A FORRESTER TOTAL ECONOMIC IMPACT™ STUDY COMMISSIONED BY CHECK POINT

The Total Economic Impact™ Of Check Point CloudGuard Network Security Cloud Security Cost Savings And Business Benefits Enabled By Check Point CloudGuard FEBRUARY 2021

THE TOTAL ECONOMIC IMPACT™ OF CHECK POINT CLOUDGUARD

Table Of Contents

Executive Summary ................................................. 1

The Check Point CloudGuard Customer Journey 6 Interviewed Organization........................................ 6 Key Challenges ...................................................... 6

Analysis Of Benefits ................................................ 7 Productivities From Single Solution (CloudGuard And Multiple Cloud) ................................................ 7 Reduced Breach Cost ............................................ 8 Time Savings For Developers For Application Development And Rework.................................... 10 Avoided Cost Of Compliance And Audits ............. 11 Unquantified Benefits ........................................... 12 Flexibility ............................................................... 12

Analysis Of Costs .................................................. 13 Cost Of CloudGuard (License, Implementation, Support, Training) ................................................. 13

Financial Summary ................................................ 14

Appendix A: Total Economic Impact ................... 15

TEI Consultant: Eric Hall

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THE TOTAL ECONOMIC IMPACT™ OF CHECK POINT CLOUDGUARD 1

Executive Summary

Cloud security is often more complex than on-premises security and must consider the shared responsibility model between cloud vendors and cloud users, and the additional threat vectors introduced by each new cloud service. Check Point CloudGuard Network Security provides cloud customers with the same threat prevention technologies as their on-premises security solutions and the same user interface, enhanced by cloud benefits of increased efficiency, better scalability, compliance automation, and improved agility.

Check Point commissioned Forrester Consulting to

conduct a Total Economic Impact™ (TEI) study and

examine the potential return on investment (ROI)

enterprises may realize by deploying CloudGuard

Network Security. The purpose of this study is to

provide readers with a framework to evaluate the

potential financial impact of CloudGuard Network

Security on their organizations. CloudGuard provides

advanced threat prevention and automated cloud

network security through a virtual security gateway,

with unified security management across multiple

cloud services as well as on-premises environments.

This is one of the capabilities of CloudGuard’s broad

multicapability cloud security platform.

To better understand the benefits, costs, and risks

associated with this investment, Forrester interviewed

a decision-maker at an organization with experience

using CloudGuard. Forrester used this experience to

project a three-year financial analysis.

Prior to using CloudGuard, the customer was not

utilizing any cloud services and utilized Check Point

on-premises. As a healthcare company, the customer

was cautious about moving workloads to the cloud to

protect healthcare data but knew that there were

financial benefits. The company considered multiple

cloud services and studied their built-in native

security capabilities, concluding that the move to the

cloud would lead to needing multiple cloud services

over time and that the native security capabilities

would not meet their needs to protect client

healthcare data.

After investing in CloudGuard and shifting multiple

workloads to the cloud, the customer is now reaping

the benefits of utilizing multiple cloud services while

not only achieving the same level of security, but also

reducing the security management costs and

providing productivities to developers. The

interviewee detailed key results from the investment:

 The security management interface for cloud uses the same interface as Check Point on-

premises, saving on training costs and

allowing for flexible staffing.

 The company can apply policies more widely, even across cloud services, providing policy

consistency and productivities to policy

creation, assignment, and maintenance.

 The company manages compliance through continuous monitoring, improving quality

while reducing compliance and auditing

efforts.

Return on investment (ROI)

169% Net present value (NPV)

$1.25M

KEY STATISTICS

THE TOTAL ECONOMIC IMPACT™ OF CHECK POINT CLOUDGUARD 2

EXECUTIVE SUMMARY

 Confidence in Check Point security leads to more rapid movement to the cloud

KEY FINDINGS

Forrester built the interviewee’s experience into a

three-year projected model, as analyzed throughout

the study.

Quantified benefits. Risk-adjusted present value

(PV) quantified benefits include:

 Labor productivities from having a single

solution set for on-premises and multicloud

valued at $779,101 over three years. The labor

productivities as described by the customer:

o Same interface as Check Point on-

premises security. “Since our security team

was only using Check Point, there wasn’t

training other than optimizing cloud-related

use.”

o Security management across multiple

clouds with fewer policies to maintain.

“They speak different languages, but

CloudGuard handles all of that. We are able to

create a single configuration, a common

policy, that works across our cloud services.”

o Cloud security management that enables

shared policies. “We don’t need to manage

27 different things across three different

clouds to accomplish the same task. We have

a single management solution in

CloudGuard.”

o Visibility. “We can look at the cloud service

providers’ log files, but that is not an easy

thing to do. It is lot easier in CloudGuard.”

 Reduced breach cost in comparison to cloud

service providers’ built-in native security

valued at $391,679 over three years.

CloudGuard provides the same level of network

security that the customer has grown to trust

within Check Point on-premises security. Per

Forrester estimates, the frequency of breaches

and costs associated with breaches are lower

than with built-in native security provided by

cloud services providers.

 Time savings for developers valued at

$352,511 over three years. CloudGuard has

enabled the customer to better control the

developers’ application of security rules without

hindering them. Getting the security right at the

beginning has eliminated rework later. The

interviewee also noted that the company has not

done a formal analysis of the developers’ time

savings and believes that the estimate is

conservative.

 Reduced compliance and audit costs at

$465,826 over three years. CloudGuard

automates compliance, providing real-time

compliance monitoring. Furthermore, Check

Point provides compliance rules, such as HIPAA

(Health Insurance Portability and Accountability

Act) rules, so the customer does not have to

maintain them. For audits, the customer only

prints out reports.

Unquantified benefits. Benefits that are not

quantified for this study include:

 Continued improvement. Check Point has

made a series of acquisitions to improve the

CloudGuard platform. The interviewee explained:

“CloudGuard is always improving. And we like

the acquisitions that they make, such as Dome9,

for security posture management.”

 Trust in Check Point. The interviewed decision-

maker is confident that Check Point security

protection meets the company’s needs, now and

into the future.

 Cloud flexibility. The customer may add one or

two other cloud services soon; security will not be

a roadblock in those decisions.

 Quality assurance. Centralized, reusable

policies reduce policy alignment and quality

THE TOTAL ECONOMIC IMPACT™ OF CHECK POINT CLOUDGUARD 3

EXECUTIVE SUMMARY

issues, in addition to reducing maintenance

effort.

 Miscellaneous productivities. The interviewee

could not quantify additional productivities due to

lack of detailed information. For example, a

security policy naturally passes from

development to quality assurance to production,

if warranted.

 Automation. The customer has been expanding

its use of CloudGuard’s automation capabilities.

The financial benefits cannot be quantified at this

time.

 Broad cloud security. CloudGuard Network

Security is part of a larger CloudGuard platform;

other platform capabilities, such as Cloud

Security Posture Management, Cloud Workload

and Application Security, and Cloud Intelligence,

were out of scope of the study.

Costs. Risk-adjusted PV costs include:

 Cost of implementation, training, support, and

CloudGuard license at $740,207 over three

years. The implementation cost is smaller than

typical for an implementation of this size because

it is essentially a Check Point implementation

within the cloud. Training is minimal, focused on

differences between cloud configurations and

cloud best practices. Licensing is per number of

cores.

Through the interview and financial analysis,

Forrester projects benefits for this customer of

$1.99M over three years versus costs of $740K,

adding up to a net present value (NPV) of $1.25M

and an ROI of 169%.

THE TOTAL ECONOMIC IMPACT™ OF CHECK POINT CLOUDGUARD 4

EXECUTIVE SUMMARY

ROI

169% BENEFITS PV

$1.99M NPV

$1.25M PAYBACK

<3 months

$779.1K

$391.7K

$352.5K

$465.8K

Productivities from single solution (CloudGuard and multiple cloud)

Reduced breach cost

Time savings for developers for application development and

rework

Avoided cost of compliance and audits

Benefits (Three-Year)

THE TOTAL ECONOMIC IMPACT™ OF CHECK POINT CLOUDGUARD 5

EXECUTIVE SUMMARY

TEI FRAMEWORK AND METHODOLOGY

From the information provided in the interviews,

Forrester constructed a Total Economic Impact™

framework for those organizations considering an

investment in CloudGuard.

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 CloudGuard can

have on an organization.

DUE DILIGENCE Interviewed Check Point stakeholders and

Forrester analysts to gather data relative to

CloudGuard.

CUSTOMER INTERVIEW Interviewed a decision-maker at an organization

using CloudGuard to obtain data with respect to

costs, benefits, and risks.

FINANCIAL MODEL FRAMEWORK Constructed a financial model representative of

the interview using the TEI methodology and

risk-adjusted the financial model based on

issues and concerns of the interviewed

organization.

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. Please

see Appendix A for additional information on the

TEI methodology.

DISCLOSURES

Readers should be aware of the following:

This study is commissioned by Check Point 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 CloudGuard.

Check Point 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.

Check Point provided the customer name for the

interview but did not participate in the interview.

THE TOTAL ECONOMIC IMPACT™ OF CHECK POINT CLOUDGUARD 6

The Check Point CloudGuard Customer Journey

Drivers leading to the CloudGuard investment

INTERVIEWED ORGANIZATION

Forrester interviewed a Check Point CloudGuard

customer with the following characteristics:

 $10+ billion revenue.

 Located in the United States.

 Regulated industry with critical need for data

protection (healthcare industry). Required to

adhere to privacy laws, such as HIPAA.

 Check Point customer since 2011, using on-

premises network, endpoint, and public/private

cloud security.

 Currently has CloudGuard manage the security

for over 300 cores, securing multiple cloud

deployments.

 Rapid expansion that could benefit greatly from

use of cloud services.

KEY CHALLENGES

The customer was conflicted on moving to the cloud.

There were known productivities and flexibilities from

transitioning to cloud services while the company had

major security concerns due to the presence of

protected health information (PHI).

The customer considered utilizing the cloud vendor’s

built-in native security services or setting up an

architecture to allow Check Point on-premises

appliances to manage the cloud security. The

customer found that the native cloud service

providers’ security capabilities were not on par with

their Check Point security and that utilizing the Check

Point on-premises implementation required additional

infrastructure.

THE TOTAL ECONOMIC IMPACT™ OF CHECK POINT CLOUDGUARD 7

Analysis Of Benefits

Quantified benefit data

PRODUCTIVITIES FROM SINGLE SOLUTION

(CLOUDGUARD AND MULTIPLE CLOUD)

Evidence and data. The customer benefits of having

a single security interface for on-premises security

and multiple cloud security include the following:

 Current security staff already knew Check Point,

so they required minimal training, and work

activities could be shared more easily.

 CloudGuard manages the communications to the

cloud services while allowing one set of controls

through the user interface. This allows an

organization to create and maintain a single

policy where multiple policies would be required if

working with individual cloud services.

 CloudGuard leverages cloud configurations

(asset tags, objects, and security groups) in the

creation and maintenance of policies. In the

cloud, existing policies can commonly be used,

versus creating a new one. Having fewer policies

reduces maintenance, which is even more

beneficial in dynamically changing cloud

environments.

 By integrating log files from the various clouds,

CloudGuard saves analysis time by providing a

single point of visibility.

Modeling and assumptions. Forrester assumes the

following about the labor productivities in the

projected three-year model:

 CloudGuard eliminates, or reduces, the need for

various training, baselining, and optimization

activities that would be necessary with a native

cloud security implementation.

 The customer expands its cloud presence to a

second cloud service provider in Year 2 and third

in Year 3.

 The security management for the first cloud

service requires 2 additional FTEs, in addition to

the 2 FTEs required to manage security under

CloudGuard. The security management for the

second and third cloud services require 1

additional FTE each because they have fewer

cores than the original cloud service.

Total Benefits

Ref. Benefit Year 1 Year 2 Year 3 Total Present Value

Atr Productivities from single solution (CloudGuard and multiple cloud)

$214,400 $321,600 $423,800 $959,800 $779,101

Btr Reduced breach cost $157,500 $157,500 $157,500 $472,500 $391,679

Ctr Time savings for developers for application development and rework

$141,750 $141,750 $141,750 $425,250 $352,511

Dtr Avoided cost of compliance and audits

$127,575 $191,363 $255,150 $574,088 $465,826

Total benefits (risk-adjusted) $641,225 $812,213 $978,200 $2,431,638 $1,989,117

THE TOTAL ECONOMIC IMPACT™ OF CHECK POINT CLOUDGUARD 8

ANALYSIS OF BENEFITS

Risks. The labor productivities will vary with:

 The experience the cloud security users have

with Check Point on-premises security before

using CloudGuard.

 The number of cloud services used.

 The ability to create reusable policies.

 Log data availability.

To account for these risks, Forrester adjusted this

benefit downward by 20%, yielding a three-year, risk-

adjusted total PV of $779,101.

REDUCED BREACH COST

Evidence and data. Protecting PHI data, the

interviewee knew that there would be no buy-in to

move any workloads to the public cloud unless the

security and visibility was at least as good as its

Check Point on-premises security solution.

CloudGuard provides the same security technology

as the current on-premises Check Point solution with

cloud-specific configuration capabilities. The

customer had issues with specific built-in native cloud

security capabilities as well as there being an inability

to manage security across clouds efficiently and

without redundancy. The capability and management

gaps could lead to an increase in both the probability

and size of breaches.

Modeling and assumptions. Estimating the financial

benefit associated with breach cost reductions is

Productivities From Single Solution (CloudGuard And Multiple Cloud)

Ref. Metric Calculation Year 1 Year 2 Year 3

A1 Avoided security training, baselining, and optimization $25,000 $37,500 $43,750

A2 Avoided FTEs Year 2: Second cloud Year 3: Third cloud

2 3 4

A3 Labor cost $121,500 $121,500 $121,500

At Productivities from single solution (CloudGuard and multiple cloud)

A1+(A2*A3) $268,000 $402,000 $529,750

Risk adjustment ↓20%

Atr Productivities from single solution (CloudGuard and multiple cloud) (risk-adjusted)

$214,400 $321,600 $423,800

Three-year total: $959,800 Three-year present value: $779,101

“Each cloud [service] has its own language. With CloudGuard, we use the same set of tags across multiple clouds and across different accounts and subscriptions. We would have had to manage everything separately if we had done it natively.”

39%

three-year benefit PV

$779,101

Productivities from single solution: 39% of total benefits

THE TOTAL ECONOMIC IMPACT™ OF CHECK POINT CLOUDGUARD 9

ANALYSIS OF BENEFITS

difficult. Forrester estimates for the breach cost

reductions:

 The average cost per breach and the typical

breach count per year for a company of this size

and cloud presence, utilizing the built-in native

security for a representative cloud service.

 How much a CloudGuard implementation can

reduce the frequency of a breach and the relative

size of a breach versus the representative cloud

vendor service.

Risks. The CloudGuard benefit related to breaches

will vary based upon:

 Industry- and company-specific characteristics.

 The native security capabilities of the cloud

service providers.

 The rigor behind the implementation of the native

cloud service capabilities.

To account for these risks, Forrester adjusted this

benefit downward by 20%, yielding a three-year, risk-

adjusted total PV of $391,679.

Reduced Breach Cost

Ref. Metric Calculation Year 1 Year 2 Year 3

B1 Average breach cost $1,500,000 $1,500,000 $1,500,000

B2 Probability of breach within year Baseline 25% 25% 25%

B3 Probability reduction of a breach 75% 75% 75%

B4 Size of breach reduction 70% 70% 70%

Bt Reduced breach cost B1*B2*B3*B4 $196,875 $196,875 $196,875

Risk adjustment ↓20%

Btr Reduced breach cost (risk-adjusted) $157,500 $157,500 $157,500

Three-year total: $472,500 Three-year present value: $391,679

20%

three-year benefit PV

$391,679

Reduced breach cost: 20% of total benefits

THE TOTAL ECONOMIC IMPACT™ OF CHECK POINT CLOUDGUARD 10

ANALYSIS OF BENEFITS

TIME SAVINGS FOR DEVELOPERS FOR

APPLICATION DEVELOPMENT AND REWORK

Evidence and data. Having CloudGuard manage the

security results in several benefits to developers:

 CloudGuard provides security guardrails for

developers while still giving them an environment

where they can develop.

 The ability to standardize and keep development

cloud-agnostic from a security perspective

simplifies development.

 The security process used to take days to weeks;

it now takes minutes to a day or two, at most.

 Developer rework, which was previously quite

frequent, is almost nonexistent today.

Modeling and assumptions. Forrester assumes the

following about the developer productivities:

 Productivities vary but are presented as a

percentage of developer time.

 These benefits are conservative.

Risks. The CloudGuard benefit related to developer

time savings will vary based upon:

 The maturity of the security process related to

developers.

 The relationship between security and

development, which will affect cooperation.

To account for these risks, Forrester adjusted this

benefit downward by 20%, yielding a three-year, risk-

adjusted total PV of $352,511.

Time Savings For Developers For Application Development And Rework

Ref. Metric Calculation Year 1 Year 2 Year 3

C1 Number of developers FTEs 10 10 10

C2 CloudGuard-provided productivities 12.5% 12.5% 12.5%

C3 Labor cost $141,750 $141,750 $141,750

Ct Time savings for developers for application development and rework

C1*C2*C3 $177,188 $177,188 $177,188

Risk adjustment ↓20%

Ctr Time savings for developers for application development and rework (risk-adjusted)

$141,750 $141,750 $141,750

Three-year total: $425,250 Three-year present value: $352,511

18%

three-year benefit PV

$352,511

Time savings for developers for application development and rework:

18% of total benefits

THE TOTAL ECONOMIC IMPACT™ OF CHECK POINT CLOUDGUARD 11

ANALYSIS OF BENEFITS

AVOIDED COST OF COMPLIANCE AND AUDITS

Evidence and data. The customer described the

benefits of the compliance blade that is part of the

CloudGuard license:

 The HIPAA rules come with the CloudGuard

solution, so there is no need to create HIPAA

rules. There is also a HIPAA audit report that

knows what they need and provides them with

the supporting details.

 The interviewee shared: “When someone pushes

out a new rule, we get alerts and run compliance

reports to makes sure that we are in line. That

makes our lives a lot easier.”

 The compliance blade provides continuous

monitoring of settings and configurations. The

interviewee even noted that it will call out rules

that aren’t properly documented to ensure that

proper documentation is maintained.

 The company maintains its own best practices,

referring to it as its “Security Policy.”

 The HIPAA rules, and their own security policy,

lead to avoided rework for generating compliance

audit supporting information.

Modeling and assumptions. Forrester’s modeling is

based upon this interviewee-supplied information:

 The interviewee stated that compliance and audit

support activities utilizing native cloud security

would require 1 FTE for the first cloud service

and 0.5 FTEs for each additional cloud service

(because they will not have the same workloads).

Risks. The CloudGuard benefit related to compliance

and audit labor savings will vary based upon

compliance and audit requirements.

To account for these risks, Forrester adjusted this

benefit downward by 10%, yielding a three-year, risk-

adjusted total PV of $465,826.

“When the HIPAA auditors come in, we print out the HIPAA report, then hand it to them. It gives them the details on everything that they are going to ask for in an audit, and it makes their lives a whole lot easier. It is pretty awesome.”

23%

three-year benefit PV

$465,826

Avoided cost of compliance and audits: 23% of total benefits

THE TOTAL ECONOMIC IMPACT™ OF CHECK POINT CLOUDGUARD 12

ANALYSIS OF BENEFITS

UNQUANTIFIED BENEFITS

Additional benefits that the customer experienced but

was not able to quantify include:

 Continued improvement. The customer has

been very pleased with the improvements that it

has seen over the three years that it has had

CloudGuard. Check Point has made a series of

acquisitions to improve the CloudGuard platform.

 Trust in Check Point. The customer stays

current on security technology reviews, is

satisfied with Check Point’s security technology,

and is not considering the replacement of either

Check Point or CloudGuard.

 Quality assurance. The customer has been able

to create reusable policies that are standardized

and effectively support its dynamic cloud

environment.

 Miscellaneous productivities. The interviewee

couldn’t quantify some productivities due to lack

of detailed information. For example, a security

policy naturally passes from development to

quality assurance to production, if warranted.

 Automation. The customer has been expanding

its use of CloudGuard’s automation capabilities.

Their financial benefits cannot be quantified at

this time.

 Broad cloud security. CloudGuard Network

Security is part of a larger CloudGuard platform;

other platform capabilities, such as Cloud

Security Posture Management, Cloud Workload

and Application Security, and Cloud Intelligence,

were out of scope of the study.

FLEXIBILITY

The value of flexibility is unique to each customer.

There are multiple scenarios in which a customer

might implement CloudGuard and later realize

additional uses and business opportunities, including:

 Cloud flexibility. The customer may add one or

two other cloud services soon; security will not be

a roadblock in those decisions.

 Organizational flexibility. The customer created

a public cloud security organization to manage

the cloud security. It is now at a maturity level at

which it can plan to consolidate some of the

security activities into a single organization. The

restructuring is not mature enough to present the

financial benefits in this study.

Flexibility would also be quantified when evaluated as

part of a specific project (described in more detail in

Appendix A).

Avoided Cost Of Compliance And Audits

Ref. Metric Calculation Year 1 Year 2 Year 3

D1 Avoided compliance and audit activities FTEs 1.0 1.5 2.0

D2 Labor cost $141,750 $141,750 $141,750

Dt Avoided cost of compliance and audits D1*D2 $141,750 $212,625 $283,500

Risk adjustment ↓10%

Dtr Avoided cost of compliance and audits (risk-adjusted) $127,575 $191,363 $255,150

Three-year total: $574,088 Three-year present value: $465,826

THE TOTAL ECONOMIC IMPACT™ OF CHECK POINT CLOUDGUARD 13

Analysis Of Costs

Quantified cost data

COST OF CLOUDGUARD (LICENSE,

IMPLEMENTATION, SUPPORT, TRAINING)

Evidence and data. The interviewed decision-maker

described the implementation and ongoing costs of

the CloudGuard experience:

 CloudGuard is an infrastructure-as-a-service

(IaaS) implementation of Check Point. The

implementation took less than a month, with part-

time staff working with a Check Point consultant.

 Initial training was focused on learning best

practices for use of Check Point for cloud

workloads.

Modeling and assumptions. For the projected

three-year total, Forrester bases licensing on

standard pricing with approximately 300 cores with

annual growth of approximately 20%.

Risks. The cost related to the CloudGuard

implementation will vary based upon:

 Licensing terms and agreements.

 Customer-specific requirements.

To account for these risks, Forrester adjusted this

cost upward by 10%, yielding a three-year, risk-

adjusted total PV of $740,207.

Total Costs

Ref. Cost Initial Year 1 Year 2 Year 3 Total Present Value

Etr

Cost of CloudGuard (license, implementation, support, training)

$55,000 $231,000 $275,000 $330,000 $891,000 $740,207

Total costs (risk- adjusted)

$55,000 $231,000 $275,000 $330,000 $891,000 $740,207

Cost Of CloudGuard (License, Implementation, Support, Training)

Ref. Metric Calculation Initial Year 1 Year 2 Year 3

Et Cost of CloudGuard (license, implementation, support, training)

$50,000 $210,000 $250,000 $300,000

Risk adjustment ↑10% 

Etr Cost of CloudGuard (license, implementation, support, training) (risk-adjusted)

$55,000 $231,000 $275,000 $330,000

Three-year total: $891,000 Three-year present value: $740,207

THE TOTAL ECONOMIC IMPACT™ OF CHECK POINT CLOUDGUARD 14

Financial Summary

CONSOLIDATED THREE-YEAR RISK-ADJUSTED METRICS

-$0.5 M

$0.5 M

$1.0 M

$1.5 M

$2.0 M

Initial Year 1 Year 2 Year 3

C a

s h

fl o

w s

Cash Flow Chart (Risk-Adjusted)

Total costs Total benefits Cumulative net benefits

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.

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.

Cash Flow Analysis (Risk-Adjusted Estimates)

Initial Year 1 Year 2 Year 3 Total Present

Value

Total costs ($55,000) ($231,000) ($275,000) ($330,000) ($891,000) ($740,207)

Total benefits $0 $641,225 $812,213 $978,200 $2,431,638 $1,989,117

Net benefits ($55,000) $410,225 $537,213 $648,200 $1,540,638 $1,248,910

ROI 169%

Payback period < 3 months

THE TOTAL ECONOMIC IMPACT™ OF CHECK POINT CLOUDGUARD 15

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.

The initial investment column contains costs incurred at “time

0” or at the beginning of Year 1 that are not discounted. All

other cash flows are discounted using the discount rate at the

end of the year. PV calculations are calculated for each total

cost and benefit estimate. NPV calculations in the summary

tables are the sum of the initial investment and the

discounted cash flows in each year. Sums and present value

calculations of the Total Benefits, Total Costs, and Cash Flow

tables may not exactly add up, as some rounding may occur.

THE TOTAL ECONOMIC IMPACT™ OF CHECK POINT CLOUDGUARD 16