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IDC White Paper | Fostering Business and Organizational Transformation to Generate Business Value with Amazon Web Services
APPENDIX C: METHODOLOGY
IDC's standard ROI methodology was utilized for this project. This methodology is based
on gathering data from organizations that IDC identified as currently using AWS as the
foundation for the model. Based on interviews with these study participants, IDC performs a
three-step process to calculate the ROI and payback period:
1. Measure the benefits associated with using AWS in terms of infrastructure-related
cost savings, IT staff efficiency and productivity benefits, higher user productivity, and
increased revenue.
2. Ascertain the investment made in deploying and using AWS.
3. Project the costs and benefits over a five-year period and calculate the ROI and payback
for AWS.
IDC bases the payback period and ROI calculations on a number of assumptions, which are
summarized as follows:
• Time values are multiplied by burdened salary (salary + 28% for benefits and overhead)
to quantify efficiency and manager productivity savings. For purposes of this analysis, IDC
has used its standard Business Value assumptions of an average fully loaded $100,000 per
year salary for IT staff members and an average fully loaded salary of $70,000 for non-IT
staff members. IDC assumes that employees work 1,880 hours per year (47 weeks x 40
hours).
• Downtime values are a product of the number of hours of downtime multiplied by the
number of users affected.
• The impact of unplanned downtime is quantified in terms of impaired end-user
productivity and lost revenue.
• Lost productivity is a product of downtime multiplied by burdened salary.
• The net present value of the five-year savings is calculated by subtracting the amount
that would have been realized by investing the original sum in an instrument yielding a
12% return to allow for the missed opportunity cost. This accounts for both the assumed
cost of money and the assumed rate of return.
2.
3.
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