A Forrester Total Economic Impact™

Study Commissioned By Microsoft

June 2018

The Total Economic

Impact™ Of
PowerApps And
Microsoft Flow
 Table Of Contents
Executive Summary 1
Key Findings 1
TEI Framework And Methodology 4
The PowerApps And Flow Customer Journey 5
Interviewed Organizations 5
Key Challenges 5
Key Results 6
Composite Organization 6
Analysis Of Benefits 7
Reduced IT Effort 7
Retired Third-Party Applications 8
Streamlined Business Processes 9
Unquantified Benefits 10
Flexibility 12
Analysis Of Costs 13
Development Costs 13
Solution And Code Management 14
Financial Summary 16
PowerApps And Microsoft Flow: Overview 17
PowerApps 17
Microsoft Flow 17
Appendix A: Total Economic Impact 18

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 Executive Summary
Benefits And Costs Microsoft provides application development solutions that help its
customers speed up application development and empowers non-
developers to create applications and automated workflows. 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 PowerApps and Microsoft Flow
Reduced application (Flow). The purpose of this study is to provide readers with a framework to
development cost and effort: evaluate the potential financial impact of PowerApps and Flow on their
70% organizations.
To better understand the benefits, costs, and risks associated with this
investment, Forrester interviewed four customers using PowerApps and/or
Flow. Interviewees said that by reducing application development time and
empowering non-developers to create custom applications and workflows
they were able to greatly reduce development costs and streamline
business processes. These process improvements delivered business
benefits such as reduced time-to-market, better customer service, and
increased revenues.
Reduction in ongoing application Prior to using PowerApps and Flow, all application development was done
management and maintenance using traditional tools, and only “high-code” developers were engaged in
effort: these activities. This meant that there was a large backlog of IT projects,
38% and many business ideas would never have been translated into system
improvements because the cost and effort would be too high. Adopting
PowerApps and Flow transformed the IT function from a blocker to an
enabler. One interviewee said: “The business is not waiting for IT anymore
which was their most common complaint. PowerApps and Flow takes that
off the table. We are now seen as an enabler, not a roadblock.”

Worker hours saved from Key Findings

streamlined and automated
business processes (Year 3): Quantified benefits. The following risk-adjusted present value (PV)
122,850 quantified benefits are representative of those experienced by the
companies interviewed and applied to a composite organization with 2,000
employees who have access to PowerApps and Flow through their Office
365 and/or Microsoft Dynamics licenses:
› The average cost to develop an application is 70% less with
PowerApps and Flow. For applications that can be developed using
these new tools and included connectors, the internal development
effort, professional services fees, and/or vendor applications purchase
costs are much lower. Additionally, the effort to maintain code and
manage applications is less. Over the life of the study, $3.5 million in
application development and management costs are avoided.
› Developing additional applications in-house eliminated vendor
license costs. Interviewees provided examples of external applications
that were replaced with in-house developed applications using
PowerApps and Flow. For the study, two applications were replaced with
a total savings of $91,454.

1 | The Total Economic Impact™ Of PowerApps And Microsoft Flow

 › PowerApps and Flow increases process automation and
efficiencies. The applications and workflows that were created digitized
existing, manual, and often paper-based processes. The efficiency gains
can vary widely by role, and mobile workers especially benefited from
these process improvements. Overall, this improved efficiencies on
average by 15% for 1,575 users by Year 3 of the study. Applying a 75%
discount, because not all productivity gains translate into additional
work, $5.32 million in process efficiencies were achieved.
Unquantified benefits. The interviewed organizations experienced the
following benefits, which are not quantified for this study:
› Streamlining and automating processes delivers business
transformation and improved business outcomes. Interviewees
described many ways that their businesses have improved. This
includes happier customers, reduced time-to-market, and revenue
protection. Because these benefits can vary greatly from one
organization to the next, they were not included in the financial analysis.
› Employees can make better and faster decisions from better
access to information. Much of the development work completed with
PowerApps and Flow enables faster collection of information from
firstline workers and transferal to decision makers in a more usable
format. This, in turn, means that better decisions are made based on
data sets that are larger and closer to real-time.
› PowerApps and Flow empowers users which increase employee
satisfaction. Both IT and business users can now more efficiently and
effectively create applications that deliver business value. In many
cases, these applications would never have been built without these
tools. This gives users more control over their work and enables them to
eliminate repetitive and annoying manual activities.
› Additional value is realized with other Microsoft solutions, such as
Dynamics CRM and SharePoint, because PowerApps and Flow
extend those solutions’ capabilities. Interviewees described how
these solutions, being part of the Microsoft stack, enable them to build
on prior investments to create more value. Additionally, tying into the
Microsoft Common Data Store (CDS) allows them to easily integrate
data across solutions and workflows.
› Mobile applications developed with PowerApps and Flow are more
secure than would likely otherwise have been developed. Because
these applications and workflows tie into Active Directory (AD) and other
Microsoft security solutions, IT can control permissions at the data and
application levels. Additionally, users building in these tools helps to
reduce shadow IT. All PowerApps that are built on the Common Data
Service for Apps are automatically GDPR compliant.
Costs. The interviewed organizations experienced the following risk-
adjusted PV costs:
› Internal and professional application development costs average
$72,820 per application. The average cost per application developed
with PowerApps and Flow can vary widely based on its functionality and
workflow complexity and how experienced users are with the tools.
Subtracting these costs from the avoided application development costs
in the Benefits section, results in the net savings that the composite
organization realized. The total development costs were slightly more
than $1.5 million.

2 | The Total Economic Impact™ Of PowerApps And Microsoft Flow

 › Ongoing corporate IT management and development of PowerApps
and Flow code and business user training was $400,154. The effort
ROI to manage the PowerApps and Flow solutions is very low at 0.1 FTE.
362% The corporate IT department is also involved in maintaining and further
developing code that has been handed over to them. IT also spends
time training business users on how to develop with PowerApps and
Flow. The centralized development and training function grows to two
FTEs by Year 3 of the study (the 0.1 for solution upkeep is included in
Benefits PV here) as the number of PowerApps and Flows increases. Users that
$8.9 million require access to advanced features and premium connectors require
paid PowerApps P1 or P2 licenses. The number of paid licenses
depends on the number of users leveraging the paid features in their
apps.

NPV Forrester’s interviews with four existing customers and subsequent

financial analysis found that an organization based on these interviewed
$7.0 million organizations experienced benefits of $8.9 million over three years versus
costs of $1.9 million, adding up to a net present value (NPV) of $7.0 million
and an ROI of 362%.

Payback
<3 months

3 | The Total Economic Impact™ Of PowerApps And Microsoft Flow

 TEI Framework And Methodology
From the information provided in the interviews, Forrester has constructed
a Total Economic Impact™ (TEI) framework for those organizations
considering implementing PowerApps and Microsoft Flow.
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 PowerApps and Microsoft Flow can
have on an organization:

The TEI methodology DUE DILIGENCE

Interviewed Microsoft stakeholders and Forrester analysts to gather data
helps companies relative to PowerApps and Flow.
demonstrate, justify, CUSTOMER INTERVIEWS
and realize the Interviewed four organizations using PowerApps and Flow to obtain data
with respect to costs, benefits, and risks.
tangible value of IT
COMPOSITE ORGANIZATION
initiatives to both Designed a composite organization based on characteristics of the
senior management interviewed organizations.

and other key FINANCIAL MODEL FRAMEWORK

Constructed a financial model representative of the interviews using the
business TEI methodology and risk-adjusted the financial model based on issues
stakeholders. and concerns of the interviewed organizations.

CASE STUDY
Employed four fundamental elements of TEI in modeling PowerApps and
Microsoft Flow’s impact: benefits, costs, flexibility, and risks. Given the
increasing sophistication that enterprises have regarding ROI analyses
related to IT investments, Forrester’s TEI methodology serves to provide 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 report to determine the
appropriateness of an investment in PowerApps and Microsoft Flow.

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.

4 | The Total Economic Impact™ Of PowerApps And Microsoft Flow

The PowerApps And Flow Customer Journey
BEFORE AND AFTER THE POWERAPPS AND FLOW INVESTMENT

Interviewed Organizations
For this study, Forrester conducted four interviews with PowerApps and
Flow customers. Interviewed customers include the following:
USERS WITH ACCESS TO
INDUSTRY REGION INTERVIEWEE POWERAPPS & FLOW
Industrial equipment
North America VP of IT and purchasing 430
servicing

Beverage distributor US regional Cloud services manager 1,600

North America and

Power generation Enterprise architect 2,200
Australia

Financial services UK Head of CRM solutions 3,500

Key Challenges
The interviewed companies faced common challenges around delivering
modern IT, supporting more users and growth, and managing increasing
costs.
› IT had to support more firstline and mobile workers. Moving to
Office 365 can significantly increase the number of users who are
consuming IT services. Additionally, companies are putting more effort “We needed to switch to a
into making mobile workers more effective and efficient. Together, mobile-centric delivery model
these two trends meant that IT struggled to deliver necessary tools to a to support merchandizers in
greatly expanded number of users. One interviewee said: “When we the stores. We also needed to
switched to Office 365, we all of a sudden had lot more users to get information back from
support, and we had to figure out a way to deliver everything mobile them that didn’t require email
first. Now, a guy on a forklift has access to these applications.” or driving back to the office.”
› Key business processes were still very manual and often paper Cloud services manager,
based. Companies were facing increased competition and customer beverage distribution
demands, but business processes were often manual which made it
difficult to meet new challenges. As an example, one interviewee was
“trying to reduce the time it takes to deliver reports to customers.” They
were looking for ways to easily streamline and automate processes.
The same interviewee reported further: “It used to take over thirty days,
and our goal was to create the reports within two days. We are now
down to four days with two less resources.”
› IT systems did not meet current needs, and there was limited
budget to make changes. Interviewees described an IT estate that
could not support new initiatives. When it comes to ERP systems, the
cost to upgrade or replace was larger than available budgets. There
was also a shortage of application development skills in-house, as well
as a lack of budget to outsource development. The interviewed VP of
IT and purchasing said: “We have an antiquated ERP system that is
the market leader in our industry. We were looking at replacing it but
were told there wasn’t budget to do that. We identified some of the
biggest limitations and fixed those using PowerApps.”

5 | The Total Economic Impact™ Of PowerApps And Microsoft Flow

Key Results
The interviews revealed that key results from the PowerApps and Flow
investment include: “Traditionally we could do
something either right, fast, or
› PowerApps and Flow streamlined processes and enabled cheap. With PowerApps we
business transformation. Interviewees provided many examples of can do all three.”
process automation and of reworking old processes that no longer
made sense in a mobile-first world. Increased standardization also had Cloud services manager,
a large impact. One interviewee said: “PowerApps and Flow have been beverage distribution
a positive disruptor to our business. There are lots of little processes
we can automate and knock out of the ballpark.”
› Development in PowerApps and Flow saves money. The financial
analysis section of the study includes many examples of cost savings.
One interviewee said, “We would not have been able to do any of this
development work the old way. We could not have justified the
investment. The PowerApps work we did would have cost $750,000.”
› IT organizations are now more responsive to business needs.
Interviewees described how utilizing PowerApps and Flow helped them
to create modern IT organizations that can deliver better and faster
solutions to the business. One interviewee said: “We can now build
once and deploy to different places. The organization didn’t want to
invest in traditional application development anymore. We can now
make changes on the fly and support a very dynamic business.”

Composite Organization
Based on the interviews, Forrester constructed a TEI framework, a
composite company, and an associated ROI analysis that illustrates the
areas financially affected. The composite organization is representative
of the four companies that Forrester interviewed and is used to present Key assumptions
the aggregate financial analysis in the next section. 2,000 employees
The composite organization is a 2,000-employee services company. 21 development projects
Knowledge workers are predominantly on Office 365 E3 licenses.
Firstline workers are on a mix of Office 365 E1 and K1/F1 licenses.
These licenses give users access to PowerApps and Flow. There are 50
users with Power Apps P1 or P2 licenses because they are using
PowerApps that require premium connectors into ERP solutions.

6 | The Total Economic Impact™ Of PowerApps And Microsoft Flow

Analysis Of Benefits
QUANTIFIED BENEFIT DATA AS APPLIED TO THE COMPOSITE

Total Benefits
PRESENT
REF. BENEFIT INITIAL YEAR 1 YEAR 2 YEAR 3 TOTAL VALUE
Atr Reduced IT effort $90,000 $738,000 $1,602,000 $1,890,000 $4,320,000 $3,504,861

Retired third-party
Btr $0 $22,500 $45,000 $45,000 $112,500 $91,454
applications
Streamlined business
Ctr $0 $362,578 $1,885,406 $4,568,484 $6,816,469 $5,320,173
processes

Total benefits (risk-adjusted) $90,000 $1,123,078 $3,532,406 $6,503,484 $11,248,969 $8,916,488

Reduced IT Effort The table above shows the total of all

benefits across the areas listed below,
All interviewees provided many examples of PowerApps and Flow as well as present values (PVs)
reducing IT cost and effort. The level of savings varies greatly based on discounted at 10%. Over three years,
the scope of the development effort. A large contributor to the effort the composite organization expects
reduction is using off the shelf connectors that are included with risk-adjusted total benefits to be a PV
PowerApps. Some examples include: of more than $8.9 million.

› “In the first year we saved $500,000 in external developer costs. We

expect similar savings in future years. There is no shortage of projects
for these tools because people are coming up with all sorts of ideas.”
› “We built a warehouse picker app that was one simple screen. Without
PowerApps it would have cost us thousands of dollars to build. We
have a lot of flexibility in testing ideas because the costs are so low.”
“A recent web app we built
› “We built an app as a POC in less than six weeks; including building would have cost 3x to 4x more
some custom APIs. Most of it was done by a summer intern new to using traditional tools. That is
.NET and C-Sharp. He could do this because the PowerApps and Flow
a good, long-term ratio for cost
tools are so simple to use.”
savings.”
› “We were looking at custom development work for a corporate
Enterprise architect, power
communications mobile app on [the two main mobile platforms]. The
generation
cost from the vendor was getting out of control. We used the Microsoft
tools and completed it in one week. Otherwise, it would have taken
months more. We threw away $70,000 in previous work and saved an
additional $30,000.”
› “We just completed another substantial project for the wind generation
people. The initial savings was $200,000 per year based on two
months development for 1.5 FTEs. We anticipate an additional savings
of $1 million to $2 million per year as it is rolled out wider.”
For the financial analysis, Forrester made the following assumptions:
› One development project is completed using PowerApps and Flow as
a proof-of-concept (POC) during the Initial period. Four more are
completed by the IT organization in Year 1, and eight are undertaken
by IT and business users in years 2 and 3.
› The average development cost using traditional tools and a mix of
internal and external resources was $200,000 per project. In the initial
7 | The Total Economic Impact™ Of PowerApps And Microsoft Flow
 period this was $100,000 because the POC was a smaller scope.
Subtracting the PowerApps and Flow development effort in the Costs
section of the study provides the net benefit.
› An ongoing cost to manage and update code equal to 20% of the
development cost is also reduced. Impact risk is the risk that the business
or technology needs of the
The avoided costs can vary greatly based on the number of development organization may not be met by the
projects that are completed with PowerApps and Flow as well as the investment, resulting in lower overall
scope. Costs will also vary depending on the mix of internal and external total benefits. The greater the
resources. To account for these risks, Forrester adjusted this benefit uncertainty, the wider the potential
range of outcomes for benefit
downward by 10%, yielding a three-year risk-adjusted total PV of
estimates.
$3,504,861.
Reduced IT Effort: Calculation Table
REF. METRIC CALC. INITIAL YEAR 1 YEAR 2 YEAR 3
A1 Number of development projects 1 4 8 8

A2 Average avoided traditional $100,000 $200,000 $200,000 $200,000

development cost

A3 Reduced development costs A1*A2 $100,000 $800,000 $1,600,000 $1,600,000

A4 Reduced IT management and Sum A3(through $20,000 $180,000 $500,000

maintenance previous year)*20%

At Reduced IT effort A3+A4 $100,000 $820,000 $1,780,000 $2,100,000

Risk adjustment ↓10%

Atr Reduced IT effort (risk-adjusted) $90,000 $738,000 $1,602,000 $1,890,000

Retired Third-Party Applications

Applications built with PowerApps and Flow can replace existing, third-
party applications that have license and maintenance costs. One
interviewee replaced an expense reporting solution that cost $25,000 per
year. Another interviewee eliminated a solution used by 70 users that
cost $25 per user per month.
For the financial analysis, Forrester included one replaced solution
beginning in Year 1, and two replaced solutions in years 2 and 3. Each
solution resulted in $25,000 annual savings.
The savings will vary depending on if the development effort replaces
third-party applications versus development of bespoke functionality that
would have been built in-house. To account for these risks, Forrester
adjusted this benefit downward by 10%, yielding a three-year
risk-adjusted total PV of $91,454.

8 | The Total Economic Impact™ Of PowerApps And Microsoft Flow

Retired Third-Party Applications: Calculation Table
REF. METRIC CALC. INITIAL YEAR 1 YEAR 2 YEAR 3
B1 Retired third-party applications $25,000 $50,000 $50,000

Bt Retired third-party applications =B1 $25,000 $50,000 $50,000

Risk adjustment ↓10%

Btr Retired third-party applications (risk-adjusted) $22,500 $45,000 $45,000

Streamlined Business Processes

Improving business processes, along with the unquantified improved
business outcomes described later in this study, were the most important
benefits according to the interviewees. In this section, Forrester looked at
specific business improvement examples that interviewees were able to
quantify. The efficiencies gained vary based on the existing business
process being streamlined with PowerApps and Flow and by a user’s
role. Some examples of process improvements include:
› “We reduced our time to quote from twelve days down to four. If we are
really slow a couple of times, a company might stop sending us “We were able to reduce the
[business].” number of people writing up
quotes from two to one in each
› “We used to have three full-time people writing reports. That’s now
shop. We have twenty
down to one person.”
locations.”
› “We had a person driving around in one region collecting paper forms.
VP of IT and purchasing,
That’s gone away.”
industrial equipment servicing
› “Accounting is saving three to four hours per week rekeying into our
ERP system. Overall, our projects probably save one full-time clerk in
the accounts payable team.”
› “The mileage reporting app we built is used by over 150
merchandizers. That time savings alone is equivalent to 1.5 FTEs
across the company.”
› “Salespeople are saving a lot of time through better insights. Two
hundred out of 400 workers are saving time because they no longer
have to attach pictures to an Excel spreadsheet.”
› “In one territory, three or four salespeople cut the time to complete
surveys in half. That’s 30 to 60 minutes per week.”
For the financial analysis, Forrester looked at the benefit from a general
increased efficiency angle and made the following assumptions:
› In total, 21 development projects were completed using PowerApps
and Flow. Each project impacted, on average, 75 users.
› The average time savings across all affected workers was equivalent
to a 5% efficiency gain in Year 1, 10% in Year 2, and 15% in Year 3 for
all affected workers.
› An average fully burdened cost (including all taxes and benefits) for all
workers across the composite organization was $91,000.
› Because this benefit was calculated from a productivity increase
perspective, instead of an elimination of specific roles and headcount,

9 | The Total Economic Impact™ Of PowerApps And Microsoft Flow

 it was adjusted downward by 75% because not all time savings results
in additional work being completed.
The reader is encouraged to think about how streamlined business
processes can reduce costs in their organization. Where possible, other
improved business outcomes, which were not included in the financial
analysis, should be calculated.
The benefit will vary based on how many workers are impacted, the size
of the efficiency gains, and the type of workers. To account for these
risks, Forrester adjusted this benefit downward by 15%, yielding a three-
year risk-adjusted total PV of $5,320,173.

Streamlined Business Processes: Calculation Table

REF. METRIC CALC. INITIAL YEAR 1 YEAR 2 YEAR 3
Total number of process =A1 (sum
C1 through 1 5 13 21
improvement projects
current year)
C2 Number of affected workers C1*75 workers 75 375 975 1,575

C3 Efficiency gain 0.0% 5.0% 10.0% 15.0%

C4 Average fully burdened cost $91,000 $91,000 $91,000 $91,000

C5 Total efficiency gains C2*C3*C4 $0 $1,706,250 $8,872,500 $21,498,750

C6 Productivity capture 25% 25% 25% 25%

Ct Streamlined business processes C5*C6 $0 $426,563 $2,218,125 $5,374,688

Risk adjustment ↓15%

Streamlined business processes

Ctr $0 $362,578 $1,885,406 $4,568,484
(risk-adjusted)

Unquantified Benefits
Interviewees described other business benefits that were not included in
the financial analysis. This could be due to the fact that there was too
great a variation, e.g., business transformation, or it was impossible to
add a realistic financial value to the business benefit, e.g., increased
employee satisfaction.
Improved Business Outcomes
Related to the process efficiencies benefit described above, companies
shared many examples of how the business is transformed and benefits “Time-to-market savings is
from PowerApps and Flow. Examples included: huge, but I can’t necessarily
quantify it. We’ve gone from
› “Overall service quality is getting better through standardized forms people saying that we can’t
and warranty claims are down. The work we have done [with deliver anything on time to,
PowerApps and Flow] is a part of this. So far, warranty claims are
‘Wow, this fast delivery time is
down $260,000 in the first five months.”
exactly what we want.’”
› “We created a customer self-service portal so our salespeople can get Enterprise architect, power
reports faster. This resulted in better customer service and happier generation
customers.”

10 | The Total Economic Impact™ Of PowerApps And Microsoft Flow

› “We are getting paid faster because reports are being generated
faster.”
› “These new apps allow us to react to critical out-of-stock events. This
makes our customers happier, and they say that we care about the
conditions of their stores.”
Better Decision Making
Many of the projects companies undertook with PowerApps and Flow
were about collecting information from the field and sending it back to
corporate. This gives managers more information and more timely
access to make better and faster decisions.
› “The tools we built helped managers understand what was going on in
stores. They could pinpoint the locations and prices and explain what
was going on.”
› “We can now deliver hard metrics to end customers, which improves
our relationships.”
› “We now give managers data in new ways and at a faster rate than
ever before. This saves time and money. They can take preventative “We are now collecting data
actions quicker because all of the information is in a single decision that we haven’t been collecting
support tool.” for the last twenty years of
› “We built a tool so operators could determine, based on market operations. We didn’t know
conditions, if an emergency repair trip should be scheduled. We’ve what we didn’t know.”
gone from fulfilling one call every weekend to sometimes not doing one Cloud services manager,
in an entire month.” beverage distributor
Increased Employee Satisfaction
Employees from different roles were reported as being happier because
they felt more empowered and could work more efficiently.
› “If you polled the mechanics, the consensus would be that they enjoy
the new electronic solutions. Even some of the biggest sceptics have
come around.”
› “Being able to do this type of development work is very empowering for
the IT department.”
› “We have had very positive feedback from mobile workers because
they have better access to company information.”
Additional Value Realization From Related Microsoft Solutions
Interviewees are using PowerApps and Flow to expand the capabilities
within other Microsoft solutions they are using. Microsoft Dynamics and
SharePoint were two that were especially called out. This means
companies can get a higher ROI on previous IT investments.
› “Office 365 has been able to leverage our work in PowerApps and
Flow to drive a lot of our improvements. As a whole, our company has
come a long way.”
› “We have a fairly mature SharePoint solution. We are using
PowerApps to consolidate information from a bunch of different
SharePoint sites. This saves us from doing data movement and data
replication.”

11 | The Total Economic Impact™ Of PowerApps And Microsoft Flow

Enhanced Application Security
PowerApps and Flow can improve security in several ways. Firstly, it
uses the permissions within Active Directory to limit access to data and “This has helped with GDPR
systems. It is also tied into the same authentication mechanisms as compliance and overall better
other Microsoft solutions. All applications built on the PowerApps security.”
Common Data Service for Apps are automatically GDPR compliant. Head of CRM solutions, financial
Lastly, IT departments are using PowerApps and Flow to eliminate services
shadow IT and take control of managing applications developed by end
users.
› “We are leveraging these tools to take shadow IT out of the shadows.”
› “If we did mobile apps the traditional way, we wouldn’t have been as
integrated. PowerApps helps us with mobile device management
(MDM).”
› “We can do more with these apps because we have security through
Azure AD.”

Flexibility
The value of flexibility is clearly unique to each customer, and the
measure of its value varies from organization to organization. There are
multiple scenarios in which a customer might choose to implement
PowerApps and later realize additional uses and business opportunities.
Interviewees described how utilizing PowerApps and Flow has made
their organizations more agile, allowing to see the future state
Flexibility, as defined by TEI,
possibilities for these tools. One area that the companies are moving represents an investment in additional
towards is to make PowerApps and Flow more available to business capacity or capability that could be
users to develop their own solutions, as part of a “citizen developer turned into business benefit for a future
movement.” None of the future opportunities were included in the additional investment. This provides an
financial analysis. organization with the "right" or the
ability to engage in future initiatives but
› “We are still building momentum. Different teams are spearheading not the obligation to do so.
efforts, especially with Flow.”
› “We are beginning to imbed PowerBI into some apps.”
› “People use the term agile development, but when you use these tools
you can quickly iterate through a lot of scenarios to get to the right
solution a heck of a lot faster.”
› “The power suite as a whole makes for a strong citizen developer
model. If a user needs a simple Flow, they can easily do it.”
“Our vision is that we will let
› “We are looking at PowerApps and Flow for more [ERP] integrations.
people look at their part of the
We will use Flow wherever it makes sense.”
business and create their own
› “We will do things in PowerApps first before other alternatives where apps; to take the load off of
possible.” traditional development.”
› “A bunch of singles really add up. There are thousands of little Head of CRM solutions, financial
processes we can improve.” services
› “We have a list as long as our arm of things we want to do. There are
thirty paper-based processes in our stores that can easily be fixed. A
business process owner could develop those.”

12 | The Total Economic Impact™ Of PowerApps And Microsoft Flow

Analysis Of Costs
QUANTIFIED COST DATA AS APPLIED TO THE COMPOSITE ORGANIZATION

Total Costs
PRESENT
REF. COST INITIAL YEAR 1 YEAR 2 YEAR 3 TOTAL VALUE
Dtr Development costs $84,000 $420,000 $714,000 $630,000 $1,848,000 $1,529,229

Corporate IT solution and

Etr $12,600 $77,805 $140,805 $266,805 $498,015 $400,154
code management

Total costs (risk-adjusted) $96,600 $497,805 $854,805 $896,805 $2,346,015 $1,929,383

Development Costs The table above shows the total of all

costs across the areas listed below, as
The development efforts shown here are in place of the eliminated well as present values (PVs)
development effort in the Benefits section of the study. Overall, discounted at 10%. Over three years,
interviewees said that the level of effort is very low. Most of them are the composite organization expects
using existing, non-developer IT staff to create applications with risk-adjusted total costs to be a PV of
more than $1.9 million.
PowerApps and Flow. One interviewee reported: “There is no real cost,
which is the beauty of it. We had the identity piece and most of the
licenses through Office 365. I taught myself how to code with the tools
using online resources.”
The change management component was also described as easy.
“Change management is relatively low,” said one interviewee. “The nice
thing about making a clean start with these tools is a common interface
across everything. There is the same user experience across phone and
laptop. We can role applications out to a broad user community without
training.”
Some companies completed all development work in-house, and some
used professional services. For the financial analysis, Forrester assumed
a mix of internal and external costs, specifically:
› The average internal development effort was two FTEs for three
months. The average fully burdened cost was $10,000 per month.
› To be conservative, Forrester included professional services, and the
amount varied over the years. For the POC it was lower because of the
limited project scope. Year 1 projects included the most professional
service, which included some custom API work and other specialized
efforts. This decreased over time as development efforts were based
more on the standard PowerApps and Flow toolsets.
The development costs will vary based on the number and scope of Implementation risk is the risk that a
projects. Increased professional services can increase costs, but proposed investment may deviate from
empowering business users to create their own apps can reduce costs. the original or expected requirements,
To account for these risks, Forrester adjusted this cost upwards by 5%, resulting in higher costs than
anticipated. The greater the
yielding a three-year risk-adjusted total PV of $1,529,299.
uncertainty, the wider the potential
range of outcomes for cost estimates.

13 | The Total Economic Impact™ Of PowerApps And Microsoft Flow

Development Costs: Calculation Table
REF. METRIC CALC. INITIAL YEAR 1 YEAR 2 YEAR 3

D1 Number of projects =A1 1 4 8 8

3 months*2 FTEs
D2 Average development cost per project $60,000 $60,000 $60,000 $60,000
*$10,000

D3 Average professional services per project $20,000 $40,000 $25,000 $15,000

Dt Development costs D1*(D2+D3) $80,000 $400,000 $680,000 $600,000

Risk adjustment ↑5%

Dtr Development costs (risk-adjusted) $84,000 $420,000 $714,000 $630,000

Solution And Code Management

IT organizations expend effort on managing the PowerApps and Flow
solutions, as well as on the code that is developed with these tools. A
best practice that emerged in the interviews is that all code should be
managed by the IT organization, even if it is developed by business
users. The code is transferred to the IT organization and managed within
a premium PowerApps account.
Managing the tools themselves was described as “less than 10% of one
person’s job,” and this is reflected in the Initial period effort. The
additional effort is for maintaining and further developing PowerApps and
Flow code that has been handed over to corporate IT and to train users
on the solutions. Total effort increases over time as more code is
centrally managed and further developed, totaling two FTEs in Year 3.
Fifty paid PowerApps licenses (equal mix of P1 costing $7 per user per
month and P2 costing $40 per user per month averaging out to $23.50)
were included in the analysis for users that required premium to
connectors to ERP systems.
Management costs will differ depending on: 1) the overall level of
development being completed with PowerApps and Flow and 2) if a
centralized IT management model is adopted. To account for these risks,
Forrester adjusted this cost upward by 5%, yielding a three-year
risk-adjusted total PV of $400,154.

14 | The Total Economic Impact™ Of PowerApps And Microsoft Flow

Solution And Code Management: Calculation Table
REF. METRIC CALC. INITIAL YEAR 1 YEAR 2 YEAR 3
Corporate IT code development and
E1 0.1 0.5 1.0 2.0
business user training (FTEs)
Corporate IT code development and
E2 E1*$120,000 $12,000 $60,000 $120,000 $240,000
business user training costs
50*$23.50*12 months
E3 PowerApps paid licenses (P1 & P2) $0 $14,100 $14,100 $14,100
[beginning Year 1]

Et Solution and code management E2+E3 $12,000 $74,100 $134,100 $254,100

Risk adjustment ↑5%

Solution and code management

Etr $12,600 $77,805 $140,805 $266,805
(risk-adjusted)

15 | The Total Economic Impact™ Of PowerApps And Microsoft Flow

Financial Summary
CONSOLIDATED THREE-YEAR RISK-ADJUSTED METRICS

Cash Flow Chart (Risk-Adjusted) 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.

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.

Cash Flow Table (Risk-Adjusted)

PRESENT
INITIAL YEAR 1 YEAR 2 YEAR 3 TOTAL VALUE
Total costs ($96,600) ($497,805) ($854,805) ($896,805) ($2,346,015) ($1,929,383)

Total benefits $90,000 $1,123,078 $3,532,406 $6,503,484 $11,248,969 $8,916,488

Net benefits ($6,600) $625,273 $2,677,601 $5,606,679 $8,902,954 $6,987,105

ROI 362%

Payback period < 3 months

16 | The Total Economic Impact™ Of PowerApps And Microsoft Flow

PowerApps And Microsoft Flow: Overview
The following information is provided by Microsoft. Forrester has not validated any claims and does not endorse
Microsoft or its offerings.

PowerApps
Building apps with PowerApps helps everyone from business analysts to professional developers work more
efficiently together. Solve business problems with intuitive visual tools that don’t require code, work faster with a
platform that enables data integration and distribution, and extend the platform with building blocks for
professional developers. Easily build and share apps on any device.
PowerApps enables a broad range of app scenarios to be created that infuse digital transformation into manual
and outdated processes. Use both canvas and model-driven apps to build PowerApps that solve business
problems for task and role-specific scenarios like inspections, field sales enablement, prospect to cash, and
integrated marketing views.
Use the built-in Common Data Service for Apps to store data and model processes and business logic. Take
advantage of more than 200 connectors to integrate data and systems you already use. Extend PowerApps
further as a professional developer with custom connectors and logic.

Microsoft Flow
Use Microsoft Flow to design logic for your PowerApps. Instead of writing code, use the point-and-click flow
designer to build out your business logic. Easily run flows in your app with buttons, actions, and data inputs.
These flows can fire-and-forget, or return data back to your app to display information to the user.
Keep users on track and ensure data consistency regardless of where it's entered with multi-stage business
process flows. For example, you can create a flow to have everyone handle customer service requests the same
way, or to require approvals before submitting an order.
Connect to your data, wherever it is, to create automated workflows that enable collaboration and productivity for
your business. Seamlessly share this task automation across your team. Deep integration with SharePoint,
OneDrive for Business, and Dynamics 365 provides automation right in-context of the applications you use every
day.
Create more powerful flows using a simple Excel-like expression language. Connect to more systems and have
additional control through built-in extensibility for pro developers. For full management, create Azure Logic Apps
from your automation workflows to manage them in Azure.

17 | The Total Economic Impact™ Of PowerApps And Microsoft Flow

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 Present value (PV)
of their products and services to clients. The TEI methodology helps
companies demonstrate, justify, and realize the tangible value of IT The present or current
initiatives to both senior management and other key business value of (discounted) cost and
stakeholders. benefit estimates given at an
interest rate (the discount rate).
The PV of costs and benefits feed
into the total NPV of cash flows.
Total Economic Impact Approach

Benefits represent the value delivered to the business by the Net present
product. The TEI methodology places equal weight on the value (NPV)
measure of benefits and the measure of costs, allowing for a
full examination of the effect of the technology on the entire The present or current value of
organization. (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
Costs consider all expenses necessary to deliver the other projects have higher NPVs.
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. Return on
investment (ROI)

A project’s expected return in

percentage terms. ROI is
Flexibility represents the strategic value that can be calculated by dividing net benefits
obtained for some future additional investment building on (benefits less costs) by costs.
top of the initial investment already made. Having the ability
to capture that benefit has a PV that can be estimated.
Discount
rate

The interest rate used in cash flow

Risks measure the uncertainty of benefit and cost estimates analysis to take into account the
given: 1) the likelihood that estimates will meet original time value of money. Organizations
projections and 2) the likelihood that estimates will be typically use discount rates
tracked over time. TEI risk factors are based on “triangular between 8% and 16%.
distribution.”

Payback
period
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 The breakeven point for an
using the discount rate at the end of the year. PV calculations are calculated for investment. This is the point in time
each total cost and benefit estimate. NPV calculations in the summary tables are at which net benefits (benefits
the sum of the initial investment and the discounted cash flows in each year. minus costs) equal initial
Sums and present value calculations of the Total Benefits, Total Costs, and investment or cost.
Cash Flow tables may not exactly add up, as some rounding may occur.

18 | The Total Economic Impact™ Of PowerApps And Microsoft Flow