June 2021

A Total Economic Impact™ Of Microsoft’s Developer Tools And Cloud Services

Cost Savings And Business Benefits Achieved By Developer Productivity And Accelerated Continuous Delivery

Microsoft logo

A Forrester Total Economic Impact™ Study Commissioned By Microsoft, June 2021

Table Of Contents

Forrester’s analysis of four current Microsoft customers found that Microsoft’s developer tools and cloud services enabled these organizations’ developers to more effectively code, collaborate, and ship applications within their organizations, resulting in lower personnel development costs, increased productivity, improved time-to-market, and total cost of ownership (TCO) savings on incumbent developer tools.

To compete effectively, organizations must provide customers — external and internal — with new and rapidly evolving product and service experiences. Development teams must quickly deliver applications, support frequent iterations, and roll out new product features at scale. But faster delivery alone leads to customer disappointment if velocity compromises quality. To overcome these barriers, digital organizations must prioritize eliminating manual errors and optimize deployment and release through standardization and automation.1

Microsoft’s developer tools and cloud services encompass Visual Studio, GitHub Enterprise, and Microsoft Azure — available through a single bundled offering. These tools and services assist an organization’s developer teams through the entire software development lifecycle, enabling them to code, collaborate, and ship applications faster, more efficiently, and more securely. Integrated Development Environments (IDE) like Visual Studio are where developers spend the majority of their time. An IDE that is highly integrated with other parts of the development toolchain reduces context switching for developers, improving productivity. DevOps tools like GitHub Enterprise and Azure DevOps accelerate developers’ workflows, moving toward continuous delivery and more frequent application iterations, as well as improving key business outcomes.

Successful digital firms use software to win new customers and better serve existing ones. They’re able to get feedback faster and more quickly build richer, more valuable experiences, leading to higher long-term customer value.2

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 Microsoft’s developer tools and cloud services.3 The purpose of this study is to provide readers with a framework to evaluate the financial impact of adopting Microsoft’s developer tools and services for their organizations.

To better understand the benefits, costs, and risks associated with this investment, Forrester interviewed four customers with experience using some or all of these tools and cloud services. For the purposes of this study, Forrester aggregated the experiences of the interviewed customers and combined the results into a single composite organization.

Prior to using Microsoft’s developer tools and services, the organization relied upon disparate solutions and processes, either homegrown or from multiple vendors across an increasingly distributed development team. Developers experienced wasted effort through manual processes and loosely integrated systems, and as a result they struggled to iterate on key projects fast enough to satisfy demand. The result: delayed delivery of code — that is, value — to their customers. After investment in Microsoft’s developer tools and services, teams were better able to code and collaborate from anywhere, enabling their organizations to standardize tools and processes, improve speed of development, and more effectively use DevOps practices to facilitate continuous delivery and release. Ultimately, organizations improved on key business outcomes through better-written code and more frequent iterations.

Consulting Team:
  • Mbenoye Diagne, Jonathan Lipsitz

Key Statistics

  • Return on investment (ROI)
    560%
  • Benefits Present Value
    $21.56M
  • Net present value (NPV)
    $18.29M
  • Payback
    < 6 months
Our biggest benefit of adopting Microsoft [developer tools and cloud services] solutions is the improved speed of development and flexibility.

CIO, North American entertainment

Quantified benefits. Risk-adjusted present value (PV) quantified benefits include:

  • Developers save more than an hour per day.

    By standardizing the way developers code and collaborate on Visual Studio, GitHub Enterprise, and Azure, interviewees collectively reported significant per-developer productivity savings.

  • The organization reinvests hiring dollars toward innovation.

    Resulting from productivity improvements for developers, the interviewed organizations reallocated 10 hires that otherwise would have been required for maintaining the development lifecycle.

  • Developers are onboarded up to five days faster.

    Familiarity in the developer community with tools such as Visual Studio and GitHub Enterprise allow organizations to ramp up their developers an average of five days faster once hired — across seniority levels. This decreases developer time-to-contribution, increasing time-to-value for the organization.

  • Improved DevOps makes the development lifecycle more efficient, driving value in each iteration.

    Microsoft developer tools and services enable organizations to improve development processes with the addition of both real-time and asynchronous collaboration tools; better code reuse; faster provisioning and configuration of development environments; and release automation that promotes continuous delivery. Interviewees differed when reporting their primary source of value: increased productivity, higher quality code, decreased downtime and support costs. For purposes of calculation, our composite organization realizes additional revenue from reducing critical system downtime by more frequently delivering higher-quality code.

  • Cost savings through consolidated developer tool license fees.

    Most of the interviewed organizations replaced now-redundant developer tools once Microsoft’s were deployed. This benefit increases over time, as additional development teams are standardized on Microsoft developer tools and services.

Unquantified benefits. Benefits that are not quantified for this study include:

  • Improved developer experience.

    Interviewees noted that adopting tools that improve collaboration and automation benefit developers from an experience standpoint, leading to higher job satisfaction and increasing talent retention. In addition, by bringing in commonly used and understood tools such as Visual Studio and GitHub, developers are 1) more effective at onboarding and 2) require less subsequent training, remaining more satisfied with their employment as a result.

  • Integration with other Microsoft products.

    Interviewees cited the seamless integration between Microsoft’s developer tools and other Microsoft solutions such as Office 365, further improving collaboration between development organizations and nondevelopment stakeholders.

  • Integration with existing toolchains.

    Interviewees noted that the flexibility of Microsoft’s developer tools and services enabled them to use them across their application estate — from long-running applications that only needed patching and maintenance to greenfield cloud-native applications that update daily. These tools and services were interoperable with the interviewees’ existing investments in IDEs, DevOps tooling, and infrastructure, as well as their existing choices in operating system, programming language, and tech stack.

  • Improved security.

    Qualitatively, the interviewees described improvements to their organizations’ security posture resulting from security-minded functionality on Microsoft developer tools and services, leading to fewer vulnerabilities — such as code containing credentials or secrets — being deployed to production; improved role-based access control; and earlier identification of insecure dependencies.

Costs. Risk-adjusted PV costs include:

  • License fees for Microsoft’s developer tools and cloud services.

    Each of the interviewed organizations paid a license fee based on the number of developers using Microsoft developer tools and cloud services.

  • Implementation and ongoing management personnel costs.

    The interviewed organizations described personnel effort required to implement and continue to maintain their Microsoft developer tools and cloud services.

The customer interviews and financial analysis found that a composite organization experiences benefits of $21.56M over three years versus costs of $3.27M, adding up to a net present value (NPV) of $18.29M and an ROI of 560%.

“Microsoft’s [developer tools and services] have enabled us to adopt new processes and standards around our releases. Our developer teams can sprint much faster.”

Global enterprise architect, North American consumer

Benefits (Three-Year)
figure

TEI Framework And Methodology

From the information provided in the interviews, Forrester constructed a Total Economic Impact™ framework for organizations considering an investment in Microsoft’s developer tools and cloud services.

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 Microsoft developer tools and services can have on an organization.

  • DUE DILIGENCE

    Interviewed Microsoft stakeholders and Forrester analysts to gather data relative to the developer tools and services used.

  • CUSTOMER INTERVIEWS

    Interviewed four decision-makers at organizations using Microsoft developer tools and cloud services to obtain data with respect to costs, benefits, and risks.

  • COMPOSITE ORGANIZATION

    Designed a composite organization based on characteristics of the interviewed organizations.

  • FINANCIAL MODEL FRAMEWORK

    Constructed a financial model representative of the interviews using the TEI methodology. It normalizes all results as a per user per month opportunity over 36 months.

  • CASE STUDY

    Employed four fundamental elements of TEI in modeling the investment impact: benefits, costs, flexibility, and risks. Given the increasing sophistication of ROI analyses related to IT investments, Forrester’s TEI methodology provides a complete picture of the total economic impact of purchase decisions.

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 Microsoft developer tools and cloud services.

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 some of the customer names for the interviews but did not participate in the interviews.

NEXT SECTION: The Microsoft Dev Customer Journey

industry Region Interviewee Components of Developer Cloud solution deployed Key Azure services
Software North America Senior engineering manager Azure, GitHub Enterprise Azure VMs, DevOps, Active Directory, Storage, Container Service,Web Hosting
Professional services Europe Operations analyst Azure, GitHub Enterprise, Visual Studio Azure VMs, Kubernetes, Log Analytics, Monitor, Cosmos DB, IoT, Functions, IAM, Mobile Apps
Consumer packaged goods North America Global enterprise architect Azure, Visual Studio Azure VMs, DevOps, Monitor, Active Directory
Entertainment North America CIO Azure, Visual Studio Azure App Service, Active Directory, DevOps, Monitor, Media Services, Dev/Test Labs

Key Challenges

The interviewed organizations struggled with common challenges, including:

  • Disparate tools and processes.

    Interviewees noted an array of tools and processes across their organizations’ developer teams or initiatives. Resulting complications to collaboration and visibility contributed to suboptimal productivity via rework, redundant effort, and additional reviews. Top-down mandates for process standardization were a recurring theme, with one interviewee summarizing: “We were tasked with standardizing the tools we’re using to future-proof the development we’re doing. That includes going back and updating older code while ensuring that the newer development is being done according to the new standards that we have set.”

  • Slower time-to-market for applications.

    Such cumbersome processes reduced time-to-market for these applications. Continuous delivery and release automation was impossible given the current tools.

  • Escalating developer personnel requirements and competition for developer talent.

    As the interviewed organizations continued to grow and expand their application estate, additional developers were required to manage the growth. However, the required development effort outpaced the organizations’ ability and budget to hire and onboard this net-new headcount given budget restrictions and a talent shortage in the market.

Solution Requirements

The interviewed organizations searched for a solution that:

  • Could provide consistent experiences and processes across multiple distributed development teams.

  • Would be compatible with the multiple programming languages and technology stacks used by the organization’s developers to both maintain and update legacy apps as well as create net-new apps.

  • Would be intuitive or already known to developers, reducing the need for training and increasing the time-to-effectiveness for new hires.

Composite Organization

Based on the interviews, Forrester constructed a TEI framework, a composite company, and a 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 the aggregate financial analysis in the next section. The composite organization has the following characteristics:

  • Description of composite.

    The global, multibillion-dollar consumer packaged goods organization employs 1,000 developers to develop and maintain the organization’s business-critical internal and customer-facing applications. The organization is growing in the high single digits year over year and has primarily grown through acquisitions in the past, resulting in a disparate collection of developer tools and development processes. Internal and external customer expectations continue to put pressure on the organization’s existing staff to develop and ship applications and application updates faster and more often.

  • Deployment characteristics.

    The composite organization adopts Visual Studio, GitHub Enterprise, and Azure as part of a global cloud migration effort to streamline its development and continuously deliver applications to production in the cloud. Previously, different tools and processes were used by different development teams, which hampered collaboration and visibility across the organization. Multiteam efforts proved challenging for these increasingly distributed teams.

“The Microsoft [developer tools and services] solution is a one-stop shop for our developers for doing everything they need to do. Microsoft keeps making it even more powerful, as well.”

Senior engineering manager, North American software

Key assumptions
  • Multibillion-dollar organization
  • 1,000 developers
  • Visual Studio, GitHub Enterprise, and Azure DevOps deployed
NEXT SECTION: Analysis Of Benefits

Total Benefits

Ref. Benefit Year 1 Year 2 Year 3 Total Present Value
Atr Developer productivity improvements $3,506,250 $7,012,500 $7,012,500 $17,531,250 $14,251,550
Btr Avoided hires $977,500 $1,955,000 $2,932,500 $5,865,000 $4,707,569
Ctr Reduced developer onboarding time $198,000 $198,000 $198,000 $594,000 $492,397
Dtr Additional value from improved DevOps $408,000 $612,000 $816,000 $1,836,000 $1,489,767
Etr Consolidated developer tool license fees $168,750 $253,125 $337,500 $759,375 $616,172
Total benefits (risk-adjusted) $5,258,500 $10,030,625 $11,296,500 $26,585,625 $21,557,455

Developer Productivity Improvements

  • Evidence and data.

    Microsoft’s developer tools and cloud services enable productivity benefits by improving developers’ ability to code, collaborate, and ship applications from anywhere. Visual Studio offers functionalities such as Live Share, a real-time collaboration feature, which interviewees cited as drivers for improved collaboration and access for their developers. Collaboration and workflow automation capabilities are further enhanced through GitHub Enterprise: GitHub Actions, a workflow-automation feature, removes manual redundant effort and enables direct integration with Microsoft Azure. Enhancing these productivity benefits further, GitHub Actions allows teams to ship from anywhere. Visual Studio has direct integrations with both GitHub and Azure, enabling developers to perform common tasks across products without needing to leave their IDE, thereby avoiding time-wasting context-switching.

    The senior engineering manager noted that hundreds of developers easily collaborate and transparently contribute code to their core product with Visual Studio, reducing instances of rework and improving the rate of collaboration and speed of development.

    The global enterprise architect we spoke with estimated a 30% productivity increase for each developer once they were standardized on Microsoft developer tools and cloud services. Previously, there was a variable level of effort for similar tasks across their organization’s many developer teams because they needed to learn and navigate a disparate set of tools and processes. The interviewee stated, “Across all of our platforms and teams, our developers were using around 10 different tools.”

    The entertainment organization’s CIO noted improvement to productivity due to centralized, interoperable developer tools and cloud services from Microsoft. The CIO told Forrester: “Standardizing and centralizing our development technology has allowed us to better set strategy.”

    With Visual Studio, supporting code over time becomes easier for the software organization’s developers. The senior engineering manager said: “Visual Studio also helps us organize and maintain our code in a better way. It is more easily supportable and more maintainable over time because down the road, our developers have visibility into what they need to see and access to the tools they need.”

    The software organization’s senior engineering manager noted developers’ ability to ship code from anywhere, in addition to summarizing the value of connecting the development lifecycle with Microsoft’s developer products: “All of the solutions are integrated with each other and interoperable. With Visual Studio, we can easily deploy our code to Azure. We can automate code deployments directly from GitHub to Azure. Our focus on continuous integration and continuous deployment is greatly supported by both Visual Studio and GitHub together with Azure.”

“Our [developer tools and cloud services] solutions are so critical to our development processes, taking these tools away would be like taking away internet access. They’re that impactful.”

Senior engineering manager, North American software

  • Modeling and assumptions.

    For the composite organization, Forrester assumes:

    • One thousand total full-time developers (2,000 hours per year) are enabled with Microsoft’s Developer Cloud.
    • A 7.5% increase in productivity in Year 1, rising to 15% by Year 3. This is a conservative assumption of 6.5 hours per week based on the experiences of the interviewed organizations.
    • A $55 per hour average burdened rate per developer.
    • A 50% productivity capture, as all reclaimed time cannot be assumed for value-added activities.
  • Risks.

    This benefit will vary among organizations based on:

    • The total number of developers within an organization.
    • An organization’s previously deployed tools and processes for its developers.
    • The scope and complexity of an organization’s development requirements.
  • Results.

    To account for these risks, Forrester adjusted this benefit downward by 15%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of nearly $14.3million.

“It all feels like one connected cloud from Microsoft nowadays. As a developer, all I want to do is ... build my code, ship it, check if it’s running, and make it hard to break. Our Microsoft solution allows our developers to focus on just that.”

Senior engineering manager, North American software

Developer Productivity Improvements

Ref. Metric Calculation Year 1 Year 2 Year 3
A1 Total affected developers Composite 1,000 1,000 1,000
A2 Average productivity increase Calculation 7.5% 15% 15%
A3 Hours saved per developer per year with Microsoft developer tools and services A2*2,000 hours 150 300 300
A4 Average burdened developer hourly rate (rounded) Composite $55 $55 $55
A5 Productivity capture Assumption 50% 50% 50%
At Developer productivity improvements A1*A3*A4*A5 $4,125,000 $8,250,000 $8,250,000
Risk adjustment ↓15%
Atr Developer productivity improvements (risk-adjusted) $3,506,250 $7,012,500 $7,012,500
Three-year total: $17,531,250 Three-year present value: $14,251,550

Reallocated Hires

  • Evidence and data.

    As an organization grows in size and expands its product or service offerings, the requirement for developers increases in turn. By standardizing tools and processes with Microsoft, interviewees noted that they could accomplish more with their current staff without the need to hire from an already short-supplied talent marketplace; they could allocate those hiring dollars elsewhere, if necessary.

    The CIO in the entertainment industry detailed an extensive cloud transformation project leveraging Microsoft developer tools and services. While the project took fewer than 20 developers to accomplish, the interviewee noted that it would have been impossible with their previous tools and processes unless they had hired to triple their development team.

    One interviewee cited personnel retention when discussing Microsoft developer tools: “[Our Microsoft tools] further help us indirectly when hiring and retaining developers. Developers are expensive, hiring them is expensive, and we have to train them. Tools like Visual Studio are known to these developers and therefore make their lives easier. This keeps them happy and more likely to stay with us.”

  • Modeling and assumptions.

    For the composite organization, Forrester assumes:

    • Ten reallocated developer hires per year, a conservative assumption based on the interviews.
    • A $115,000 average burdened developer salary, given the mix of experience levels among developers.
  • Risk.

    This benefit will vary among organizations based on:

    • The skill and capacity of an organization’s developers.
    • The current and future business demands on an organization’s developers.
  • Results.

    To account for these risks, Forrester adjusted this benefit downward by 15%, yielding a three-year, risk-adjusted total PV of $4.7 million.

Reallocated Hires

Ref. Metric Calculation Year 1 Year 2 Year 3
B1 Avoided developer hires Interviews 10 20 30
B2 Average burdened salary Composite $115,000 $115,000 $115,000
Bt Reallocated hires B1*B2 $1,150,000 $2,300,000 $3,450,000
Risk adjustment ↓15%
Btr Reallocated hires (risk-adjusted) $977,500 $1,955,000 $2,932,500
Three-year total: $5,865,000 Three-year present value: $4,707,569

Reduced Developer Onboarding Time

  • Evidence and data.

    The interviewed decision-makers noted an improved ability to onboard newly hired developers who were already familiar with Microsoft developer tools and cloud services. New hires almost always know how to use these tools and services from prior experience. The Visual Studio family of tools is the most popular in the world, with more than 25 million monthly active users, and GitHub has more than 65 million developers registered on its platform. Furthermore, some interviewees noted that their organizations could easily ramp junior or less experienced (and less expensive) developers given the intuitiveness of Microsoft developer tools.4

    The operations analyst expounded on the ability to expedite training of newly hired developers, as well as more quickly bring newer staff to full effectiveness: “Developer onboarding has been much easier. We also have a few on our team who started learning [these tools] a few months ago; they’re making very good progress. Without the [Microsoft developer] tools, it would have taken much longer. We’ve seen very good ROI for onboarding in this respect.”

    The software senior engineering manager echoed this sentiment, noting that training costs for their developers on their Microsoft solutions is negligible. They continued, “Even for junior developers who haven’t used these tools before, they’re intuitive enough that they can ramp extremely quickly.”

  • Modeling and assumptions.

    For the composite organization, Forrester assumes:

    • The organization hires 100 developers per year given an average 10% developer attrition rate.
    • The organization eliminates 40 hours of onboarding training per hire after adopting the Microsoft Developer Cloud.
    • A $55 per hour average burdened rate per developer.
  • Risks.

    This benefit will vary among organizations based on:

    • The skill and capacity of an organization's developers.
    • An organization's yearly developer attrition rate.
  • Results.

    To account for these risks, Forrester adjusted this benefit downward by 10%, yielding a three-year, risk-adjusted total PV of $4.7 million.

Reduced Developer Onboarding Time

Ref. Metric Calculation Year 1 Year 2 Year 3
C1 Yearly developer hires 1,000*10% 100 100 100
C2 Reduced training hours per hire Interviews 40 40 40
C3 Averaged burdened developer hourly rate (rounded) Composite $55 $55 $55
Ct Reduced developer onboarding time C1*C2*C3 $220,000 $220,000 $220,000
Risk adjustment ↓10%
Ctr Reduced developer onboarding time (risk-adjusted) $198,000 $198,000 $198,000
Three-year total: $594,000 Three-year present value: $492,397

Additional Value from DevOps

  • Evidence and data.

    Because developers used a standard, integrated set of tools and processes on Microsoft developer tools and services, organizations described an improvement in their DevOps function, enabling continuous delivery and release automation. Interviewees described an improved ability to deploy, monitor, and iteratively update their applications frictionlessly across distributed teams. The iterative value of continuous delivery varied by organization and industry, but interviewees collectively described value beyond productivity and cost savings resulting from improved DevOps.

    The entertainment organization greatly improved its end-user experience through a complete overhaul of a previously painstaking process, improving end-user engagement at the same time. Its CIO shared: “The majority of our processes were paper-based. Our users would actually print out a piece of paper, fill it in, and submit it, and someone [in IT] would manually enter it into a database. Now our users’ interaction and experience with us is a completely different [one].”

    The consumer packaged goods organization greatly increased its physical supply chain efficiency by reducing system downtime through continuous development across multiple business-critical platforms running its supply chain. Updates are now deployed more frequently, planned and unplanned downtime is less frequent, and performance issues are less common. The consumer packed goods global enterprise architect noted that performance-impacting tickets for their systems have decreased by nearly 25% since revamping and accelerating development processes on Microsoft’s developer solution. They explained: “Our improved ability to collaborate has given us much better quality control. We don’t have downtime. We don’t have some of the outages that we used to experience.”

    The operations analyst we interviewed noted improved release cycle agility after adopting Microsoft developer tools and services, which may accelerate revenue. For smaller initiatives or applications, time-to-market has improved by up to 66%, while for larger applications or initiatives, time-to-market was decreased by multiple weeks or months in some cases. The operations analyst said: “We used to do monthly deployments or updates. Now, we’re doing one sprint every two weeks for the apps that we need to push through.”

  • Modeling and assumptions.

    For the composite organization, Forrester assumes that:

    • Improved development cycles on the organization’s critical platforms yield value through improved uptime, at $80,000 per hour of avoided downtime.
    • The organization has a yearly volume of 120 major tickets that relate to system downtime.
    • Downtime-related ticket volume decreases by 10% in Year 1, escalating to 20% by Year 3 of the analysis.
  • Risks.

    This benefit will vary among organizations based on an organization’s industry as it pertains to the value of continuous development.

  • Results.

    To account for these risks, Forrester adjusted this benefit downward by 15%, yielding a three-year, risk-adjusted total PV of $1.5 million.

icon
Reduction in critical application downtime from improved DevOps
20%

Additional Value From Iterative Development

Ref. Metric Calculation Year 1 Year 2 Year 3
D1 Yearly volume of high-priority support tickets (downtime-related tickets) Composite 120 120 120
D2 Reduction in high-or medium-priority tickets Interviews 10% 15% 20%
D3 Reduction in ticket volume D1*D2 12 18 24
D4 Average downtime per ticket (hours) Composite 0.5 0.5 0.5
D5 Avoided system downtime (hours) D3*D4 6 9 12
D6 Hourly revenue impact of system downtime Composite $80,000 $80,000 $80,000
Dt Additional value from iterative development D5*D6 $480,000 $720,000 $960,000
Risk adjustment ↓15%
Dtr Additional value from iterative development (risk-adjusted) $408,000 $612,000 $816,000
Three-year total: $1,836,000 Three-year present value: $1,489,767

Consolidated Developer Tool License Fees

  • Evidence and data.

    As the interviewed organizations implemented Microsoft developer tools and cloud services, now-redundant developer tools were retired to offset some of the costs associated with the Microsoft investments. Some of the interviewed companies that had grown through acquisition saved significantly on cost, as multiple incumbent solutions could be phased out over subsequent years.

  • Modeling and assumptions.

    For the composite organization, Forrester makes the following assumptions:

    • A yearly spend of $375,000 on tools that become redundant with Microsoft developer tool and service investments.
    • A phased retirement for these solutions, as contract terms and developer use cases may mandate a temporary side-by-side deployment. By Year 3 of the analysis, all the redundant solutions are phased out.
  • Risks.

    This benefit will vary among organizations based on:

    • The scope and complexity of an organization’s developer tools deployment.
    • The contract circumstances among different organizations.
    • The number of specialized use cases for these tools, which affect an organization’s ability to retire a solution.
  • Results.

    To account for these risks, Forrester adjusted this benefit downward by 10%, yielding a three-year, risk-adjusted total PV of just over $600,000.

Consolidated Developer Tool License Fees

Ref. Metric Calculation Year 1 Year 2 Year 3
E1 Yearly license for incumbent solutions Composite $375,000 $375,000 $375,000
E2 Yearly percentage of retired spend Assumption 50% 75% 100%
Et Consolidated developer tool license fees E1*E2 $187,500 $281,250 $375,000
Risk adjustment ↓10%
Etr Consolidated developer tool license fees (risk-adjusted) $168,750 $253,125 $337,500
Three-year total: $759,375 Three-year present value: $616,172

Unquantified Benefits

  • Developer experience.

    Interviewees noted that adopting tools that enable better collaboration and automation prove beneficial to developers from an experience standpoint. In addition, by bringing in tools that are commonly used and understood among developers (such as Visual Studio and GitHub from Microsoft), new hires spend less time onboarding and require less subsequent training. Non developers may also be able to contribute, given the intuitive nature of Microsoft’s solutions. According to one interviewee: “We think it’s going to be easier for an individual who’s looking to become a developer given these [developer] solutions from Microsoft. They’ll be able to ramp up quickly and learn these tools, especially given the level of integration with other Microsoft products.”

  • Integration with other Microsoft products.

    Interviewees noted that integration with other Microsoft products allows for a seamless experience across many types of applications.

  • Improved security.

    Qualitatively, the interviewees described improvements to their organizations’ security posture resulting from security-minded functionality in Microsoft developer tools and cloud services. The software company’s senior engineering manager noted a marked improvement to the security of code via functionality in Visual Studio (Dotfuscator): “Visual Studio in particular makes it really easy to identify and prevent security issues. There are a whole slew of tools that are inside Visual Studio or complementary to Visual Studio that make it very easy for us to secure our code and databases.”

Flexibility

The value of flexibility is unique to each customer. There are multiple scenarios in which a customer might implement Microsoft developer tools and cloud services and later realize additional uses and business opportunities, including:

  • The iterative value of continuous development.

    As a result of better applications being delivered faster and more frequently, organizations may stand to gain the long-term benefit of improved time-to-market or iterative releases.

  • Integration with existing toolchains.

    Interviewees noted that the flexibility of Microsoft’s developer tools and services enabled them to use them across their application estate — from long-running applications that only needed patching and maintenance, to greenfield cloud-native applications that update daily. The developer tools and services are interoperable with the interviewees’ existing investments in IDEs, DevOps tooling, and infrastructure, as well as their existing choices in operating system, programming language, and tech stack.

  • The flexibility of the cloud.

    Microsoft’s developer cloud services allow organizations to benefit from the scalability of the cloud, adjusting to current demand and eliminating the need to over provision. One interviewee noted such flexibility as an asset during the 2020 COVID-19 pandemic: “In a lot of ways, [this flexibility] has been what has saved us this year because we’re on the cloud. We can expand and scale up or down when needed. [Combine that] with Microsoft’s help in establishing a DevOps pipeline and deployment processes, [and] we’re just much nimbler.”

Flexibility would also be quantified when evaluated as part of a specific project (described in more detail in Appendix A).

NEXT SECTION: Analysis Of Costs

Total Costs

Ref. Cost Initial Year 1 Year 2 Year 3 Total Present Value
Ftr Subscription fees for Microsoft developer tools and cloud services solutions $0 $969,570 $969,570 $969,570 $2,908,710 $2,411,177
Gtr Internal implementation and ongoing management personnel costs $227,700 $253,000 $253,000 $253,000 $986,700 $856,874
Total costs (risk-adjusted) $227,700 $1,222,570 $1,222,570 $1,222,570 $3,895,410 $3,268,051

Subscription Fees For Microsoft Developer Tools and Cloud Services Solutions

  • Evidence and data.

    Interviewees pay a license fee for Microsoft’s developer tools and cloud services. Firms pay the subscription fee on a bundled offering that includes all tools and cloud services, charged per developer, per month (with most organizations securing a three-year contract). Microsoft has reviewed these assumptions and provided the appropriate pricing for this composite analysis. For pricing or configuration options specific to your organization and use case(s), please contact Microsoft.

  • Modeling and assumptions.

    For the composite organization, Forrester assumes:

    • The organization contracts for Visual Studio + GitHub Enterprise Subscriptions for 1,000 developers in Year 1. A Visual Studio + GitHub Enterprise subscription includes Azure DevOps as well as monthly Azure credits for development and test.
    • The level of investment in Microsoft developer solutions varies by developer, as a portion of subscriptions are Visual Studio Enterprise + GitHub Enterprise, while others are Visual Studio Professional + GitHub Enterprise.
  • Risks.

    This cost will vary among organizations based on:

    • The specific solutions and options for each contracted Microsoft developer solution.
    • The number of developers within the organization.
  • Results.

    To account for these risks, Forrester adjusted this cost upward by 5%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $2.4 million.

chart

Subscription Fees For Microsoft Developer Tools and Cloud Services Solution

Ref. Metric Calculation Initial Year 1 Year 2 Year 3
F1 Total number of developers with Visual Studio Professional + GitHub Enterprise Composite 600 600 600
F2 Total number of developers with Visual Studio Enterprise + GitHub Enterprise Composite 400 400 400
F3 Cost for Visual Studio Professional + GitHub Enterprise (annual) F1*$395/developer/year $237,000 $237,000 $237,000
F4 Cost for Visual Studio Enterprise + GitHub Enterprise (annual) F2*$1,716/developer/year $686,400 $686,400 $686,400
Ft Total subscription fees for Microsoft developer tools and cloud services F3+F4 $0 $923,400 $923,400 $923,400
Risk adjustment ↑5%
Ftr Subscription fees for Microsoft developer tools and cloud services (risk-adjusted) $0 $969,570 $969,570 $969,570
Three-year total: $2,908,710 Three-year present value: $2,411,177

Internal Implementation And Ongoing Management Personnel Costs

  • Evidence and data.

    Interviewees collectively described an implementation process of variable length most directly related to the available personnel capacity and hosting considerations within their organizations. Most of the organizations fully completed implementation in four to 12 months. Some organizations contracted with Microsoft partners for professional services to speed implementation and shorten the learning curve for their personnel.

  • Modeling and assumptions.

    For the composite organization, Forrester assumes that:

    • Six FTEs spend 40% of their working time on Microsoft developer tools and cloud services adoption over a nine-month implementation period.
    • Once deployed, two FTEs maintain the tools to ensure maximum effectiveness with developers.
  • Risks.

    This cost will vary among organizations based on:

    • The specific tools and services used within each organization.
    • The skill and capacity of the personnel who implement and maintain Microsoft developer tools and cloud services.
  • Results.

    To account for these risks, Forrester adjusted this cost upward by 10%, yielding a three-year, risk-adjusted total PV of just over $850,000.

chart

Internal Implementation And Ongoing Management Personnel Costs

Ref. Metric Calculation Initial Year 1 Year 2 Year 3
G1 FTEs involved with Microsoft developer solution implementations Composite 6
G2 Implementation duration(months) Composite 9
G3 Implementation FTE percentage of time spent on task Interviews 40%
G4 FTEs managing Microsoft developer tools and cloud services Interviews 2 2 2
G5 Average annual salary Composite $115,000 $115,000 $115,000 $115,000
Gt1 Internal implementation costs G1*(G2/12 $207,000 months)*G3*G5 $207,000
Gt2 Ongoing management personnel costs G4*G5 $230,000 $230,000 $230,000
Risk adjustment ↑10%
Gtr Internal implementation and ongoing Gtr management personnel costs (risk-adjusted) $227,700 $253,000 $253,000 $253,000
Three-year total: $986,700 Three-year present value: $856,874
NEXT SECTION: Financial Summary

CONSOLIDATED THREE-YEAR RISK-ADJUSTED METRICS

  • 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 Chart (Risk-Adjusted)

Cash Flow Table (Risk-Adjusted Estimates)

Initial Year 1 Year 2 Year 3 Total Present Value
Total costs ($227,700) ($1,222,570) ($1,222,570) ($1,222,570) ($3,895,410) ($3,268,051)
Total benefits $0 $5,258,500 $10,030,625 $11,296,500 $26,585,625 $21,557,455
Net benefits ($227,700) $4,035,930 $8,808,055 $10,073,930 $22,690,215 $18,289,404
ROI 560%
Payback period (months) <6

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.

NEXT SECTION: Appendix

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 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.

Total Economic Impact Approach

  • Benefits represent the value delivered to the business by the product. The TEI methodology places 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.

  • Costs consider all expenses necessary to deliver the 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.

  • Flexibility represents the strategic value that can be obtained for some future additional investment building on top of the initial investment already made. Having the ability to capture that benefit has a PV that can be estimated.

  • Risks measure the uncertainty of benefit and cost estimates given: 1) the likelihood that estimates will meet original projections and 2) the likelihood that estimates will be tracked over time. TEI risk factors are based on “triangular distribution.”

  • 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 NPV of cash flows.

  • 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.

  • RETURN ON INVESTMENT (ROI)

    A project’s expected return in percentage terms. ROI is calculated by dividing net benefits (benefits less costs) by costs.

  • DISCOUNT RATE

    The interest rate used in cash flow analysis to take into account the time value of money. Organizations typically use discount rates between 8% and 16%.

  • PAYBACK PERIOD

    The breakeven point for an investment. This is the point in time at which net benefits (benefits minus costs) equal initial investment or cost.

Appendix B: Supplemental Material

Related Forrester Research

“Now Tech: Continuous Delivery And Release Automation, Q2 2020,” Forrester Research, Inc., April 9, 2020

“Digital Transformation Requires Development Transformation,” Forrester Research, Inc., December 29, 2020

Appendix C: Endnotes

1Source: “Now Tech: Continuous Delivery And Release Automation, Q2 2020,” Forrester Research, Inc., April 9, 2020.

2Source: “Digital Transformation Requires Development Transformation,” Forrester Research, Inc., December 29, 2020.

3Total 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 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.

4Source: “Stack Overflow Developer Survey,” Stack Overflow, 2019; Microsoft FY21 Q3 Earnings Call, Microsoft, April 27, 2021; GitHub.com (https://github.com/about).

About Forrester Consulting

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