Okta Economic Impact 3.6

A
Forrester Total Economic Impact Study Prepared For Okta
The Total Economic Impact Of Okta On-Demand

Identity And Access Management Service
Project Director: Norman Forbush
October 2012

Forrester Consulting
The Total Economic Impact Of Okta On-Demand Identity And Access Management Service
TABLE OF CONTENTS
Executive Summary ................................................................................................................................................................................................. 2
Disclosures ............................................................................................................................................................................................................. 3
TEI Framework And Methodology ................................................................................................................................................................... 4
Analysis .......................................................................................................................................................................................................................... 6
Interview Highlights .......................................................................................................................................................................................... 6
Costs .......................................................................................................................................................................................................................... 8
Benefits .................................................................................................................................................................................................................... 9
Flexibility ............................................................................................................................................................................................................. 14
Risk ......................................................................................................................................................................................................................... 14
Financial Summary ............................................................................................................................................................................................... 16
Total Cost Of Ownership Of Okta Compared With In-House Development .............................................................................. 17
Okta On-Demand Identity And Access Management: Overview ..................................................................................................... 19
Appendix A: Total Economic Impact Overview ................................................................................................................................... 20
Appendix B: Glossary ........................................................................................................................................................................................... 21
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About Forrester Consulting

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Executive Summary
Okta commissioned Forrester Consulting to examine the total economic impact and potential return on
investment (ROI) enterprises may realize by deploying Okta On-Demand Identity and Access Management
service. The purpose of this study is to provide readers with a framework to evaluate the potential financial
impact of Okta on their organization. For this study, Forrester conducted an interview with one existing Okta
customer. The analysis showed that Okta benefited the organizations IT staff with productivity savings from
automated provisioning and deprovisioning and with reduction of service desk requests due to password resets
and forgotten URLs. Users saw increased productivity because of improved access to applications from any
device in any location. The analysis found that the interviewed organization of 1,100 employees experienced the
risk-adjusted ROI, costs, and benefits shown in Table 1.
Table 1
Three-Year Risk-Adjusted Analysis
Payback Total benefits Total costs Net present

ROI
period (PV) (PV) value
652% 2 months $1,333,499 ($177,263) $1,156,236
Source: Forrester Research, Inc.
Benefits. The interviewed organization experienced the following benefits:
o Reduced IT time spent on provisioning/deprovisioning. The interviewed organization uses

automated provisioning and deprovisioning to reduce those requests by 75%, with an estimated
savings of $23,323 per year.
o Improved IT admin and user productivity by automating password resets and

forgotten URLs. The interviewed organization estimates it reduces service desk requests for
password resets and forgotten URLs by 80%, with an estimated savings of $164,472 per year in
improved service desk productivity and a corresponding estimated savings of $188,602 per year in
improved user productivity.
o Improved user productivity working more due to any device, anywhere. The
interviewed organization estimates that Okta enables single sign-on to critical enterprise applications,
either remotely, while mobile, or on-premises, for important staff, with an estimated productivity
improvement of 25 minutes per week, with an estimated savings of $446,188 per year.
Costs. The composite organization experienced the following costs:
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o Software-as-a-service (SaaS) fees. The interviewed organization reported Okta monthly fees of
$4,950, or $66,000 a year, for 1,100 users.
Figure 1
Financial Summary Three-Year Risk-Adjusted ROI
Financial analysis (three-year)

$800,000
$700,000
$600,000
$500,000
Cash flows
$400,000
$300,000
$200,000
$100,000
$0
($100,000) Initial Year 1 Year 2 Year 3
($200,000)
Total Costs Total Benefits

Disclosures
The reader should be aware of the following:
The study is commissioned by Okta and delivered by the Forrester Consulting group.
Forrester makes no assumptions as to the potential return on investment 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 Okta.
Okta 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 Forresters findings or
obscure the meaning of the study.
This study is based on an interview with one company. The customer for the interview was provided by
Okta.
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TEI Framework And Methodology
Introduction
From the information provided in the interviews, Forrester has constructed a Total Economic Impact
framework for those organizations considering implementing Okta services. The objective of the framework is
to identify the cost, benefit, flexibility, and risk factors that affect the investment decision.
Approach And Methodology

Forrester took a multistep approach to evaluate the impact that Okta Access Switches can have on an
organization (see Figure 2). Specifically, Forrester:
Interviewed Okta marketing and sales personnel and Forrester analysts to gather data relative to Okta and
the marketplace for cloud-based identity and access management.
Interviewed one organization currently using Okta services to obtain data with respect to costs, benefits,
and risks.
Constructed a financial model representative of the interview using the TEI methodology. The financial
model is populated with the cost and benefit data obtained from the interview.
Figure 2
TEI Approach
Conduct Construct financial

Perform due Write case
customer model using TEI
diligence study
interviews framework

Forrester employed four fundamental elements of TEI in modeling Okta On-Demand Identity and Access
Management service:
1. Costs.
2. Benefits to the entire organization.
3. Flexibility.
4. Risk.
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Given the increasing sophistication that enterprises have regarding ROI analyses related to IT investments,
Forresters TEI methodology serves the purpose of providing a complete picture of the total economic impact of
purchase decisions. Please see Appendix A for additional information on the TEI methodology.
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Analysis
Interview Highlights
The customer interviewed for this study is a global technology solutions company. The interview with the IT
director at the company uncovered the following points (all quotes are from that interviewee):
Okta is integral to the companys cloud-first strategy. The interviewed company indicated
that the adoption of Okta was related to a convergence of a number of strategic and tactical cloud-related
initiatives within the company. To conform to a cloud first, 100% web IT strategy, there was a desire to
adopt packaged cloud applications (sales force automation, productivity suites, expense management, and
reporting) and custom line-of-business applications. This convergence exposed the need for a solution
that Okta provided, which included single sign-on (SSO), multi-factor authentication, active directory
integration, just-in-time provisioning, and administration and reporting:
The aggressive adoption of cloud applications really exposed the need for Okta. We had tactical
reasons that pushed us in the direction of Okta, like adopting different cloud solutions, but we also
needed something more enterprise grade and reliable. And all this made Okta a good fit for us.
Okta replaced the companys complex and expensive in-house SSO integrations. Prior to
Okta, the interviewed company was using internal resources to build SSO web services to access
applications:
The problem was that it was time consuming, and every time we had to build an integration, we had to
support that integration. Continuation of in-house development to support a web-based strategy would
have been too complex and expensive.Complexity was increasing with support of critical web-based sales
force automation applications, which required failover functionality that the in-house integration couldnt
deliver on reliability, and which decreased user productivity when applications were not accessible. The
company also estimated that it cost about $25,000 per in-house integration, plus ongoing maintenance
costs, and with the growing number of web-based applications that it projected to support, those overall
costs were escalating quickly.
Okta provides users with easy access to applications, self-provisioning, and simplified
password maintenance. Users find clear benefits in having access to all applications in one place with
one (domain) log-in. One stop shopping is perceived as a big benefit. Plus employee self-provisioning of
applications is very well received by users. Users have deployed 787 instances of applications, including a
cloud-based project management application whose use has spread virally via invites and self-
provisioning and led to the company purchasing enterprise licensing for it. Other common self-
provisioned bookmarked sites are for hotel, car, and airline programs in support of employee travel. It
gives IT insights into what salespeople are doing. Further, the ability to put in a password one time to
access to multiple (dozens) applications is a seen as a big advantage.
Okta benefits IT administrators in managing application access and the provisioning and
deprovisioning process. With Okta, IT administrators use dashboards to see if active directories are
healthy, how many people have access to applications, how many applications have been provisioned in
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Okta, who the top users are based on usage, and what are the top applications based on usage; they also
receive alerts on repeated unsuccessful log-ins. Having all these web apps managed in a central way is
tremendously beneficial. Further, Okta provides automatic deprovisioning of enterprise applications
when users are deprovisioned in Active Directory and provides workflow (to the help desk) to support
deprovisioning of applications for unsupported applications. The interviewee cited provisioning of users
as another huge benefit, as Okta-supported applications are also simplified. When we roll out a new
application, its very easy for us to provision it to users in Okta. When the company rolled out an
application to its sales organization, it was literally a work of an instant because everyone was already
accustomed to logging into Okta, so the next time they log in, the application icon is available to them, and
there is nothing for them to do. There is no user name or password for them to learn, theres no link they
have to learn. That is incredibly time-saving and efficient it just makes it very easy to roll out a new
application.
Broad user adoption of Okta was driven by web-based collaboration and productivity
applications. Once we made the decision to go with Okta, the core set of enterprise packaged
applications were logical, obvious fits for Okta, said our interviewee. Yet, the real driver of heavy
adoption was the roll-out of enterprisewide cloud content sharing and collaboration tools and web-based
user productivity applications. Everyone in the company accesses these apps via Okta and they are our
primary communication and collaboration system. Some of these applications didnt start as
enterprisewide use, but the adoption of Okta made them easily deployed on an enterprisewide basis.
Framework Assumptions
Table 2 provides the model assumptions that Forrester used in this analysis.
Table 2
Model Assumptions
Ref. Metric Value
Discount rate used in present value (PV) and net present value
A1 10%
(NPV)
A2 Length of analysis 3 years
IT administrator hourly rate at $90,000 base salary or $121,500

A3 $58.41
fully loaded salary/2,080 hours per year
Service desk hourly rate at $48,000 base salary or $64,800 fully

A4 $31.15
loaded salary/2,080 hours per year
General business staff hourly rate at $55,000 base salary or

A5 $35.72
$74,300 fully loaded salary/2,080 hours per year
A6 Knowledge worker hourly rate at $100,000 base salary or $64.90
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$135,000 fully loaded salary/2,080 hours per year
Organizations typically use discount rates between 8% and 16% based on their current environment. Readers
are urged to consult with their respective companys finance department to determine the most appropriate
discount rate to use within their own organizations.
Costs
This section describes the overall costs for Okta services.
Okta SaaS Fees

Okta is a SaaS offering that is paid for on a monthly basis. Oktas pricing is based on the number of users. The
interviewed organization indicated fees of approximately $4,950 per month, which is $5 per 1,100 users per
month. On an annual basis, this is $60 per user per year, or $66,000 per year, as shown in Table 3.
Table 3
Okta SaaS Annual Fees
Ref. Metric Calculation Initial Year 1 Year 2 Year 3
B1 Number of users 1,100
B2 Annual fee per user $5*12 $60
Bt Okta SaaS annual fees B1*B2 ($66,000) ($66,000) ($66,000)
Okta provides professional services to assist customers to initially configure their applications, but the
interviewed company did not require these services. Further, the interviewed company indicated that initial and
ongoing configuration and deployment of applications in the Okta service took so little time as to not warrant
inclusion of that time in their capex or opex costs.
Total Incremental Costs

The total incremental cost for the composite organization to purchase Okta devices is illustrated in Table 4.
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Table 4
Total Costs (Non-Risk-Adjusted)
Ref. Cost Initial Year 1 Year 2 Year 3 Total PV
($198,000
Bt Okta SaaS annual fees ($66,000) ($66,000) ($66,000) ($164,132)
)
($198,000
TCt Total costs ($66,000) ($66,000) ($66,000) ($164,132)
)
Benefits
The next component of this analysis examines the potential benefits associated with the interviewed
organization investing in Okta cloud services. The interviewed customer identified several benefit areas where
they were able to realize tangible value as a result of their investment in Okta. These include:
Reduced IT time spent on provisioning/deprovisioning.
Improved productivity (service desk) password resets and forgotten URLs.
Improved productivity (users) password resets and forgotten URLs.
Improved user productivity working more due to any device, anywhere.
Reduced IT Time Spent On Provisioning/Deprovisioning

Okta frees up IT administrator time from servicing provisioning/deprovisioning requests and allows service
desk staff to complete the task more efficiently. The interviewed organization estimates that, prior to Okta, it
processed more than 1,300 provisioning/deprovisioning requests per year, or about 10% of the number of
users (1,100) and average applications per user (12). With just-in-time provisioning and automated
deprovisioning, the company estimates that 75% of the requests are eliminated and that 60% of the remaining
requests are now handled by the service desk, a less costly resource.
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Table 5
Reduced IT Time Spent On Provisioning/Deprovisioning
C1 Number of users 1,100
Average number of business-oriented

C2 12
applications per user
Percentage of provisioning/deprovisioning
C3 10%
per application per year
Number of provisioning/deprovisioning
C4 C1*C2*C3 1,320
requests per year
IT admin time spent on

C5 provisioning/deprovisioning (minutes per 15
request)
Total IT admin time spent on

C6 C4*(C5/60) 330
provisioning/deprovisioning (hours/year)
C7 IT administrator hourly rate A3 $58.41
IT cost on provisioning/deprovisioning, per

C8 year, prior to Okta and using IT C6*C7 $19,275
administrators
Percentage of provisioning/deprovisioning
C9 requests eliminated due to just-in-time 75%
provisioning and automated deprovisioning
Savings from elimination of

C10 C8*C9 $14,456
provisioning/deprovisioning requests
Percentage of post-Okta
C11 provisioning/deprovisioning requests now 60%
handled by help desk
C12 Service desk hourly rate A4 $31.15
Savings from moving requests from IT (C6*C9*C11

C13 $4,048
administrator to service desk. )*(C7-C12)
Annual savings from reduced IT admin time

Ct C8+C13 $23,323 $23,323 $23,323
spent provisioning/deprovisioning
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A further (non-quantified) benefit is that provisioning is done faster, allowing users immediate access to
applications instead of often waiting a day or two for the request to be processed.
Improved Productivity (Service Desk) Password Resets And Forgotten URLs

With Okta providing single sign-on to numerous web applications, the interviewed organization estimates that
the number of service desk calls due to password resets and lost or forgotten URLs is reduced by 80%. The
organization reported nearly 12 of these incidents per user, which approximates to about 1 incident per
application per user (average of 12 applications), as shown in Table 6.
Table 6
Improved Productivity For Service Desk From Reduced Password Reset And Lost URL Incidents
D1 Number of users 1,100
Average number of business-oriented

D2 C2 12
applications per user
Password reset/lost URL incidents per user

D3 1
per application per year
D4 Password reset, minutes per incident 15
Number of hours spent on password

D1*D2*D3
D5 reset/forgotten URLs, per year (service 3,300
*(D4/60)
desk)
D6 Service desk hourly rate A4 $31.15
Service desk cost to support password

D7 D5*D6 $102,795
resets and forgotten URLs
Reduction in password resets/forgotten

D8 80%
URLs due to Okta
Savings from improved productivity from

Dt reduced password reset/forgotten URLs D7*D8 $82,236 $82,236 $82,236
incidents
Improved Productivity (Users) Password Resets And Forgotten URLs

There is a corresponding productivity improvement for users in the reduction of service desk calls for password
resets and lost or forgotten URLs as the users do not spend this time making the request to the service desk.
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Table 7
Improved Productivity For Users From Reduced Password Reset/Forgotten URLs Incidents
Number of hours spent on password reset,

E1 D5 3,300
per year (users)
E2 General staff hourly rate A5 $35.72
General staff cost spent on password

E3 E1*E2 $117,876
resets/forgotten URLs
Reduction in password resets/forgotten

E4 D8 80%
URLs due to Okta
Savings from improved productivity from

Et E3*E4 $94,301 $94,301 $94,301
reduced password reset incidents
Improved User Productivity Working More Due To Any Device, Anywhere

Use of Oktas web-based single sign-on allows access to critical enterprise applications from any device,
anywhere remote, mobile, and on-premises. The interviewed company estimates that value is gained from
50% of its users (senior staff/knowledge workers) who gain 25 minutes in access per week. As these types of
productivity gains are often deemed difficult to value, Forrester applies a factor of 50% productivity realized, as
seen in Table 8.
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Table 8
Improved User Productivity From Working More Due To Any Device, Anywhere
F1 Number of users 1,100
Percent of users utilizing any device,

F2 60%
anywhere
Number of users impacted by any

F3 F1*F2 660
device, anywhere
Increased time spent accessing

F4 25
applications (minutes per week)
Increased time spent accessing F3*(F4/60)

F5 13,750
applications (50 weeks per year) *50
F6 Knowledge worker hourly rate A6 $64.90
F7 User productivity equivalent F5*F6 $892,375
F8 Productivity gain realized 50%
Increased user productivity working

Ft F7*F8 $446,188 $446,188 $446,188
more due to any device, anywhere
Total Benefits
Table 9 summarizes the total benefits (non-risk-adjusted) associated with the purchase of Okta devices.
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Table 9
Total Benefits (Non-Risk-Adjusted)
Ref. Benefits Initial Year 1 Year 2 Year 3 Total PV
Reduced IT time spent on

Ct $23,323 $23,323 $23,323 $69,970 $58,002
provisioning/deprovisioning
Improved productivity (service

Dt desk) password resets and $82,236 $82,236 $82,236 $246,708 $204,509
forgotten URLs
Improved productivity (users)

Et password resets and forgotten $94,301 $94,301 $94,301 $282,902 $234,512
URLs
Improved productivity working

Ft more due to any device, $446,188 $446,188 $446,288 $1,338,563 $1,109,602
anywhere
TBt Total benefits $646,048 $646,048 $646,048 $1,938,143 $1,606,625
Flexibility
Flexibility, as defined by TEI, represents an investment in additional capacity or capability that could be turned
into business benefit for some future additional investment. This provides an organization with the right or
the ability to engage in future initiatives, but not the obligation to do so. There are scenarios in which a customer
might choose to implement Okta services and later realize additional benefits. An example would be if the
interviewed organization had significant end user growth and/or increased the number of enterprisewide,
cloud-based applications via Okta, creating additional benefits and an additional cost per user. As the
interviewed company indicated that it was entering a steady-state after three years in which the number of
users and supported applications is stable, no additional flexibility benefits are calculated in this analysis.
Risk
Forrester defines two types of risk associated with this analysis: implementation risk and impact risk.
Implementation risk is the risk that a proposed investment in Okta may deviate from the original or expected
requirements, resulting in higher costs than anticipated. Impact risk refers to the risk that the business or
technology needs of the organization may not be met by the investment in Okta, resulting in lower overall total
benefits. The greater the uncertainty, the wider the potential range of outcomes for cost and benefit estimates.
Quantitatively capturing investment and impact risk by directly adjusting the financial estimates results in more
meaningful and accurate estimates and a more accurate projection of the ROI. In general, risks affect costs by
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raising the original estimates, and they affect benefits by reducing the original estimates. The risk-adjusted
numbers should be taken as realistic expectations since they represent the expected values considering risk.
Table 10 shows the values used to adjust for risk and uncertainty in the cost and benefit estimates. The TEI
model uses a triangular distribution method to calculate risk-adjusted values. To construct the distribution, it is
necessary to first estimate the low, most likely, and high values that could occur within the current environment.
The risk-adjusted value is the mean of the distribution of those points. Forrester has conservatively used low
risk adjustments to increase cost estimates by 8% and decrease benefit estimates by 17%. Readers are urged to
apply their own risk ranges based on their own degree of confidence in the cost and benefit estimates.
Table 10
Cost And Benefit Risk Adjustments
Most
Low High Mean
likely
Costs 100% 100% 125% 108%
Benefits 50% 100% 100% 83%
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Financial Summary
The financial results calculated in the Costs and Benefits sections can be used to determine the return on
investment, net present value, and payback period for the organizations investment in Okta. These are shown in
Table 11 below.
Table 11
Cash Flow Non-Risk-Adjusted
Initial Year 1 Year 2 Year 3 Total Present value
Costs $0 ($66,000) ($66,000) ($66,000) ($198,000) ($164,132)
Benefits $0 $646,048 $646,048 $646,048 $1,938,143 $1,606,625
Net benefits $0 $580,048 $580,048 $580,048 $1,740,143 $1,442,493
ROI 879%
Payback period 2 months
Table 12 below shows the risk-adjusted ROI, NPV, and payback period values. These values are determined by
applying the risk-adjustment values from Table 10 in the Risk section to the cost and benefits numbers in Tables
4 and 9.
Table 12
Cash Flow Risk-Adjusted
Initial Year 1 Year 2 Year 3 Total Present value
Costs $0 ($71,280) ($71,280) ($71,280) ($213,840) ($177,263)
Benefits $0 $536,220 $536,220 $536,220 $1,608,859 $1,333,499
Net benefits $0 $464,940 $464,940 $464,940 $1,394,819 $1,156,236
ROI 652%
Payback period 2 months
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Total Cost Of Ownership Of Okta Compared With In-House Development

The interviewed organization also provided estimates for the cost of in-house development of SSO integration
for applications. That is, having experience in developing integrations for applications before Okta, the
interviewed organization estimates that it cost them $25,000 per integration for the most important
enterprisewide applications and that those would have been done initially as part of the cloud initiative. The
organization further estimates a maintenance cost of 10% of the development costs per year.
Table 13
In-House Application Development Costs, For SSO
G1 Number of applications 8
In-house AD integration for SSO, per

G2 $25,000
application
Cost for in-house AD integration costs for

G3 G1*G2 $200,000
SSO (initial expense)
AD integration cost, maintenance per year

G4 10%
(as percent of initial cost)
G5 Cost for in-house application maintenance G3*G4 $20,000 $20,000 $20,000
Gt In-house AD integration costs for SSO G3+G5 $200,000 $20,000 $20,000 $20,000
Additional costs may have been incurred for multi-factor authentication via a point solution and to develop
application connectors, but the interviewed organization did not research or estimate these expenses, and so
they have not been included in the analysis.
Table 14 and Figure 3 show the comparison of Okta costs (opex) to in-house development (capex and opex)
over a three-year period.
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Table 14
TCO: Okta Compared With In-House Development
Ref. Cost Initial Year 1 Year 2 Year 3 Total PV
TCt Okta SaaS annual fees ($66,000) ($66,000) ($66,000) ($198,000) ($164,132)
($200,000
TCt Total costs ($20,000) ($20,000) ($20,000) ($260,000) ($249,737)
)
Figure 3
TCO: Okta Compared With In-House Development (Three-Year Analysis)
3-year TCO: Okta vs. in-house

($300,000)
($250,000)
($200,000)
OPEX
($150,000)
CAPEX
($100,000)
($50,000)
Okta In-House
$0

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Okta On-Demand Identity And Access Management: Overview

According to Okta, Okta is the market-leading on-demand identity and access management service that enables
enterprises to simply and securely manage access to cloud, mobile, and on-premises web applications across
employees, partners, and customers.
Managed via an intuitive, consumer web UI, Oktas functionality spans directory services, single sign-on, strong
authentication, provisioning, workflow, and analytics. Built on a secure, reliable, SOC2 Type II audited platform
that operates at Internet scale, Okta delivers identity management from the cloud but for a hybrid IT world. Okta
integrates with all of the applications, directories, identity systems, devices, organizations, and people that you
need to integrate with whether those integrations are in the cloud or behind a firewall.
Enterprises are using Okta to increase security, improve user productivity, reduce IT costs, and ensure
compliance.
The Okta team has built, deployed, and supported market-leading, on-demand and enterprise software.
For more information, please visit: http://www.okta.com.
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Appendix A: Total Economic Impact Overview

Total Economic Impact is a methodology developed by Forrester Research that enhances a companys
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.
The TEI methodology consists of four components to evaluate investment value: benefits, costs, risks, and
flexibility.
Benefits
Benefits represent the value delivered to the user organization IT and/or business units by the proposed
product or project. Often product or project justification exercises focus just on IT cost and cost reduction,
leaving little room to analyze the effect of the technology on the entire organization. The TEI methodology and
the resulting financial model place 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. Calculation of benefit estimates
involves a clear dialogue with the user organization to understand the specific value that is created. In addition,
Forrester also requires that there be a clear line of accountability established between the measurement and
justification of benefit estimates after the project has been completed. This ensures that benefit estimates tie
back directly to the bottom line.
Costs
Costs represent the investment necessary to capture the value, or benefits, of the proposed project. IT or the
business units may incur costs in the form of fully burdened labor, subcontractors, or materials. Costs consider
all the investments and expenses necessary to deliver the proposed value. In addition, the cost category within
TEI captures any incremental costs over the existing environment for ongoing costs associated with the
solution. All costs must be tied to the benefits that are created.
Risk
Risk measures the uncertainty of benefit and cost estimates contained within the investment. Uncertainty is
measured in two ways: 1) the likelihood that the cost and benefit estimates will meet the original projections,
and 2) the likelihood that the estimates will be measured and tracked over time. TEI applies a probability
density function known as triangular distribution to the values entered. At minimum, three values are
calculated to estimate the underlying range around each cost and benefit.
Flexibility
Within the TEI methodology, direct benefits represent one part of the investment value. While direct benefits
can typically be the primary way to justify a project, Forrester believes that organizations should be able to
measure the strategic value of an investment. Flexibility represents the value that can be obtained for some
future additional investment building on top of the initial investment already made. For instance, an investment
in an enterprisewide upgrade of an office productivity suite can potentially increase standardization (to
increase efficiency) and reduce licensing costs. However, an embedded collaboration feature may translate to
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greater worker productivity if activated. The collaboration can only be used with additional investment in
training at some future point in time. However, having the ability to capture that benefit has a present value that
can be estimated. The flexibility component of TEI captures that value.
Appendix B: Glossary
Discount rate: The interest rate used in cash flow analysis to take into account the time value of money.
Although the Federal Reserve Bank sets a discount rate, companies often set a discount rate based on their
business and investment environment. Forrester assumes a yearly discount rate of 10% for this analysis.
Readers are urged to consult their respective organization to determine the most appropriate discount rate to
use in their own environment.
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.
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 net present value of cash flows.
Payback period: The breakeven point for an investment. The point in time at which net benefits (benefits
minus costs) equal initial investment or cost.
Return on investment (ROI): A measure of a projects expected return in percentage terms. ROI is
calculated by dividing net benefits (benefits minus costs) by costs.
A Note On Cash Flow Tables

The following is a note on the cash flow tables used in this study (see the example table below). The initial
investment column contains costs incurred at time 0 or at the beginning of Year 1. Those costs are not
discounted. All other cash flows in Years 1 through 3 are discounted using the discount rate (shown in
Framework Assumptions section) at the end of the year. Present value (PV) calculations are calculated for each
total cost and benefit estimate. Net present value (NPV) calculations are not calculated until the summary tables
and are the sum of the initial investment and the discounted cash flows in each year.
Table [Example]
Example Table
Ref. Category Calculation Initial cost Year 1 Year 2 Year 3 Total
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A

Forrester Total Economic Impact Study Prepared For Okta

The Total Economic Impact Of Okta On-Demand

TEI Framework And Methodology ................................................................................................................................................................... 4

Interview Highlights .......................................................................................................................................................................................... 6

Financial Summary ............................................................................................................................................................................................... 16

Total Cost Of Ownership Of Okta Compared With In-House Development .............................................................................. 17

Okta On-Demand Identity And Access Management: Overview ..................................................................................................... 19

Appendix A: Total Economic Impact Overview ................................................................................................................................... 20

Appendix B: Glossary ........................................................................................................................................................................................... 21

About Forrester Consulting

Payback Total benefits Total costs Net present

652% 2 months $1,333,499 ($177,263) $1,156,236

Source: Forrester Research, Inc.

Benefits. The interviewed organization experienced the following benefits:

o Reduced IT time spent on provisioning/deprovisioning. The interviewed organization uses

o Improved IT admin and user productivity by automating password resets and

Costs. The composite organization experienced the following costs:

Financial analysis (three-year)

Total Costs Total Benefits

Source: Forrester Research, Inc.

TEI Framework And Methodology

Approach And Methodology

Conduct Construct financial

2. Benefits to the entire organization.

Ref. Metric Value

A2 Length of analysis 3 years

IT administrator hourly rate at $90,000 base salary or $121,500

Service desk hourly rate at $48,000 base salary or $64,800 fully

General business staff hourly rate at $55,000 base salary or

A6 Knowledge worker hourly rate at $100,000 base salary or $64.90

$135,000 fully loaded salary/2,080 hours per year

Source: Forrester Research, Inc.

Okta SaaS Fees

Ref. Metric Calculation Initial Year 1 Year 2 Year 3

B1 Number of users 1,100

B2 Annual fee per user $5*12 $60

Bt Okta SaaS annual fees B1*B2 ($66,000) ($66,000) ($66,000)

Source: Forrester Research, Inc.

Total Incremental Costs

Ref. Cost Initial Year 1 Year 2 Year 3 Total PV

Source: Forrester Research, Inc.

Reduced IT time spent on provisioning/deprovisioning.

Improved productivity (service desk) password resets and forgotten URLs.

Improved productivity (users) password resets and forgotten URLs.

Improved user productivity working more due to any device, anywhere.

Reduced IT Time Spent On Provisioning/Deprovisioning

Ref. Metric Calculation Initial Year 1 Year 2 Year 3

C1 Number of users 1,100

Average number of business-oriented

IT admin time spent on

Total IT admin time spent on

C7 IT administrator hourly rate A3 $58.41

IT cost on provisioning/deprovisioning, per

Savings from elimination of

C12 Service desk hourly rate A4 $31.15

Savings from moving requests from IT (C6*C9*C11

Annual savings from reduced IT admin time

Source: Forrester Research, Inc.

Improved Productivity (Service Desk) Password Resets And Forgotten URLs

Ref. Metric Calculation Initial Year 1 Year 2 Year 3

D1 Number of users 1,100

Average number of business-oriented

Password reset/lost URL incidents per user

Savings from moving requests from IT (C6C9C11