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IDC ROI Calculator

For Anti Spam Solutions    
            ROI Defined      
Enter Information Here:ê   ROI Results: ê    
Select Currency     Total Cost of Spam per year without anti-spam solution:    
Number of email users:     5-Year ROI:      
Initial license and / or set up cost of anti-spam software, appliance or services:   Payback (in years)      
Annual cost for maintenace, updates or subscription services for anti-spam solution:   5-Year NPV using discount rate:    
Type of commercial anti-spam solution in use:              
Annual Increased Revenues + Savings Base   Year 1 Year 2 Year 3 Year 4   Year 5  
Technology-related benefits                
   Cost reduction      
Productivity-related benefits                
   Email users      
   IT staff      
Capital Expenditures Initial   Year 1 Year 2 Year 3 Year 4   Year 5  
Services (external)   0 0 0 0   0  
Software   0 0 0 0   0  
Hardware   0 0 0 0   0  
Depreciation Schedule Initial   Year 1 Year 2 Year 3 Year 4   Year 5  
Services (external) 0      
Software 0      
Hardware 0      
Expensed Costs Initial   Year 1 Year 2 Year 3 Year 4   Year 5  
Services (internal)   0 0 0 0   0  
Services (external)      
Software (licenses/maintenance)      
Server hardware (purchase/maintenance)      
Net Cash Flows Initial   Year 1 Year 2 Year 3 Year 4   Year 5  
Total Benefits      
Less: Total Costs      
Less: Depreciation      
Net Profit Before Tax      
Net Profit After Tax      
Add: Depreciation      
Less: Capital Expenditures      
Net Cash Flow After Taxes      
Basic Financial Assumptions      
All Federal and State Taxes 40%      
Discount Rate 15%      
Depreciation - Straight Line (years) 3      
1)  Hardware, software, and external services costs are expensed if US$50,000 or less, and are otherwise depreciated
2)  Assumes a 220-day working year, 35 hour productive working week
3) The figures presented here are an independent financial assessment by IDC based on surveys of  line of business (LOB) and information technology (IT) managers about the costs of spam and benefits of anti-spam solutions
4) Actual costs and returns on investment will vary. The values in this model are based upon data collected from the    survey, and reflect averages and assumptions that do not distinguish between specific vendor's products or services. The reader is encouraged to conduct a more in-depth independent assessment to make a decision
5) Currency conversion rate used: 1 USD = 0.63 GBP;  0.84 Euro    
For those readers relatively new to the field of finance, or for the rest of us who are rusty, ROI is the most common method by which organizations judge the relative attractiveness of investment opportunities. At its simplest, ROI refers to the annual return on business investment. Since the expression of the results are not unlike a personal investment, such as a bank account or return on a stock investment, many people feel intuitively comfortable with this approach.
An ROI analysis begins by identifying the important business processes that have been affected by the business analytics implementation. The incremental costs and resulting benefits attributed to the business analytics implementation are then calculated over five years of use in "production" mode. To account for factors, such as inflation and interest rates, both costs are discounted and then expressed in today's dollars. This is what economists call the present value of the investment. ROI uses these present values to assess the relative attractiveness of investments. ROI can be mathematically expressed as:

present value of benefits

present value of costs

ROI as the key financial impact measure: ROI is the most popular way of measuring the financial merits of any type of corporate investment alternative. It is easy to understand and communicate, and, once you have the right numbers, it is easy to calculate. However, ROI does not tell the whole story. It does not consider how long it takes to break even on the investment or the overall profits it will bring in because ROI results are expressed in a percentage of return. Therefore, IDC includes an analysis of payback period and net present value (NPV) in its research.
Using standard financial assumptions: In its research, IDC uses one set of conservative financial assumptions across all case studies. This allows IDC to compare the results of organizations in different industries and financial circumstances. These financial assumptions include:
  • Discount rate: 15%
  • Tax rate: 40%
  • Software or hardware expensed up to $50,000
  • Depreciation: straight line
Although ROI can be simply described as the NPV of costs over benefits, calculations based on cash flow are considered a much more representative measure of true bottom-line impact. Therefore, IDC’s ROI calculations are based on internal rate of return (IRR) — the discount rate that must be applied to annual cash flows to achieve a project NPV of zero. The financial community generally regards this approach as a more conservative and representative measure of ROI.


IDC uses a five-year time horizon, which in IDC’s experience is the time horizon preferred by CFOs when considering significant technology investment decisions. Using this timeline, year 0 represents the development phase for the solution and the beginning of year 1 is regarded as the initial production deployment phase.  

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