A Forrester Total Economic

Impact™ Study

Commissioned By

Mindtree

Project Director:

Reggie Lau

October 2015

The Total Economic

Impact™ Of

Mindtree Infrastructure

Management Services Abridged Case Study Focused On Investing In Outsourced Infrastructure Management Services

Table Of Contents

Disclosures .................................................................................................. 3

Executive Summary .................................................................................... 4

TEI Framework And Methodology ............................................................ 5

Financial Highlights .................................................................................... 6

Interview Highlights .................................................................................... 7

Financial Summary ..................................................................................... 9

Mindtree: Overview ................................................................................... 10

Appendix A: Interviewed Customer Description .................................. 11

Appendix B: Total Economic Impact™ Overview ................................. 13

Appendix C: Glossary ............................................................................... 14

Appendix D: Endnotes .............................................................................. 14

ABOUT FORRESTER CONSULTING

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Information is based on best available resources. Opinions reflect judgment at the time and are subject to

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are trademarks of Forrester Research, Inc. All other trademarks are the property of their respective

companies. For additional information, go to www.forrester.com.

3

Disclosures

The reader should be aware of the following:

› The study is commissioned by Mindtree and delivered by Forrester Consulting. It is not meant to be used as a competitive

analysis.

› 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 Mindtree Infrastructure Management Services.

› Mindtree 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.

› The customer names for the interviews were provided by Mindtree. Mindtree did not participate in customer interviews.

› This is an abridged study and only includes summary findings and metrics. Readers can request further details and data

tables from Mindtree.

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Executive Summary

In October 2015, Mindtree commissioned Forrester

Consulting to conduct an abridged Total Economic Impact™

(TEI) study and examine the potential return on investment

(ROI) enterprises may realize by engaging Mindtree

Infrastructure Management Services. The purpose of this

study is to provide readers with a framework to evaluate the

potential financial impact of Mindtree on their organizations.

Mindtree provides technology transformation and execution

services. Mindtree Infrastructure Management Services

offers outsourcing of data center infrastructure

management, end user computing services, application support, and technical support. To differentiate itself, the company

brings an “applistructure” perspective to infrastructure management by focusing on a downward view of applications and

user groups as opposed to focusing solely on the core infrastructure. This perspective allows Mindtree to provide better

availability, customer service, and tier 1 support for applications through the infrastructure management team. Mindtree also

offers proprietary management software, MWatch, which is integrated and used along with a customer’s existing tool set.

To better understand the benefits, costs, risks, and flexibility of engaging Mindtree Infrastructure Management Services,

Forrester interviewed an existing customer in the financial services industry. The interviewed customer’s prior vendor had

been acquired, and the customer was unsure whether the vendor would continue to service infrastructure environments and

operating systems that differed from the vendor’s new, post-acquisition road map. An RFP was issued and Mindtree was

selected because it was a solution that could partner with the customer’s operations team for joint management as opposed

to requiring the customer to completely relinquish control and administrator rights. This type of hybrid model and flexibility

became Mindtree’s competitive advantage over others in the RFP process.

MINDTREE INFRASTRUCTURE MANAGEMENT SERVICES NOT ONLY OFFERS HIRING AVOIDANCE BUT ALSO

DEVELOPS EFFICIENCIES TO ALLOW CUSTOMERS TO SCALE DEVICES AND OPERATIONS WHILE MAINTAINING

STABLE MANAGEMENT COSTS

Forrester’s interview with an existing customer and subsequent financial analysis found that the customer experienced the

risk-adjusted benefits and costs shown in Figure 1.1 See Appendix A for a description of the interviewed customer.

The analysis points to benefits of $19,555,453 versus costs of $9,573,096 over three years, adding up to a net present value

(NPV) of $9,982,357.

FIGURE 1

Financial Summary Showing Three-Year Risk-Adjusted Results

ROI:……... 104%

NPV: $9,982,357 Value-added development and support time per year: 59 weeks Payback period:

6.8 months

Staff hiring avoidance: 55-70 FTE

Source: Forrester Research, Inc.

“With 24x7 support, database

support — we would have had to

hire 20 more people worldwide

without Mindtree.”

~VP of global operations, large US financial institution

5

TEI Framework And Methodology

INTRODUCTION

From the information provided in the interviews, Forrester has constructed a Total Economic Impact (TEI) framework for

those organizations considering engaging Mindtree. 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 Mindtree can have on an organization (see Figure 2).

Specifically, Forrester:

› Interviewed Mindtree marketing, sales, and consulting personnel, along with Forrester analysts, to gather data relative to

Mindtree and the marketplace for Mindtree Infrastructure Management Services.

› Interviewed one organization currently using Mindtree to obtain data with respect to costs, benefits, and risks.

› Constructed a financial model representative of the interviews using the TEI methodology. The financial model is

populated with the cost and benefit data obtained from the customer interview.

› Risk-adjusted the financial model based on issues and concerns the interviewed organization highlighted in interviews.

Risk adjustment is a key part of the TEI methodology. While the interviewed organization provided cost and benefit

estimates, some categories included a broad range of possibilities or had a number of outside forces that might have

raised or lowered the benefit and cost values. For that reason, some cost and benefit totals have been risk-adjusted and

are detailed in each relevant section.

Forrester employed four fundamental elements of TEI in modeling the value of using Mindtree: benefits, costs, flexibility, and

risks.

Given the increasing sophistication that enterprises have regarding ROI analyses related to IT investments, Forrester’s TEI

methodology serves to provide a complete picture of the total economic impact of purchase decisions. Please see Appendix

B for additional information on the TEI methodology.

FIGURE 2

TEI Approach

Source: Forrester Research, Inc.

Perform duediligence

Conductcustomerinterviews

Constructfinancial

model usingTEI framework

Write casestudy

6

Financial Highlights

› Benefits. The interview determined that the customer experienced the following three-year risk-adjusted benefits:

• Infrastructure management efficiency — $18,855,400. This benefit category consists of five subcategories:

o Infrastructure management. Reduced staff hiring demands is the foundation to this benefit category. It

quantifies the staff avoidance by the investment needed to start and operate 24x7 support for infrastructure,

databases, and email servers. For an environment of 400 to 500 devices and hundreds of terabytes in

databases with a recent annual growth rate of 100% in storage demand, the customer estimated at least 50

to 70 staff would be needed to support the organization’s main business units and its newly acquired

business unit.

o Ad hoc development and support. This focuses on the value-added work that Mindtree resources

voluntarily take on and deliver to the customer. This work can range from deploying new servers to

development and management of a SharePoint environment. These tasks are typically not included in the

Infrastructure Management Services contract, but Mindtree has exemplified an affinity to offer a positive

customer experience first and negotiate differential pricing in the future. The customer’s main business units

and newly acquired business unit both estimated asking Mindtree resources for ad hoc work at least once

per month. The main business units typically offload ad hoc projects that take 75 to 80 hours, and the newly

acquired business unit typically offloads ad hoc projects that take 80 to 120 hours.

o Ticket and vendor oversight. This centers on Mindtree’s ability to manage tickets from end to end and

provide oversight to all vendors in the process. In the past three years, more than 99% of the customer’s

tickets have been initiated by automated monitoring, and an average of 54,000 tickets have been resolved

each year. The customer highlighted that Mindtree “does not have any issues working with others and there

is no finger pointing between Mindtree and other vendors in infrastructure management, unlike other vendors

that collaborate in different parts of the organization.”

o Integration and transition efficiency. This benefit demonstrates how quickly and effectively Mindtree can

transition into the customer’s environment and replace the incumbent provider. Mindtree inherited an

environment without any overlap in service from the incumbent. This situation even went to the extent where

certain administrator passwords were not transitioned. Under these circumstances, the customer noted the

challenges and highlighted that working with Mindtree closer as a partner instead of an outsourcer has led to

a smoother transition and agreement on roles and responsibilities.

o Software license and hardware cost avoidance. This speaks to both the management software that could

be retired by using Mindtree MWatch and any hardware consolidation efforts that Mindtree delivers. The

customer noted a reduction of 70 servers as a result of consolidation projects with Mindtree.

• Service cost effectiveness of $700,053. This benefit category describes the 15% year-over-year saving based on

the annual contract value. Mindtree plans to gain more experience and become more efficient in managing the

customer’s environment each year. This efficiency gain is translated into a 15% saving, which the customer chose to

apply for scale instead of an actual contract value reduction. That is, the customer’s annual contract value remained

the same each year while the environment and volume of devices under management scaled up.

› Costs. The interview determined that the customer experienced the following three-year risk-adjusted costs:

• Mindtree solution cost of $9,465,539. The annual contract is the main portion of this case study’s costs. The

customer’s contract consisted of $3.4 million each year — 50% of the contract covered 400 to 500 servers and

certain SLAs regarding response times and availability, and the remaining 50% covered nondevice-related

engineering, solution support, and customer support. Readers should reach out to Mindtree for specific quotes.

• Internal planning and implementation costs of $107,557. Internal labor consisted of the group VP’s time in initial

setup. The VP dedicated 70% and 50% of time to the first and latter six months of the transition, respectively. The

ongoing management effort is approximately 1 hour each week.

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Interview Highlights

INTERVIEWED CUSTOMER

Background

For this study, Forrester Consulting conducted an interview with an

existing customer that has engaged with Mindtree. The customer is

a large US financial institution and has the following high-level

characteristics:

› Annual revenue of over $2 billion and over $150 billion in assets

under management.

› Over 1,200 employees, with approximately 30 full-time staff in IT

operations.

› Global operations requiring 24x7 support.

Situation

Prior to engaging Mindtree Infrastructure Management Services,

the customer’s infrastructure management vendor was acquired by

a larger IT vendor. With uncertainty regarding whether the existing

vendor would continue to support the customer’s environment and

OS, the customer decided to issue an RFP.

Solution

Mindtree was selected based on its pricing and a model that

allowed the customer to remain involved in co-managing the

environment. This became a differentiator as other vendors

requested more control and access to the customer’s environment.

The customer engaged with Mindtree for data center infrastructure

management, end user support, and application support.

The engagement began with the following high-level goals:

› Co-manage an environment of 400 to 500 devices.

› Engage with Mindtree for ad hoc work as appropriate.

› Free up and reallocate internal engineers to value-added projects

that have an impact on the business.

“We had an RFP with all the

big vendors in India and the

US — we chose Mindtree

because they are the best

hybrid for us. Some companies

wanted us to give 1,000%

control, while Mindtree

provided dedicated resources

but also allowed co-

management, which is what

our organization needed.”

~ VP of global operations, large US financial

institution

“Business user satisfaction has

gone up, particularly because

Mindtree has taken root cause

analysis very seriously.”

~ Group CIO, large US financial institution

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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 multiple scenarios in which a customer might choose to implement

Mindtree and later realize additional uses and business opportunities. Flexibility would also be quantified when evaluated as

part of a specific project (described in more detail in Appendix B).

The customer plans to continue to grow its environment as needed while experiencing stable contract pricing with Mindtree.

Furthermore, the customer may consider further staff augmentation with Mindtree to cover end user help desk operations.

This transition would involve Mindtree staff shadowing and overlapping with the current help desk staff.

RISKS

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 Mindtree 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 Mindtree, resulting in lower overall total benefits. The greater the uncertainty, the wider the potential

range of outcomes for cost and benefit estimates.

Quantitatively capturing implementation risk and impact risk by directly adjusting the financial estimates results provides

more meaningful and accurate estimates and a more accurate projection of the ROI. In general, risks affect costs by 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.

The following impact risks that affect benefits are identified as part of the analysis:

› Low adoption rate.

› Stagnant environments that do not take advantage of year-over-year contract savings and scalability options.

The following implementation risks that affect costs are identified as part of this analysis:

› Increased ad hoc work leading to contract renegotiation.

› Extended initial transition timeline due to lack of overlap between Mindtree and incumbent.

Readers should assess the risks and challenges that your organization may face when adopting a mobile application

development platform and developing mobile soldier applications. Risk assessment will assist organizations in both creating

risk mitigation plans and adjusting the value of benefits and costs by the likelihood and severity of a risk.

9

Financial Summary

The financial results calculated for each benefit and cost category can be used to determine the ROI, NPV, and payback

period for the organization’s investment in Mindtree.

FIGURE 3

Cash Flow Chart (Risk-Adjusted)

Source: Forrester Research, Inc.

TABLE 1

Cash Flow (Risk-Adjusted)

Initial Year 1 Year 2 Year 3 Total Present Value

Costs ($3,769,200) ($4,050) ($3,676,172) ($3,676,297) ($11,125,718) ($9,573,096)

Benefits $0 $6,613,370 $8,179,679 $9,028,483 $23,821,532 $19,555,453

Net benefits ($3,769,200) $6,609,320 $4,503,508 $5,352,186 $12,695,814 $9,982,357

ROI 104%

Payback period 6.8 months

Source: Forrester Research, Inc.

($6,000,000)

($4,000,000)

($2,000,000)

$0

$2,000,000

$4,000,000

$6,000,000

$8,000,000

$10,000,000

$12,000,000

$14,000,000

Initial Year 1 Year 2 Year 3

Cas

h f

low

s

Financial Analysis (risk-adjusted)

Total costs Total benefits Cumulative total

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Mindtree: Overview

The following information is provided by Mindtree. Forrester has not validated any claims and does not endorse Mindtree or

its offerings.

Mindtree combines infrastructure management with software-as-a-service (SaaS) applications to optimize performance and availability and quickly remediate issues. Customers can retain complete control and transparency through MWatch, the management and operations platform.

Key components and capabilities include:

› Data center infrastructure management. Monitor and optimize data center resources 24/7.

› End user computing. Customized workspace services significantly improve data management, productivity, processes,

and security across your company.

› Application support. Continually optimize application availability and performance.

› Technical support. Customer profiling and predictive analytics are incorporated into the remote and on-site services

portfolio.

For more information on Mindtree, go to http://www.mindtree.com/services/infrastructure-management-services.

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Appendix A: Interviewed Customer Description

BACKGROUND

For this study, Forrester Consulting conducted an interview with an existing customer that has engaged with Mindtree. The

customer is a large US financial institution and has the following high-level characteristics:

› Annual revenue of over $2 billion and over $150 billion in assets under management.

› Over 1,200 employees, with approximately 30 full-time staff in IT operations.

› Global operations requiring 24x7 support.

SITUATION

Prior to engaging Mindtree Infrastructure Management Services, the customer’s infrastructure management vendor was

acquired by a larger IT vendor. With uncertainty regarding whether the existing vendor would continue to support the

customer’s environment and OS, the customer decided to issue an RFP.

SOLUTION

Mindtree was selected based on its pricing and a model that allowed the customer to remain involved in co-managing the

environment. This became a differentiator as other vendors requested more control and access to the customer’s

environment. The customer engaged with Mindtree for data center infrastructure management, end user support, and

application support.

The engagement began with the following high-level goals:

› Co-manage environment of 400 to 500 devices.

› Engage with Mindtree for ad hoc work as appropriate.

› Free up and reallocate internal engineers to value-added projects that have an impact on the business.

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FRAMEWORK ASSUMPTIONS

Table 2 provides the model assumptions that Forrester used

in this analysis.

The discount rate used in the PV and NPV calculations is

10%, and the time horizon used for the financial modeling is

three years. Organizations typically use discount rates

between 8% and 16% based on their current environment.

Readers are urged to consult with their respective

company’s finance department to determine the most

appropriate discount rate to use within their own

organizations.

TABLE 2

Model Assumptions

Ref. Metric Value

X1 Hours per week 40

X2 Weeks per year 52

X3 Hours per year (M-F, 9-5) 2,080

X4 Hours per year (24x7) 8,760

X5 Working days 240

X6 Annual organization growth 3%

X7 Staff annual salary $120,000

X8 Executive annual salary $150,000

X9 Ad hoc hourly wage $75

PY Prior year

Source: Forrester Research, Inc.

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Appendix B: Total Economic Impact™ Overview

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.

The TEI methodology consists of four components to evaluate investment value: benefits, costs, flexibility, and risks.

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.

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 greater worker productivity if activated. The collaboration can only be used with additional

investment in training at some future point. However, having the ability to capture that benefit has a PV that can be

estimated. The flexibility component of TEI captures that value.

RISKS

Risks measure 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 a minimum, three values are calculated to estimate the underlying range around each cost and

benefit.

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Appendix C: Glossary

Discount rate: The interest rate used in cash flow analysis to take into account the time value of money. Companies set

their own discount rate based on their business and investment environment. Forrester assumes a yearly discount rate of

10% for this analysis. Organizations typically use discount rates between 8% and 16% based on their current environment.

Readers are urged to consult their respective organizations 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 NPV of cash flows.

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.

Return on investment (ROI): A measure of a project’s 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 table 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 the Framework Assumptions section) at the end of the

year. PV calculations are calculated for each total cost and benefit estimate. NPV calculations are not calculated until the

summary tables are the sum of the initial investment and the discounted cash flows in each year.

TABLE [EXAMPLE]

Example Table

Ref. Metric Calculation Year 1 Year 2 Year 3

Source: Forrester Research, Inc.

Appendix D: Endnotes

1 Forrester risk-adjusts the summary financial metrics to take into account the potential uncertainty of the cost and benefit

estimates. For more information, see the section on Risks.