Economic Impact of SharePoint 2010

Competitive markets coupled with the poor success rate of software projects make it very hard to justify significant financial investment in renewal of existing I.T. systems.

The total annual cost of worldwide IT failures is $6.2 trillion dollars, according to calculations performed by Roger Sessions, über-expert enterprise architect and CTO of ObjectWatch. (These are without doubt very scary numbers!)

I firmly believe that every I.T. professional has a responsibility to contribute to improving the success (and value) of the industry.
One of my fact-finding journeys leads me to an investigation on how such I.T. failures measure up against I.T. successes. The business value (cost saving, increased productivity and more importantly the role which evolution of technology play on industry advancement) should not be overlooked.

I believe that SharePoint Server 2010 is one of the platforms which provide an organization with enormous financial benefit if implemented successfully. 

Below I summarize a report which supports my statment.

In December 2009, Microsoft commissioned Forrester Consulting to examine the total economic impact and potential return on investment (ROI) that enterprises may realize by deploying Microsoft SharePoint Server 2010


Forrester used a five-step approach for this study:

1. Forrester gathered data from existing Forrester research relative to next-generation collaboration tools, the enterprise collaboration platforms market in general, as well as the emerging trend of using Microsoft Office as a front end for line-of-business information and processes.
2. Forrester interviewed Microsoft marketing and strategy personnel to fully understand the potential value proposition of SharePoint Server 2010.
3. Forrester conducted a series of in-depth interviews with 11 organizations currently using SharePoint Server 2010.
4. Forrester created a composite organization based on the interviews and populated the framework using data from the interviews as applied to the composite organization.
5. Forrester constructed a financial model representative of the interviews. This model can be found in the TEI Framework section below.


Key Findings:
ROI: The risk-adjusted ROI for the composite company — not including any productivity benefits is 108%, with a breakeven point (payback period) of fewer than 12 months after deployment.
Benefits: Quantified benefits accruing to the composite organization, which reflect the experience and the expectations of the companies interviewed for the study, amount to approximately $3.1 million (risk-adjusted, present value [PV]) over a three-year period. 
Costs: The costs for the upgrade to SharePoint 2010 sum to almost $1.5 million (risk-adjusted, PV) over the first three years.
(these costs include implementation labour, professional services fees for taxonomy development of an information architecture, and additional server hardware costs)

Risk-adjusted cash flow:














Total Risk-Adjusted Cost:

Total Risk-Adjusted Benefit:

The data collected in this study indicate that standardizing and centralizing on a platform based on SharePoint Server 2010 has the potential to provide a solid return on the investment. The risk-adjusted ROI of 108%, along with a rapid payback period (breakeven point) raises confidence that the investment is likely to succeed, as the risks and uncertainty that may threaten the project have been considered and quantified.

Based on these findings, companies looking to implement SharePoint Server 2010 can anticipate significant cost savings and efficiency gains. Using the TEI framework, many companies may find the potential for a compelling business case to make such an investment.

References:
The Total Economic Impact Of Microsoft SharePoint Server 2010
Prepared for Microsoft by Jeffrey North, Principal Consultant - March 2010
http://download.microsoft.com/documents/uk/enterprise/75_the_total_economic_impactTM_of_Microsoft_SharePoint_Server.pdf