Business Value of Oracle Exadata Database Machine

IDC White Paper | Business Value of Oracle Exadata Database Machine
Sponsored by: Oracle
Authors:
Carl W. Olofson
Matthew Marden
October 2016
Business Value of Oracle Exadata
Database Machine
EXECUTIVE SUMMARY
Managing a large datacenter is a costly, complicated activity for any enterprise, but when
that datacenter also includes a number of database servers, and when database performance
is critical, those costs and complications can multiply. Every database, which includes the
database server and its associated storage and network (assuming SAN or NAS configuration),
must be carefully tuned. As the number of applications and their associated databases
Business Value
Highlights
429%
increases, the administrative costs mount, while the ability of an overstretched staff to
properly maintain and tune each database and its server deteriorates.
One solution to this problem is to turn to converged systems that combine the management
Five-year ROI
of hardware and software in a single unit. A better solution is to use a hardware system
$157,712
specifically designed for the database software to optimize database operations both for
Average annual benefits
per 100 users
performance and for administrative simplicity. Add to that an environment that supports
11 months
databases in question, and you can really cut costs while ensuring optimal performance.
average time to breakeven
$222,000
workload consolidation, thereby reducing the number of physical servers required for the
That’s the concept behind Oracle Exadata Database Machine (Oracle Exadata), and Oracle has
made some pretty interesting claims regarding the business value benefits of the system for
additional revenue per
100 users
Oracle Database. To test these claims, Oracle sponsored a white paper by IDC to interview a
94%
that system, and perform both quantitative and qualitative analysis on that data.
number of Oracle Exadata customers, gather data about the benefits they have derived from
less unplanned downtime
25%
less time “keeping the lights on”
in their database environments
42%
less staff time per application
developed
IDC interviewed eight organizations about how they are using Oracle Exadata to support
their database-related workloads. These organizations reported that, by moving to an Oracle
engineered system platform optimized for running database-related workloads, they better
and more efficiently leverage their organizations’ data to their business and operational
advantage. As a result, the organizations are achieving better business outcomes and
efficiencies through improved database performance, scalability, and reliability. On the basis
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IDC White Paper | Business Value of Oracle Exadata Database Machine
of these interviews, IDC projects that these Oracle customers will realize average annual
business benefits worth $157,712 per 100 users and a breakeven point of 11 months, which
would result in a five-year return on investment (ROI) of 429% by:
»
A
chieving better business outcomes with improved database performance and scalability
»
M
aking employees more productive by enabling them to make better use of data through
improved performance and reliability
»
R
equiring less database administrator and IT staff time to manage and deploy databases
»
R
educing costs associated with database and other licenses, as well as ongoing costs such
as power and datacenter space
Situation Overview
IDC has been examining the growing complexity crisis for a number of years now. This is the
phenomenon of systems and software building up in the datacenter until the complexity of
the configuration itself inhibits both maintenance of existing systems and any possibility of
expanding functionality to meet the needs of the business.
Add to that the imperatives represented by digital transformation — the movement of
enterprises to fully enable, improve, and make agile their business processes by digital means,
and you can see that a backlog of complexity will ultimately inhibit the ability of IT to respond
to critical management initiatives. In considering digital transformation and the embrace
of 3rd Platform technologies1, many have discussed emerging capabilities aimed at that
purpose, including Hadoop, NoSQL databases, cognitive systems, new software employing
microservices, and container structures. Before these can be employed in a datacenter, and
before a private cloud may be contemplated, the operational dimension of the datacenter
must be simplified.
Having hundreds of database servers linked through complex networks to shared storage
creates too much management overhead to permit the datacenter to grow, or to expand the
database capacity in order to perform desired data management needed to engage in digital
transformation. The solution to this problem is to adopt a database system architecture that
accomplishes the following:
1
The 3rd Platform is an interoperable collec-
»
expand easily to support new workloads
tion of facilities designed for innovation and
growth, built on cloud, mobile, social and
Big Data analytics technologies.
R
educes the total number of systems required to run the existing database load and can
»
P
rovides support for consolidation of databases on fewer servers, while making both
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IDC White Paper | Business Value of Oracle Exadata Database Machine
the consolidation process and the subsequent management of the converged systems
simpler
»
Is based on hardware designed and optimized for the database software it runs, so that
activities such as database tuning and systems administration can be made much simpler,
requiring far less staff time to carry out
»
Is supported by as few vendors as possible, to avoid finger-pointing, and to ensure a clean
and consistent support experience
Oracle Exadata
Oracle Exadata is an optimized hardware and software system designed specifically to
support Oracle Database. Oracle Exadata and Oracle Database are optimized for both
performance and simplicity of administration. They separate the complex SQL processing
from simple SQL execution of data reads and write, with the latter encoded onto special
storage systems that use a variety of techniques to greatly reduce the amount of data passed
to a system in response to a query, thereby improving performance. At the same time, they
are expandable at both the compute and storage levels of operation.
One would expect the following benefits to accrue from the use of Oracle Exadata:
»
B
ecause Oracle Exadata and Oracle Database both come from Oracle Corporation,
they are supported together, creating a purpose built platform to run Oracle databases
and, making problem resolution and operational guidance quicker, simpler, and more
responsive to user needs than would be the case if the hardware system came from one
vendor and the RDBMS from another.
»
B
ecause both hardware and software design contain optimizations for their
interoperation, one would expect fewer operational problems, far less tuning required,
and overall better performance than one would experience in a conventional build-yourown configuration of servers, storage, and software.
»
B
ecause Oracle Exadata is designed, in part, to support consolidation of databases
on fewer servers, one would expect lower operational costs derived from system
maintenance, as well as from physical concerns such as floor space usage and power
consumption.
This white paper, commissioned by Oracle, is intended to test these and other assumptions
and expectations and determine what benefits, at least in the case of the eight organizations
interviewed, were realized.
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IDC White Paper | Business Value of Oracle Exadata Database Machine
The Business Value of Oracle Exadata
Study Demographics
IDC interviewed eight organizations that have moved and consolidated database workloads
on Oracle Exadata. Interviews were designed to capture both qualitative and quantitative
feedback from these organizations on how Oracle Exadata has impacted their databaserelated performance, scalability, reliability, support, and costs. On average, interviewed
organizations have substantial business and IT operations, with around 30,900 employees
on average and a median of 13,500. The eight organizations included experiences from five
United States–based organizations, as well as from the United Kingdom, Greece, and Australia,
and a number of industry verticals (see Tables 1 and 2).
TABLE 1
Demographics of Interviewed Organizations That Use
Oracle Exadata
AverageMedian
Number of employees
30,900
13,500
Number of IT staff
1,345
450
Number of IT users
25,500
10,400
Number of business applications (total)
848
200
Countries
United States, Australia, Greece, and
United Kingdom
Industries
Financial services, healthcare (two healthcare
companies), hospitality, natural resources,
retail, telecommunications, and transport
(airline)
n=8
Source: IDC, 2016
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IDC White Paper | Business Value of Oracle Exadata Database Machine
TABLE 2
Oracle Exadata Environments
AverageMedian
Number of Oracle Exadata
7
6
Number of business applications supported by Oracle Exadata
47
14
Number of internal users supported by Oracle Exadata
8,091
1,000
Number of TBs used by Oracle Exadata
237
225
n=8
Source: IDC, 2016
Interviewed organizations described supporting significant elements of their overall database
environments with Oracle Exadata. They mentioned common reasons for moving databases
to the Oracle-converged infrastructure platform, including needing improved database
performance, ease of management, enabling database consolidation, and requiring the
highest possible levels of database availability. According to interviewed organizations, they
have been able to leverage Oracle Exadata in particular for their data warehousing, analytics,
transactional, and operational workloads. These Oracle customers are dividing their capacity
on their Exadata platforms relatively evenly between data warehousing (34%), production
business applications (26%), development and testing (23%), and disaster recovery (17%).
Business Value Analysis
Interviewed organizations described common reasons for deploying Oracle Exadata,
including needing improved database performance, greater scalability, and a more efficient
and consolidated database infrastructure. IDC’s interviews show that they are achieving
these objectives and, as a result, are leveraging their database environments to achieve
better business outcomes and operational efficiencies. IDC projects that these organizations
will achieve average annual benefits worth $157,712 per 100 users ($12.76 million per
organization) over five years in the following areas (see Figure 1):
»
B
usiness productivity benefits: Higher revenue and user productivity gains result from
ensuring the delivery of timely and compelling data to support business operations and
reducing the time required to deliver new business applications. IDC puts the value of
improved operating margins and higher user productivity at an average annual value of
$70,906 per 100 users ($5.74 million per organization) over five years.
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IDC White Paper | Business Value of Oracle Exadata Database Machine
»
I T staff productivity gains: Having a converged and optimized infrastructure platform for
database workloads means database administrators and other IT staff can spend less time
on day-to-day operations and supports application development efforts. As a result, these
teams are more productive, which IDC quantifies as being worth $43,617 per 100 users
($3.53 million per organization) over five years.
»
R
isk mitigation — user productivity benefits: Having fewer database-related failures
mean that unplanned outages have less impact on employees and business operations.
As a result, IDC calculates that interviewed organizations will realize higher user
productivity and revenue worth $32,407 per 100 users ($2.62 million per organization).
»
I T infrastructure cost reductions: The consolidated Oracle Exadata platform provides a
cost-effective base for database operations. IDC projects that interviewed organizations
will save an average $10,782 per 100 users ($0.87 million per organization) in areas such as
database and other licensing, as well as power and facilities expenses.
FIGURE 1
($ per 100 users)
Estimated Average Annual Benefits per 100 Users
with Oracle Exadata
180,000
160,000
140,000
120,000
100,000
80,000
60,000
40,000
20,000
0
$70,906
$32,407
$43,617
$10,782
IT infrastructure
cost reductions
IT staff
productivity
benefits
Risk mitigation
— user productivity
benefits
Business
productivity
benefits
Average annual benefits per 100 users: $157,712
Source: IDC, 2016
Business Productivity Benefits
Interviewed organizations depend on their database environments to provide high-quality
data in a timely manner. They reported that deploying Oracle Exadata to support database
operations has been instrumental in their unlocking more potential value from this data. In
particular, they attributed higher revenue and employee productivity gains to Oracle Exadata,
due to improved database performance and scalability.
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IDC White Paper | Business Value of Oracle Exadata Database Machine
Improved Database Performance
Needing to improve database performance was a common driver of interviewed
organizations’ choice of Oracle Exadata as a platform for their database operations. Their
legacy database infrastructures often could not meet the performance thresholds their dataintensive business operations required. For these organizations, data is becoming a more
integral component of not only addressing business opportunities but also of creating highvalue business applications and enabling their employees.
Interviewed organizations reported across the board that they have improved key database
performance–related metrics with Oracle Exadata. They process transactions faster, complete
queries in less time, and have decreased load and backup recovery times. As a result, these
organizations are better able to leverage their databases to support their operations. Several
interviewed database managers commented on these types of impactful improvements:
“Oracle Exadata has
increased performance
across the board —
batch processing has
gone from taking up
to 13 minutes to 5
seconds with Oracle
Exadata as a result of
such a substantial I/O
improvement. Another
example is almost a
2,000% improvement
with processes related
to revenue accounting.”
»
F
aster processing: “Oracle Exadata has increased performance across the board — batch
processing has gone from taking up to 13 minutes to 5 seconds with Oracle Exadata as a result
of such a substantial I/O improvement. Another example is almost a 2,000% improvement with
processes related to revenue accounting.”
»
R
educed query time: “We have queries that used to take minutes and now take one second
with Oracle Exadata. The sales team is most impacted by this performance improvement —
they save up to an hour per day, and on average I think everyone is saving a day a month.”
FIGURE 2
Performance KPIs with Oracle Exadata
103%
73%
Transaction rate
Query speed
(% improvement)
Source: IDC, 2016
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48%
48%
Load time
Backup recovery
IDC White Paper | Business Value of Oracle Exadata Database Machine
Database Scalability
“Scalability is huge for
us, and it’s much easier
to scale with Exadata
… . I don’t even know if
the other system would
have scaled to the
extent we needed. So
I think what I’m saying
is that we’re avoiding a
forklift upgrade. We’re
turning around in a
speed boat, not the
Titanic now. I don’t think
the old system would
have taken us where we
wanted to go.”
Interviewed organizations reported struggling with their legacy database infrastructure to scale
database operations in a timely and cost-effective way. This sometimes resulted in spending too
much on infrastructure to ensure database platform capacity and prevented them from scaling
their database infrastructure to meet evolving business demand. According to interviewed
organizations, Oracle Exadata has enabled them address these concerns. As a result of moving
from a siloed infrastructure to a converged platform, organizations no longer experience
delays in deploying resources and applications and can more easily provision capacity to meet
evolving demand on their optimized Oracle Database platforms. One organization commented
on the impact: “Scalability is huge for us, and it’s much easier to scale with Exadata … . I don’t even
know if the other system would have scaled to the extent we needed. So I think what I’m saying is that
we’re avoiding a forklift upgrade. We’re turning around in a speed boat, not the Titanic now. I don’t
think the old system would have taken us where we wanted to go.”
Achieving Better Business and Operational Outcomes
Interviewed organizations directly linked improved database performance and scalability
to improved business results and operational efficiencies. These organizations also used
their databases to power customer-facing services and products and underpin the business
applications that enable their operations. With Oracle Exadata, these organizations can provide
employees with the data, information, analytics, and performance needed to meet customer
demand, which enable them to win more business ($222,000 of additional revenue per 100
users). According to one organization: “With Exadata supporting our database operations, we make
better decisions, which is resulting in more revenue and lower costs. I’d say that we get 10% more
“With Exadata
supporting our
database operations,
we make better
decisions, which is
resulting in more
revenue and lower
costs. I’d say that we get
10% more revenue per
year. Also, we’re saving
money in processes like
procurement and in
areas like advertising —
millions of dollars per
year. It’s a lot of money.”
revenue per year. Also, we’re saving money in processes like procurement and in areas like advertising
— millions of dollars per year. It’s a lot of money.”
Interviewed organizations provided a number of examples of Oracle Exadata’s business impact:
»
D
ecision making: More timely and robust delivery of data supports better strategic decision
making for one organization that constantly tweaks its business and marketing strategies in
a very competitive vertical, which is enabling it to capture more revenue.
»
F
reeing up staff resources: Another organization has freed up DBA and application
developer resources, thanks to efficiencies with Oracle Exadata that has helped it deliver new
services.
»
I mproved system performance: Another organization has increased its market share
because its point of sale system performance has improved substantially, and customers
have responded to its ability to provide high-quality service at the point of sale.
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IDC White Paper | Business Value of Oracle Exadata Database Machine
In addition to higher revenue, interviewed organizations reported that they have become
more operationally efficient. In particular, improved performance of database-related
workloads and the ability to deliver new data-driven applications and features in less time
have led to higher user productivity. Interviewed organizations pointed to specific employees
who have benefited from improved performance, faster query speed, and reduced load time
with Oracle Exadata. Among the ways that these organizations mentioned benefiting include:
faster report generation, better access to data to serve customers, real-time updated data
to support sales efforts, and the ability to run queries without experiencing a time lag while
waiting for results (see Table 3).
TABLE 3
Business and User Impact with Oracle Exadata
Per Organization
Per 100 Users
Revenue Impact
Additional revenue per year
$17.96 million
$222,000
Assumed operating margin
15%
15%
Higher operating margin per year
$2.69 million
$33,300
User Productivity Impact
Number of users impacted
387
5
Average productivity gain
22%
22%
Additional productive hours
92,437
1,142
Source: IDC, 2016
IT Staff Efficiencies
Interviewed organizations also reported that their Oracle Exadata platforms make their IT
teams more productive and efficient. In particular, application development teams can deliver
more value, and database administrator teams are more efficient.
Enabling Application Development Teams
Application development teams better support business operations and thus deliver more
value, because Oracle Exadata allows them to be more agile and deliver higher-value
applications. According to interviewed organizations, Oracle Exadata minimizes the extent
to which provisioning infrastructure impedes application development efforts and ensures
that higher-quality and robust data flows through to business applications. According
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IDC White Paper | Business Value of Oracle Exadata Database Machine
to one organization: “The continuous delivery platform we’ve been able to put in place with
Oracle Exadata helps us to be more agile. The reason that this helps the developers is that the
environments are easier to provision, so turnaround time is better on applications and features … .
We’ve got around 600–700 application developers who are now at least 30-40% more productive.”
Overall, application development teams deliver more applications and new features in less
time, increasing the value of their efforts (see Table 4).
TABLE 4
Application Development KPIs with Oracle Exadata
Before Oracle With Oracle
Exadata
Exadata
Number of applications developed per year
Time to develop/deploy per application (weeks)
Difference Benefit (%)
11
17
6
49
12.9
8.5
4.3
34
Source: IDC, 2016
“The continuous
delivery platform
we’ve been able to put
in place with Oracle
Exadata helps us to
be more agile. The
reason that this helps
the developers is that
the environments are
easier to provision,
so turnaround time is
better on applications
and features … . We’ve
got around 600–700
application developers
who are now at
least 30-40% more
productive.”
Ease of Ongoing Management and Administration
Interviewed organizations indicated that Oracle Exadata platform can be managed and
operated more efficiently than legacy infrastructure environments. They attributed efficiencies
to the consolidated and optimized nature of Oracle Exadata. As Figure 3 shows, this means
that their DBA teams spend 19% less time per 100 users supporting database operations,
which is the time that can be reinvested in supporting their business operations, especially to
link databases to data-driven applications and services. One organization evinced skepticism
that it could have even succeeded using another approach given how it uses its Oracle
Exadata platform: “I spend 100% of my time doing innovation with Exadata, and there’s no time
spent keeping it up. It’s never crashed in two years. I suspect other systems would struggle with the
volume of data and the kind of transactions we do against the database. The resilience built in at
the lower levels of Exadata mean that it keeps the lights on 24 x 7.” Another explained: “We’ve gone
from needing five DBAs to three because Exadata has a single instance of storage which allocates
to the database itself, so we don’t need to connect servers to storage. Also, connectivity is far less
complicated, we don’t have distinct boxes to maintain, and we now have a single technology to
maintain.”
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IDC White Paper | Business Value of Oracle Exadata Database Machine
FIGURE 3
Database Administrator Efficiencies
with Oracle Exadata
228
185
Before Oracle Exadata
With Oracle Exadata
(Hours per 100 users per year)
Source: IDC, 2016
Risk Mitigation and Availability
Interviewed organizations also view the reliability of Oracle Exadata as a key factor in their
choice of it. In the context of supporting critical database workloads that underpin customerfacing services and important business applications, these organizations cannot afford
disruptions (see Table 5). On average, with Oracle Exadata, interviewed organizations reported
experiencing 94% less user-impacting unplanned outages, and six of the eight organizations
have yet to experience an unplanned outage. One organization commented: “We haven’t
had even one unplanned outage with Exadata — before it potentially breaks we get notifications
so we have the chance to fix the issue before downtime occurs; along with redundancy within the
Exadata box, this ensures that we don’t have outages or lose performance.”
TABLE 5
Risk Mitigation: Unplanned Downtime with Oracle Exadata
Before Oracle With Oracle
Exadata
Exadata
Difference Benefit (%)
Unplanned downtime productivity impact
Number of instances of unplanned downtime per year
7.1
0.7
6.4
90
Mean time TR (hours)
2.9
0.4
2.5
86
1,021
66
955
94
44
3
41
94
Productive hours lost per 100 users per year
FTE impact
Revenue impact of unplanned downtime
Percentage of unplanned downtime instances 40
40
impacting revenue (%)
Revenue impact per hour
$51,100
$51,100
Revenue impact in total per year
$423,700
$5,900
Source: IDC, 2016
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$417,800
99
IDC White Paper | Business Value of Oracle Exadata Database Machine
IT Infrastructure Cost Reductions
Interviewed organizations further benefit with Oracle Exadata from having a consolidated
and efficient infrastructure for supporting their database workloads. Several organizations
reported that they have consolidated their database environments to a significant extent
in terms of both number of databases and servers, limiting infrastructure- and licensingrelated costs associated with their database environments. Meanwhile, several interviewees
expressed doubt that they could have even achieved the same results in terms of
performance and scalability for their database environments with another infrastructure
approach, even assuming they had taken on substantial additional costs. Moreover,
interviewed organizations indicated that Exadata allowed their organizations to reduce
database related costs in several ways:
»
D
atabase licensing: By consolidating their database infrastructure, organizations can
reduce the number of cores to which they must license and thus reduce licensing costs.
»
M
aintenance: Several organizations have moved from more distributed environments
and have retired servers or storage, thereby eliminating maintenance fees.
»
P
ower and facilities: Oracle Exadata provides an efficient platform in terms of power
consumed and space required, especially compared with more distributed environments.
»
O
ther operational savings: Several organizations spoke of reducing spending through
better use of analytics on their Oracle Exadata platforms.
FIGURE 4
IT and Operational Cost Savings per
Year with Oracle Exadata
($ per 100 users per year)
12,000
10,000
8,000
Total: $10,782
$989
$895
$892
$1,827
6,000
4,000
$6,181
2,000
0
Source: IDC, 2016
Document #US41732316 ©2016 IDC. www.idc.com | Page 12
n
n
n
n
n
Power and facilities cost savings
Other maintenance cost savings
Application-related cost savings
Database licensing cost savings
Other operational cost savings
IDC White Paper | Business Value of Oracle Exadata Database Machine
ROI Analysis
IDC carried out interviews with eight organizations running database workloads on Oracle Exadata
and recorded their results to inform this white paper’s analysis. IDC used the following three-step
method for conducting its return-on-investment analysis:
»
G
athered quantitative benefit information during the interviews using a before-andafter assessment. In this white paper, the benefits included staff time savings and productivity
gains, user productivity increases, increased revenue, and database infrastructure-related cost
reductions.
»
C
reated a complete investment (five-year total cost analysis) profile based on the
interviews. Investments go beyond the initial and annual costs of using Oracle Exadata, and it
can include additional costs related to the solution, including migrations, planning, consulting,
configuration or maintenance, and staff or user training.
»
C
alculated the ROI and payback period. IDC conducted a depreciated cash flow analysis of the
benefits and investments for these organizations’ use of Oracle Exadata over a five-year period.
ROI is the ratio of the net present value (NPV) and the discounted investment. The payback
period is the point at which cumulative benefits equal the initial investment.
Table 6 presents IDC’s analysis of the average discounted benefits, investment, and return on
investment that the Oracle customers using the Exadata platform are achieving. In total, IDC
projects that these organizations will invest $104,354 per 100 users ($8.44 million per organization)
over five years in Oracle Exadata, which includes investment in staff time associated with Exadata
deployment and use. In return, IDC calculates that these organizations will realize benefits worth
$551,642 per 100 users ($44.64 million per organization) over five years in the areas described in
this white paper. This would result in a five-year average ROI of 429% for these organizations, with
breakeven in the investment in Oracle Exadata occurring in an average of 11 months.
TABLE 6
Five-Year ROI Analysis
Per Organization
Per 100 Users
Benefit (discounted)
$44.64 million
$551,642
Investment (discounted)
$8.44 million
$104,354
Net present value (NPV)
$36.20 million
$447,288
Return on investment (ROI)
429%
429%
Payback period
11 months
11 months
Discount rate 12%
12%
Source: IDC, 2016
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IDC White Paper | Business Value of Oracle Exadata Database Machine
Challenges and Opportunities
There are multiple vendors offering converged systems designed to support Oracle
Database. They all claim capabilities that offer benefits matching or exceeding Oracle
Exadata for various technical reasons. Of course, they can’t claim the single vendor solution
point that belongs to Oracle alone. They also can’t claim that the hardware and software are
designed for each other, since they don’t control the software. So Oracle has the advantage
there as well.
Nonetheless, Oracle must continue to develop its systems to keep ahead of these
competitors. Oracle must also continue to evolve Oracle Exadata to meet the changing
needs of cloud deployment, including both private and hybrid cloud, in order to ensure
that Exadata continues to meet the needs of customers engaged in the process of digital
transformation.
Summary and Conclusion
Enterprise datacenters are constantly getting more complex and therefore more difficult
and expensive to manage. Expansion of capability to meet the requirements of digital
transformation, with its emphasis on huge data volumes and new data types, may be
impossible without optimizing the data management environment that currently exists.
This white paper demonstrates the considerable value that Oracle customers are achieving
by moving to and consolidating their database operations on the Exadata platform. In
particular, these organizations are better able to leverage their database environments to
achieve better business outcomes and operational efficiencies through improved database
performance, scalability, and reliability.
Although Oracle customers interviewed for this study were not using cloud services, Oracle
now offers cloud services, deployed on Exadata. There are three consumption models:
Oracle Exadata Express (which is the low-cost developer option), Exadata Cloud Service
(a fully dedicated cloud service driven by Exadata and running in the Oracle Cloud), and
Exadata Cloud Machine (combining Exadata with the Oracle Cloud for use in the datacenter
behind the firewall).
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IDC White Paper | Business Value of Oracle Exadata Database Machine
Appendix
IDC utilized its standard ROI methodology for this project. This methodology is based on
gathering data from current users of Oracle Exadata as the foundation for the model. On the
basis of these interviews, IDC performs a three-step process to calculate the ROI and payback
period:
»
M
easure the savings from reduced IT costs (staff, hardware, software, maintenance, and
IT support), increased user productivity, and improved revenue over the term of the
deployment.
»
A
scertain the investment made in deploying the solution and the associated migration,
training, and support costs.
»
P
roject the costs and savings over a five-year period and calculate the ROI and payback for
the deployed solution.
IDC bases the payback period and ROI calculations on a number of assumptions that are
summarized as follows:
»
T ime values are multiplied by burdened salary (salary + 28% for benefits and overhead) to
quantify efficiency and manager productivity savings.
»
D
owntime values are a product of the number of hours of downtime multiplied by the
number of users affected.
»
T he impact of unplanned downtime is quantified in terms of impaired end-user
productivity and lost revenue.
»
L ost productivity is a product of downtime multiplied by burdened salary.
»
L ost revenue is a product of downtime multiplied by the average revenue generated per
hour.
»
T he net present value of the three-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.
Because every hour of downtime does not equate to a lost hour of productivity or revenue
generation, IDC attributes only a fraction of the result to savings. As part of our assessment,
we asked each company what fraction of downtime hours to use in calculating productivity
savings and the reduction in lost revenue. IDC then taxes the revenue at that rate.
Document #US41732316 ©2016 IDC. www.idc.com | Page 15
IDC White Paper | Business Value of Oracle Exadata Database Machine
Further, because IT solutions require a deployment period, the full benefits of the solution
are not available during deployment. To capture this reality, IDC prorates the benefits on a
monthly basis and then subtracts the deployment time from the first-year savings.
Note: All numbers in this document may not be exact due to rounding.
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