Forrester Consulting recently published a report on the Total Economic Impact (TEI) of VMware Cloud Foundation, providing details on the business benefits and cost savings based on customer interviews with seven different VMware customers with VMware Cloud Foundation in production. This study, commissioned by VMware is a very detailed economic analysis that provides readers with a framework to evaluate the potential financial impact of VMware Cloud Foundation (VCF) as a critical element of their own application and infrastructure transformation.
Forrester Consulting TEI Methodology
Forrester uses a proven and standardized methodology for characterizing, capturing and measuring the financial benefits of technology solutions such as VCF. The TEI process anonymizes real data from actual customer deployments captured through 1-1 customer interviews which they build into a single composite organization. Within the TEI report, the Forrester consultants do a great job of capturing the value provided by a full stack HCI solution with the added benefits of automation and intrinsic security.
The Forrester TEI framework identifies the cost, benefit, flexibility, and risk factors that affect the investment decision, using a multistep approach to evaluate the impact that the VMware Cloud Foundation can have on an organization. This process includes due diligence, decision maker interviews, building the composite organization, constructing the financial model framework and then building a case study of the composite organization.
The composite organization utilized for the TEI study was a global organization with $750M in annual revenue with operations in 10 locations with an executive objective of increasing operational efficiency of the organization to increase profitability. The composite organization has 10,000 employees with $750M in annual revenue.
The value that VCF brings into customer environments was quantified across lifecycle management, network operations productivity, security and decreased operational costs as illustrated in figure 1 below.
The TEI found that the composite organization realized financial benefits in the following areas:
Lifecycle Management Productivity
Many of the companies interviewed for the TEI were relatively early in their VCF deployments, so one can expect that the LCM productivity will increase over time, but the companies reported almost a $400,000 financial benefit with VCF. The TEI report shows that participating customers measured a 35% decreased effort in patching their systems, 75% decrease in their interoperability testing with measurable gains in productivity and maintenance related costs.
Network Operations (NetOps) Productivity
NetOps productivity was also an important aspect of the TEI report as it demonstrated that companies saw an 30% increase in NetOps efficiency by year 1 increasing to 50% by years 2 and 3. This resulted in a corresponding efficiency gain of $525,500 in the first year with increased a savings of $877,500 each in years 2 and 3.
Security Related Savings
By far, the area that created the highest degree of cost savings and business benefit was related to security and compliance, where a $4.8M financial benefit was yielded from the savings from NSX-T and the intrinsic security within VMware Cloud Foundation. Forrester also factored in the cost of a major breach (extrapolated from a 2020 Cybersecurity Breach Survey) having a $1.9M impact to an organization annually.
Decreased Operational Costs and Improved Employee Morale
There are additional benefits that were documented as part of the TEI report that demonstrated a $2.6M financial benefit related to increased efficiency in storage and compute associated with the increase in capacity utilization due to the increased efficiency and reduced management overhead.
The unquantified benefit that customers was an improvement to employee morale due to an improved employee experience, which according to the interviewees would lead to lower frequency of employee turnover and improved overall well-being.
Take the Next Step
Of course, your mileage may vary but the intent of the Forrester TEI report is to approximate a financial model that is representative of typical VMware Cloud Foundation customers can expect to see from their VCF deployments. Learn more by downloading the VMware Cloud Foundation Total Economic impact report for yourself on the analyst section of the VMware Cloud Foundation resources page.
Webcast: Forrester TEI for VMware Cloud Foundation
The Forrester team and I had a great time doing a webcast that walks through the details of the TEI report providing a lot of background on the TEI process and the verified financial benefits that these VMware Cloud Foundation customers received as part of their deployments. You can view the webcast replay here: