defaults reflect a Centrex Customers cost profile. 4. Enter at least the customer name and number of phones in the Assumptions worksheet. Also enter any other data that is known or you have a good estimate. All remaining data will be defaulted All contents are Copyright Cisco Systems, Inc. All rights reserved. Important Notices and Privacy Statement. Page 1 of 12

2 (default assumptions are shown in column E). To override defaults, enter any number. 5. Print the Reports. Go to any of the worksheets to view the output reports (Cost summary, Cash flow summary, Cash flow chart, Total cost chart, or NPV chart). To print an individual report select print (File, Print) from the toolbar in that sheet. To print all reports select, entire workbook under the print options. You can also print all reports by clicking on the Print All Reports button on the navigation bar at the top of the Assumptions worksheet. II. INPUT, ASSUMPTIONS AND CALCULATIONS To calculate an ROI start by entering assumptions in the Assumptions worksheet. In the worksheet customer specific information is entered and is supplemented by default data where the customer data is unknown. Current Cost Customer Name The name entered here prints on all reports # Phones This is a required input field. Most of the calculations for current cost and proposed cost are driven from the number of phones. # of Remote Locations This is the number of remote sites that will be required and is used to calculate the cost of site to site long distance, and local telecom consolidation savings. If this field is blank, no local long distance savings or telecom consolidation savings are assumed. Page 2 of 12

3 # of Centrex Lines If the customer has billable Centrex lines enter the number of lines the customer has. For customers indicated as Centrex on the Defaults and Lease Rates worksheet, this will default to the same as the number of phones. For PBX customers leave this blank or 0. Monthly Net Centrex Fee Per Line This is the monthly cost per line for Centrex. Generally this fee is between $10 (for highly subsidized public sector customers) to $30 per month. This fee should include all taxes (approximately $5.35 per line) and extra features (i.e. voic , caller ID, etc). If it is a public sector customer that received government subsidies (i.e. e-rate) for Centrex, this fee should be the net monthly fee that reflects the customers out of pocket costs per line. Year of Planned Upgrade Many customers upgrade their PBX or Key system every 2-3 years. This field captures the year of the planned upgrade and will reflect this cost in the appropriate year of the cash flow report. Cost of PBX upgrade If known, enter the estimated cost of upgrading the PBX. If unknown, the default will be $200 per user for all users if no remote locations, or $200 per user for half the users if remote locations are indicated. Cost of Key System Upgrades - If known, enter the cost of Key system upgrades. If not known the default will be $4,000 per site, if remote sites are listed. PBX, Key System Lease Cost If the PBX is leased enter the lease cost. The default is calculated based on the estimated PBX cost of $1,000 per user at a 5 year lease rate. If the PBX was purchased, enter zero to override the calculated lease cost. PBX, Key System Maintenance Estimated cost of maintenance. The default for this field is 15% per year of the estimated PBX or Key System cost. Voic Maintenance This field collects the maintenance cost for voic . If a customer has inhouse voic , they are likely paying maintenance. While there is no default for this field you can estimate voic maintenance at $1.56 per user per month. Conference Calling Many customers pay a conferencing service for conference calls. Indicate this cost here. The default is very conservative at $5 per user per month. Moves, Add, Changes This field should include the percent of users that have voice changes done in a year. The default is 25% and generally is between 10 and 30% depending on the organizations. The default cost per MAC is $90. Both the default percent of users with Moves, Adds and Changes per year as well the cost of MAC s may be changed under the default worksheet. Cellular Expense This field collects any cellular phone costs the customer is paying for mobility today Page 3 of 12

4 that may be eliminated with IPT. If the customer has a wireless LAN, cellular phones that were purchased for mobile workers may be eliminated. Our experience is that customers pay on average $60 per month for cellular phone usage. There is no default value. Local Toll and Long Distance This field defaults based on the input of remote locations above, and is the cost the customer is paying today for site to site toll calls. Toll calls can be eliminated by routing internal calls over the WAN with IPT.. If remote sites are entered, the default value for long distance is estimated at $5 per remote phone per month. The percent of phones in remote sites is estimated based on the percentage loaded on the default worksheet. The default estimated cost per month of long distance per remote site phone can be changed under the default worksheet. Telecom Line Consolidation This field defaults to one T1 line cost savings for each remote locations and one T1 line for the every 200 users on the main campus. Many customers realize some savings from consolidating their telecom lines with the deployment of IPT. The default cost per T1 line is $150 per line per month but may be changed under the default worksheet. The number of users on the main campus is calculated based on the Percent of Users in Remote Sites on the Defaults and Lease Rates worksheet. Personnel Savings This field has no default but may be used to input anticipated personnel savings from convergence. If used, enter an Annual cost number. Other This is a catch all field to capture any other monthly cost not captured above. If cost is entered, also enter the description to the right that will print on reports. Cisco IP Communications Cost Estimates Voic , Unified Messaging - Should voic , Unified Messaging or no voic be included in the Cisco cost estimate? Page 4 of 12

5 Inline Power Will inline power switches be required to power the phones? If so, additional cost will be estimated. Conference Connection If you are estimated monthly conference calling expense, you should include the cost of conference connection. This cost will be estimated based on the number of users Lease or Purchase Equipment This tool default all equipment to a 60 month Operating lease for Commercial customers, and a 60 month Tax Exempt $1 buyout lease for Public Sector customers. This determination is made based on whether the customer is identified as a public sector customer in the Default worksheet. If the customer elects to purchase the equipment, enter a P here and all hardware will be reflected in year 1 of the cash flow report. Lease or Purchase Deployment If the customer will pay up front one time for the deployment enter P here, otherwise the default is that the deployment cost will be reflected as a Capital lease. Number of PRI s per month The default is one PRI for every 80 users calculated at $400 per month per PRI. However, you can change this calculation by changing the number of PRI s in this field, or by changing the default number of users per PRI in the default worksheet. The monthly cost per PRI can also be modified under the default worksheet. Number of FXO lines for Remote Sites If remote sites are indicated, the default is to estimate two FXO lines per remote site. This calculation can be modified by changing the number of lines in this field, or by changing the default number of lines per remote site in the default worksheet. The monthly cost per FXO line is assumed to be $25 but may be changed under the default worksheet. Other Costs This is a miscellaneous category to capture other monthly costs not represented elsewhere. Enter a description in the yellow input area (column F) and the monthly cost in the assumption column. Costs entered here will be reflected in all cost summary reports and graphs. Hardware List Cost - Based on the options selected above (voic , inline power, etc) the cost of the Cisco IPT configuration will be estimated. If a Bill of Materials has been completed, enter the actual list price here to override the default. The blended cost of IP Phones and user licenses is estimated at $425 per user and this represents a typical blended cost of phones but may be changed under the defaults worksheet. Deployment Cost The deployment costs are estimated at 25% of the net hardware cost, but may be overridden if a firm estimate has been developed. Annual Smartnet List Cost Enter the annual Smartnet and Software Maintenance cost if known. If not known, it will be estimated at 9% of the net hardware cost. The default calculation for Smartnet as a percent of the hardware list cost may be changed under the defaults worksheet. Note: All maintenance cost are shown spread over 5 years under a Capital lease. Lease Term Enter 36 or 48 months for the lease term if a shorter lease is desired. A 60 month lease is defaulted. All hardware leases are assumed to be operating leases for Commercial customers and Tax Exempt $1 buyout leases for Public Sector customers. If the deployment is leased it is reflected as a Capital Lease, and Page 5 of 12

6 maintenance is always shown as a multiyear Capital lease. Page 6 of 12

7 Calculated Cisco Cost Estimates This table displays the Cisco cost estimates that will be used for IP Communications in this ROI report. The equipment cost, deployment cost, and Smartnet cost is estimated based on the information entered. III. DEFAULTS AND LEASE RATES Default Settings The Default worksheet may be used to change the calculations and cost estimates used in calculating the defaults in the tool. Detail descriptions of these options are provided below. Page 7 of 12

8 Global Default Values Public Sector Lease (Y or N) Enter an Y here if the customer is a public sector customer (local government, school, or other tax exempt organization), otherwise enter a N. This field determines what lease rate will be used for lease calculations. If a Y is entered here the Public Sector Tax Exempt $1 buyout lease rates entered in the Lease Factor worksheet will be used in all lease calculations, otherwise the Private Sector Operating Lease Rate table will be used. Primarily Centrex Account (Y or N) Enter an Y here if the customer is primarily a Centrex user, enter a N if the customer is primarily a PBX customer. Both Centrex and PBX cost data may be captured on the Assumptions worksheet. This field determines whether Centrex or PBX default values should be reflected on the Assumptions worksheet. Cost of Money used in Present Value Calculations This field allows the interest rate that will be used to calculate Net Present Values in the Cost Summary and Cash Flow Summary reports. The tool uses an estimated interest rate for NPV calculations of 6.5% unless changed here. If remote locations, Percent of users in remote sites This field is used to calculate the number of users that are assumed to be in the remote locations if remote locations are indicated in the Assumptions worksheet (cell C11). The tool assumes 50% of the phones are in remote sites unless changed here. Current Cost Default Values Monthly Net Centrex Fee per line This field contains the monthly fee per Centrex line that will be used in the default calculation of Centrex costs. The monthly Centrex fee per line may also be changed on the Assumptions Page 8 of 12

9 worksheet on an individual basis. The tool uses an average cost per Centrex line of $25.00 in the default calculation unless it is changed here. Percent of users that move, add, or change in a year This field contains the percent of users that have Move, Adds, or Changes completed in a year that will be used to calculate the defaults in the tool. On an individual customer basis the percent of users with MAC s may also be changed in the Assumptions worksheet. The tool uses 25% in the default calculation of MAC s unless changed here. Cost of Moves, Adds, Changes The cost of Moves, Adds, and Changes may be changed in this field. Normally MAC s cost between $90 and $105 each. The tool uses an estimated cost per MAC of $90 unless it is changed here. T1 Costs per month per remote site This field contains the monthly cost of a T1 line in the default calculation. The tool will assume that there is one voice T1 line to each remote siet at a cost of $150 per month per line unless changed here. Long Distance Cost per user per month if remote The tool will assume that there is a monthly long distance cost per remote phone for site to site long distance that may be eliminated with IPT. The monthly cost per remote site phone is determined by the value in this field and is assumed to be $5.00 per remote site phone per month unless changed. Cisco Cost Default Values Number of users per PRI The tool will calculate one voice PRI for 80 users unless changed here. Enter the number of users per PRI line. PRI cost per month The monthly cost of a voice PRI line is assumed to be $400 unless changed here. PRI cost per line vary by carrier and geography. Enter the cost here. Number of FXO lines per remote site The tool assumes that there will be two FXO voice lines for backup at each remote site unless it is changed here. Enter the number of lines that should be included for each remote location. FXO cost per month The tool will assume that each FXO line for remote sites will be $20 per month unless changed here. Deployment cost default percent of Hardware net cost The tool estimates deployment cost based on a percentage of the Hardware net cost. It can be changed here by entering a percentage and will be assumed to be 25% unless changed. Smartnet default percent of Hardware List Price The tool estimates Smartnet costs based on a percentage of the Hardware list cost and is assumed to be 9% unless changed here. If the customer requires additional support enter a higher percentage here. Page 9 of 12

10 Blended list cost of IP Phones and User Licenses The tool assumes that the blended list cost of phones and user licenses is $ list price unless changed here. Enter a smaller number if the customer will use primarily low end phones or a higher number is a high percentage of 7960 and 7970 phones are used. The default of $425 assumes 50% of the phones are 7912 s, 25% are 7940 s, and 25% are 7960 s. End User Discount The end user discount may be entered here used in the calculation of Cisco cost. Unless changed, it is assumed to be a 35% discount to the end customer. Lease Rate Factors The Lease Rate Factors used for all calculations may be changed here. Private Sector Lease Rates These lease rate factors are used to calculate monthly lease rates for all customers indicated as Private Sector customers above under the Global Defaults section of this worksheet. All Private Sector leases are defaulted to 60 month Fair Market Value Leases for the equipment and 60 Month $1 Buyout Lease for the deployment services. Public Sector Lease Rates These lease rate factors are used to calculate monthly lease rates for all customers indicated as Public Sector customers above under the Global Defaults section of this worksheet. Public Sector leases are defaulted to 60 month Tax Exempt $1 Buyout Leases. Lease Rate Factors Used in this Calculation Page 10 of 12

11 The lease rates factors represented in this table reflect the rate factors currently in use by the tool based on whether the customer was identified as a Public or Private Sector Customer in the Global Defaults section of the Defaults and Lease Rate Factors worksheet. Page 11 of 12

12 IV. CASH FLOW SUMMARY Changing Cash Flow Assumptions The Cash Flow Summary worksheet contains the Cash Flow report. In this report, the line by line assumptions that determine if cost increases, decreases or is constant for five years is indicated. Cash Flow Assumptions On each line you can indicate if the cost should increase, decrease or remain constant year over year. In the first cell of the Cash Flow Assumptions column, you can enter a positive number to reflect a annual cost increase, a negative number to reflect a cost decrease, or zero to reflect a constant annual cost. The Year 2-5 costs will be calculated based on the input in this column. Defaults been established based on industry averages. Page 12 of 12