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TEI Framework And MethodologyFrom the information provided in the interviews, Forrester has constructeda Total Economic Impact (TEI) framework for those organizationsconsidering implementing Microsoft Dynamics 365 Sales.The objective of the framework is to identify the cost, benefit, flexibility, andrisk factors that affect the investment decision. Forrester took a multistepapproach to evaluate the impact that Microsoft Dynamics 365 Sales canhave on an organization:The TEI methodologyhelps companiesdemonstrate, justify,and realize thetangible value of ITinitiatives to bothsenior managementand other keybusinessstakeholders.DUE DILIGENCEInterviewed Microsoft stakeholders and Forrester analysts to gather datarelative to Dynamics 365 Sales.CUSTOMER INTERVIEWSInterviewed eight organizations using Dynamics 365 Sales to obtain datawith respect to costs, benefits, and risks.COMPOSITE ORGANIZATIONDesigned a composite organization based on characteristics of theinterviewed organizations.FINANCIAL MODEL FRAMEWORKConstructed a financial model representative of the interviews using theTEI methodology and risk-adjusted the financial model based on issuesand concerns of the interviewed organizations.CASE STUDYEmployed four fundamental elements of TEI in modeling MicrosoftDynamics 365 Sales’ impact: benefits, costs, flexibility, and risks. Giventhe increasing sophistication that enterprises have regarding ROIanalyses related to IT investments, Forrester’s TEI methodology serves toprovide a complete picture of the total economic impact of purchasedecisions. Please see Appendix A for additional information on the TEImethodology.DISCLOSURESReaders 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 otherorganizations will receive. Forrester strongly advises that readers use their ownestimates within the framework provided in the report to determine theappropriateness of an investment in Microsoft Dynamics 365 Sales.Microsoft reviewed and provided feedback to Forrester, but Forrester maintainseditorial control over the study and its findings and does not accept changes tothe study that contradict Forrester’s findings or obscure the meaning of thestudy.Microsoft provided six of the eight customer names for the interviews but didnot participate in the interviews. Forrester sourced the other two of the eightcustomer interviews via an independent panel not affiliated with Microsoft.3 The Total Economic Impact Of Microsoft Dynamics 365 Sales

The Dynamics 365 Sales Customer JourneyBEFORE AND AFTER THE DYNAMICS 365 SALES INVESTMENTInterviewed OrganizationsForrester interviewed eight Microsoft Dynamics 365 Sales customers forthis study, including the following:INDUSTRYREGIONSIZEINTERVIEWEEFinancial servicesGlobal1,500 employees700 usersDirector of sales operationsProfessional servicesNorth America20,000 employees3,400 usersGlobal marketing programs managerReal estateNorth America2,500 employees1,200 usersChief information officerRetailGlobal100,000 employees1,000 usersCRM managerManufacturingEurope15,000 employees1,000 usersHead of market to order applicationsManufacturingAustralia10,000 employees750 usersExecutive vice president of information technologyReal estateNorth America15,000 employees500 usersCRM managerEducational servicesNorth America2,000 employees500 usersDirector of information technologyOrganizations struggled with legacy CRM systems that could not meettheir current business needs for user experience, capabilities, datacollection, security, privacy, and scalability in the following ways:› Homegrown solutions were behind the times and expensive tomaintain. Development and IT teams could not keep up with technicaldebt, let alone update their homegrown CRMs to meet modernbusiness needs. Costs rose while users suffered, and business leadersknew they needed to make changes or face major business risks.› Vendor solutions lacked desired capabilities and incurredexcessive licensing costs. Organizations faced functionalitychallenges such as lacking integrations and poor user experience withlegacy vendor CRMs, and some struggled with overly expensivesolutions. These companies needed to make changes to improve userexperiences and data management, while also getting costs in control.These companies therefore searched for a solution that could:› Provide a more intuitive user experience with additional capabilities.› Eliminate excessive labor from developers, IT administrators, andbusiness analysts to manage, maintain, and update the CRM.› Enable capturing of higher data volume and quality.› Integrate with key business software such as email, calendars, filemanagement, internal communications, and reporting.› Provide flexibility to add further capabilities and integrations, andscalability to adapt to the changing size and needs of the business.4 The Total Economic Impact Of Microsoft Dynamics 365 Sales“When we chose Microsoft, wesummarized our needs as‘M.I.C.E.’ — the solution hadto be mobile responsive,integrable, configurable, andoffer powerful enhancements.”Chief information officer,real estate“One reason we went toDynamics 365 was that we aremoving towards becoming aMicrosoft shop. All of ourapplications are Microsoftapplications, and having ourOffice suite — like email —connected to Dynamics worksbetter for our sales objectives.”CRM manager,real estate

› Ensure strong security and meet stringent privacy requirements forregulations such as CCPA and GDPR.Interviewees found that Dynamics 365 Sales met these requirementswith competitive pricing. For companies heavily invested in Microsoftsolutions such as Office 365, the Power Platform, and Azure, Dynamics365 was a clear choice for ease of deployment and integration.Composite OrganizationMethodology. To model the TEI of Microsoft Dynamics 365 Sales,Forrester aggregated findings from the eight customer interviews todesign a composite organization and an associated ROI analysis.› The composite organization is representative of the eight interviewedcustomers and is used to present the aggregate financial analysis.› Costs, benefits, risks, and flexibility are modeled based on the typical,average experiences of the interviewed customers.“Our former CRM washomegrown, self-supported,very old, and just didn’t meetthe needs of today. Wecouldn’t integrate it. We'rebecoming a Microsoft shop,and after looking at otheravenues, we felt thatDynamics 365 was the bestcourse for us. This was anatural journey, and Microsoftmade it very attractive andoffered a lot of help.”Director of information technology,educational services› Subscription pricing and related costs are based on publicly available,undiscounted list pricing for Dynamics 365 from Microsoft and arecorroborated by the interviewed customers.› The role and cost of third-party professional services in deployingDynamics 365 are further informed by a recent Forrester TotalEconomic Impact analysis, titled “The Partner Business OpportunityFor Microsoft Business Applications.”1› Salary assumptions are based on PayScale data at time of publishing.2Description of the composite organization. The compositeorganization is a global enterprise based in North America that:› Employs 900 fulltime sellers along with 100 sales managers.› Sources 180,000 sales opportunities per year across this saleschannel, for an average of 200 worked opportunities per seller.› Wins 40,000 deals per year across this channel (25% average dealclose rate), with an average of 50 deals won per seller.› Earns an average of 10,000 in revenue per closed deal, driving 500,000 in annual revenue per seller and 450 million across theentire sales channel of 900 sellers.Composite organization Dynamics 365 replacesa homegrown CRM 900 sellers and 100sales managers 450 million in revenuefrom the sales channel 8.9% operating profitmargin for deals› Earns profits after costs of goods sold (COGS) and overhead at anindustry-agnostic standard operating profit margin of 8.9%.3Deployment characteristics. The composite organization replaces ahomegrown, on-premises CRM with Microsoft Dynamics 365 Sales asdeployed in the cloud. The composite organization:› Leverages a third-party system integrator (SI) to analyze its internalprocesses, design and customize the Dynamics 365 implementation,and lead the implementation and rollout.› Deploys Dynamics 365 over the course of one year, including: threemonths of design, six months of implementation, and three months oftesting and rollout.› Continues customization, training, change management, and rolloutover the first year of usage to achieve full adoption. Benefits are onlypartially realized in the first year as the composite organization worksthrough the typical challenges of a major CRM replacement.5 The Total Economic Impact Of Microsoft Dynamics 365 SalesSeller metrics 200 opportunities perseller, per year 50 closed deals perseller, per year 10,000 average dealsize in revenue

Analysis Of BenefitsQUANTIFIED BENEFIT DATA FOR THE COMPOSITE ORGANIZATIONTotal BenefitsYEAR 1YEAR 2YEAR 3TOTALPRESENTVALUEImproved seller productivity 567,000 1,134,000 1,344,600 3,045,600 2,462,863BtrIncreased sales 600,750 1,201,500 1,802,250 3,604,500 2,893,169CtrFaster seller onboarding 171,000 342,000 342,000 855,000 695,049DtrImproved sales manager productivity 167,040 331,470 331,470 829,980 674,835EtrAvoided CRM administration costs 747,150 1,494,300 1,494,300 3,735,750 3,036,876FtrAvoided CRM infrastructure costs 629,978 216,878 216,878 1,063,733 914,888 2,882,918 4,720,148 5,531,498 13,134,563 10,677,680REF.BENEFITAtrTotal benefits (risk-adjusted)Benefits (Three-Year) 3.0M 2.9M 2.5M 915K 695KIncreased salesImproved sellerproductivityFaster selleronboardingBenefits to CRM users 675KImproved salesAvoided CRMAvoided CRMmanager productivity administration costs infrastructure costsAvoided CRM costsThe table above shows the total of all benefits across the areas listed below, as well as present values (PVs) discounted at10%. Over three years, the composite organization expects risk-adjusted total benefits to be a PV of almost 10.7 million.6 The Total Economic Impact Of Microsoft Dynamics 365 Sales

Seller ProductivityDynamics 365 significantly improved productivity for sellers acrossseveral categories. Integrations with Outlook emails and calendars,Microsoft Teams communications, SharePoint files, and Power BIreporting all helped sellers communicate more efficiently, schedule moreeffectively, and log more accurate data with less time. Mobile accessallowed them to capture and review data while on the go significantlyeasier. As historical data and files accumulated, sellers further enjoyedincreased reusability of previous proposals and meeting content. Further,automated reminders and dashboards helped sellers be better stewardsof customer relationships and prioritize their workloads more effectively.Finally, sellers enjoyed the Dynamics 365 user interface on PC and onmobile finding it to be intuitive, clear, and familiar to their knowledge ofother Microsoft products. Specific examples include:› The retailer ran an internal business case across a variety ofimprovements in its sellers’ productivity, finding a multimillion-dollar netbenefit from productivity alone that allowed it to handle the same salesvolume with a several-percent decrease in workforce size.› “Working faster is a huge benefit of the cloud,” described the head ofmarket to order applications at the manufacturing company. Hecontinued: “We’ve become more global in all ways, and we needcentral hubs with the power of seamless communication flow aboutopportunities together with using Outlook, storing customerinformation, and reusing content in a central place instead of with eachdepartment. They all had lots of information before, but they kept itwithin their own silos.”› The real estate CRM manager explained how mobile streamlined fieldsales: “If [our sellers] are out and drop by a potential client, with themobile app, they can do a quick search to see, ‘Do we know anybodyat this company?’” Integrations also led to significant savings, as theycontinued: “Now, [sellers] can get CRM data without ever leavingOutlook. Vice versa, they can see all the email interactions in CRMcards instead of tracking them down. It’s all there and visible becauseof the connectivity with [Office 365].”› The educational services director of information technology confirmed,“There is no way Dynamics 365 did not make [sellers] more efficient.”Forrester modeled the financial benefit for the composite organizationbased on the following estimates:23% 2.5 millionthree-yearbenefit PVSeller productivity:23% of total benefitsUp to 83 hourssaved per seller,per year by Year 3“Dynamics has enabled us toadopt the mindset of sharingexperiences and reusinginformation. We don't need toreinvent the wheel for everynew engagement.”Head of market to orderapplications, manufacturing› Sellers spend half their time actively communicating and schedulingwith prospects. Dynamics 365 increases communications andscheduling productivity by 3%, saving 31 hours per seller, per year.› Sellers spend 15% of their time preparing for meetings and creatingproposals. As more resources are linked and documented in Dynamics365, reusability increases by 2% in Year 1, 4% in Year 2, and 8% inYear 3 — saving 25 hours per seller, per year by Year 3.› Sellers spend 10% of their time working while mobile after hours orwhile traveling. Dynamics 365 increases mobile productivity by 8%,saving 17 hours per seller, per year.› Sellers spend 5% of their time entering and validating data in the CRM.Dynamics 365 increases data entry and validation productivity by 10%,saving 10 hours per seller, per year.7 The Total Economic Impact Of Microsoft Dynamics 365 Sales“We're trying to make our salesteam as tech-enabled aspossible. We are leveraging[Dynamics 365] to reduce thenumber of decisions sellershave to make and the numberof tasks they have to do.”Director of sales operations,financial services

› The composite organization employs 900 sellers, earning an averagefully burdened salary of 40 per hour.› Feature adoption and driving seller usage may require longer than thethree-month rollout period; to ensure conservatism, only 50% of timesavings are realized in the first year of the analysis.› Some time savings may be wasted rather than reinvested in thebusiness; to ensure conservatism, only 50% of hours saved arerecaptured by the business for added value.Forrester uncovered moderate risks that may impact the financial impactof this benefit. Many factors impact seller productivity such as industry,selling motions, and the redesign of workloads or functionality with thenew CRM. Further, it is difficult to quantify the discrete changes toworkforce behavior as it may vary widely by employee.To account for these risks, Forrester adjusted this benefit downward by10%, yielding a three-year risk-adjusted cumulative total of 3,384,000and a PV of 2,462,863 for the composite organization. This equates toa three-year PV of 2,737 per seller, with yearly savings by Year 3 (oncebenefits are fully realized) of 1,494 per seller.“There is no way Dynamics 365did not make [sellers] moreefficient.”Director of information technology,educational servicesImpact risk is the risk that thebusiness or technology needs of theorganization may not be met by theinvestment, resulting in lower overalltotal benefits. The greater theuncertainty, the wider the potentialrange of outcomes for benefitestimates.Seller Productivity: Calculation TableREF.METRICCALCULATIONYEAR 1YEAR 2YEAR 3A1Annual hours spent on comms and scheduling50% of workload1,0401,0401,040A2Comms and scheduling productivity increaseInterview data1.5%3%3%A3Hours saved for communications and scheduling perseller, per yearA1*A2163131A4Annual hours to prepare meetings and proposals15% of workload312312312A5Percent increase in re-usabilityInterview data2%4%8%A6Hours saved for meeting preparation and proposalsper seller, per yearA4*A561225A7Annual hours spent working while mobile10% of workload208208208A8Mobile productivity increaseInterview data4%8%8%A9Hours saved while mobile per seller, per yearA7*A881717A10Annual hours spent on data entry and validation5% of workload104104104A11Data entry productivity increaseInterview data5%10%10%A12Hours saved for data entry and validation per seller,per yearA10*A1151010A13Total hours saved per seller, per yearA3 A6 A9 A12357083A14Number of sellersJ1900900900A15Total hours saved by sales forceA13*A1431,50063,00074,700A16Seller hourly salaryJ3 40 40 40A17Percent of time saved recaptured for business valueTEI assumption50%50%50%AtSeller productivityA15*A16*A17 630,000 1,260,000 1,494,000Risk adjustment 10% 567,000 1,134,000 1,344,600AtrSeller productivity (risk-adjusted)8 The Total Economic Impact Of Microsoft Dynamics 365 Sales

Increased SalesDynamics 365 made sellers at the interviewed companies moreproductive, more efficient, and more effective:› Sellers gained productivity as integrations, mobile access procedures,and workload automation reduced the burden of manual tasks such asdata entry and validation.› Sellers became more efficient with more accurate historical data,content reusability, mobile access, software integrations, andreminders that helped to prioritize and complete tasks more quickly.› Sellers became more effective as Dynamics 365 helped them identifykey contacts, follow up more consistently, provide more personalizedservice, leverage data to refine pitches and approaches, becomebetter stewards of their customer and prospect relationships, andprovide smoother handoffs between sellers when needed. 2.9 millionthree-yearbenefit PV27%Increased sales:27% of total benefitsSellers ultimately can drive greater sales as a result of these Dynamics365-driven productivity, efficiency, and effectiveness improvements by:› Sourcing and working more opportunities.› Increasing close rates by strengthening relationships with prospectsand customers, following up more consistently, providing morepersonalized service, and offering better data-backed proposals.› Improving deal sizes, retention, and enrichment through strongercustomer relationships, more consistent follow-up, personalizedservice, and better data-backed decision making.› Reduce the risk of churn or lost opportunities that arise from errors,forgetfulness, or poorly managed tradeoffs to new sellers.Demonstrating the impact of any CRM on topline revenue is nearimpossible, given the vast range of market wide, company, product,marketing, and sales factors that influence overall sales. This challengewas true for the interviewed companies, as none could clearly correlatetheir CRM deployment with overall business revenue.However, by examining sales effectiveness on a per-seller basis canprovide a route for businesses to quantify the impact of a new CRM onsales. For most interviewed organizations, Dynamics 365 allowed sellersto work more opportunities and increase deal close rates, boosting salesper seller. Interviewed customers provided the following examples:› Dynamics 365 helped the retailer’s salespeople dedicate more time toopportunities, prioritize work, better serve customers, and smoothlyhand off accounts when needed for vacations or employee turnoverwithout disrupting customer experience. The CRM manager said:“Dynamics 365 is helping our [sellers] become more mature in theirroles, building books of business, showing account ownership,identifying points of value, and leaning in deep to drive business.” As aresult, they increased the number of transactions per seller. The CRMmanager added: “Dynamics 365 helps sellers prioritize accounts tocontact, understand who is in the book of business, identify keycontacts, and follow through. Having the information at their fingertipsto make the right decision, get it to the right person, and serve the rightneed leverages automation and productivity to sell solutions.” Theinvestment coincided with double digit topline revenue growth;however, the interviewee emphasized many factors beyond the CRMhave influenced the total topline growth.9 The Total Economic Impact Of Microsoft Dynamics 365 SalesMicrosoft Dynamics 365helps sellers: Work 2% moreopportunities Increase deal closerates by 3% Sell 6% more dealsper year worth 2Kin additional profit“Dynamics 365 is helping our[sellers] become more maturein their role, building books ofbusiness, showing accountownership, identifying points ofvalue, and leaning in deep todrive business.”CRM manager,retail

› The educational services company made its

CRM is not just something you can buy and turn on. Careful process design and commitment from IT, leadership, and sellers is paramount. The retail company's CRM manager explained: "Sales success requires more than any tool. You have to fuel the engine, light the fire, and map out a clear outcome to drive to.