Oracle Information Technology: Building a Foundation for Future Growth


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Oracle Information Technology: Building a Foundation for Future Growth

  1. 1. Insight Impact SeriesOracle Information Technology:Building a Foundation for Future GrowthTransformation Through Datacenter Optimization
  2. 2. TaBle OF cOnTenTS1 executive Overview2 Industry Trends4 challenges6 Solutions10 Redefining the Successful Datacenter15 Benefits20 conclusion
  3. 3. In 2006, Oracle ceO larry ellison met with Mark Sunday,Oracle’s cIO, to discuss the impending tidal wave ofacquisitions that would hit the shores of the informationtechnology (IT) department. The challenge was to havea clear strategy for scaling IT processes that wouldaccommodate the acquisitions, reduce costs, andmaintain Oracle IT’s traditionally high levels of service.executive OverviewOracle IT was faced with significant physical and power limitations—a commonproblem for many datacenters. each year, electricity usage was growing at a rateof more than 100 percent, and demand for data storage and computing resourceswas almost doubling—accelerating beyond even the most aggressive scenarios.The proliferation of servers, storage, and communications hardware representedsignificant capital expense for the company. In addition, operating expenses wereincreasing as resource allocation and planning in the datacenters took a backseat tocoping with everyday tactical activities. These symptoms highlighted the underlyingproblem of IT’s organic growth.While it was clear that Oracle IT needed to change its way of operating and managingIT services, exactly what to change and how to implement those changes were notas obvious. What Oracle IT needed was a new way of thinking about how to provideIT services—a transformation of Oracle IT into a strategic engine that could supportOracle’s scale and propel its business forward.With a strong vision, Oracle set out to transform the IT function in a series ofsystematic actions. From the foundations of hardware and physical infrastructureto advanced services, every layer of IT services was redefined. Oracle employedfour main phases during the transformation: consolidation, standardization, andvirtualization, leading to utility computing. The end result was a highly effective,fuel-efficient computing infrastructure backed by financial results.Since the transformation started, Oracle has increased revenue from US$14 billionto US$26 billion, while reducing the cost of IT from 2.6 percent of revenue to 1.85percent. Benefits range from lower capital investment in facilities and hardware tolower operational costs of power and resources.Many cIOs face the issues of IT costs and scalability every day. By sharing Oracle IT’stransformation story, our intent in this executive report is to reveal the best practicesthat can benefit organizations confronting similar challenges. 1
  4. 4. FaCT: as a strategic operational entity, Oracle IT enabled Oracle to complete more than60 acquisitions in five years.ORaCLE IT aT a GLaNCEOracle IT has been key in helping Industry TrendsOracle achieve the expectedbenefits of acquisitions made The Impetus for Changeover the past five years, including a recent McKinsey survey of IT executives highlighted how the primary role of IT groupsPeopleSoft (2005), Siebel (2006), is moving from a low-cost, commodity provider of IT to a strategic partner in improvingHyperion (2007), agile (2007), Bea(2008), and Sun (2010). Many of business efficiency. In the survey, some respondents indicated that their IT groups werethese acquired companies were playing a more critical role than they had in the previous year by improving businessoperating datacenters to support efficiencies and reducing costs across the enterprise.1their internal IT operations.Oracle IT operates at a very low among those executives whose organizations had involved IT in the development ofcost compared with its peers, their business strategies, 66 percent of business leaders and 46 percent of the ITand in the last five years, has leaders felt that their IT groups were effective. The numbers for those executivesreduced IT infrastructure costs asa percentage of overall revenue whose organizations had not linked their IT and business strategies were much lower:from 2.63 percent in 2006 to only 8 percent of the business leaders and 16 percent of the IT leaders in those1.85 percent in 2009. This also situations felt that the IT groups in their organizations were effective.contributed significantly to anoverall decrease in general andadministrative (G&a) expenses. Total Current Business/ IT Strategy Business Leaders IT Leaders 16 Business and IT strategy are tightly 66 46 integrated and influence each other Business strategy is developed with 18 some input from IT 28 35 47 Business strategy is developed first 27 27 and used to guide IT strategy 19 Business and IT strategy are 8 16 not linked Composite metric representing the percentage of respondents who rated three or more activities “extremely” or “very” effective N=444 Figure 1. More business and IT leaders feel that IT is effective when it is linked to business strategies. In the same survey, notably fewer respondents cited “lowering costs” as their primary focus for IT, suggesting that—instead of planning to cut back on the role of IT in their company—executives are seeing better results when they increase the role of IT throughout the enterprise. The focus for IT was shifting—from a tactical, reactive role to a strategic, proactive role that could provide value, improve efficiencies, and support the company’s specific business processes in a timely manner. It was against this background that Oracle began implementation of the plan that would take Oracle IT down the road toward operational excellence. 1“ITin the New Normal: McKinsey Global Survey Results, Roger Roberts and Johnson Sikes, McKinsey ” Quarterly, Dec. 2009.2
  5. 5. FaCT: In a recent survey of cIO executive boards, the number one reason citedfor integration failures was slow execution of the integration process.Source: corporate Strategy Board research; Infrastructure executive council,“avoiding M&a Integration Pitfalls, Washington, Dc: corporate executive Board, ”2006; cIO executive Board research.Providing ValueIn the world of mergers and acquisitions, many benefits attributed to an acquisitionare found in the synergies between the two organizations. The critical synergies “In the last three years,for enterprise software industry acquisitions are in core IT and software product Oracle has rapidly anddevelopment—comprising nearly 55 percent of the value of the merger. successfully integrated more than 30 acquisi- tions, including seven IT-Enabled in the last four months. Synergies 30% Non-IT Led To make that happen, Synergies integration has to begin 45% IT Synergies on day one. ” 25% Mark Sunday, CIO, Oracle Oracle OpenWorld 2007Figure 2. In the enterprise software industry, CEOs expect IT departments to deliver a significantportion of the benefits realized from an acquisition.2Improving EfficienciesThe postacquisition results from an IT group include improved efficiencies simply byeliminating duplicate processes. In addition, however, the economies of scale—thebenefits that an organization gains from expansion—can be significant. With the righttechnology choices, IT groups can easily deliver improved efficiencies that can directlyaffect the bottom line. economies of scale can be realized in hardware (servers, storage),software (applications, database), facilities (energy, physical footprint), and, of course, inhuman resources.Supporting Business ProcessesBy supporting the specific processes used by a business, IT can provide standardizationthat will result in more efficient, better supported services with higher availability ata lower cost. Human resource and financial processes are excellent candidates forstandardized support from IT because the processes are the same throughout theenterprise. Standard business processes needing variations for localized support areincorporated into the configuration processes for individual sites.2 Source: Corporate Strategy Board research; Infrastructure Executive Council, “Avoiding M&A Integration Pitfalls, Washington, DC: Corporate Executive Board, 2006; CIO ” Executive Board research. 3
  6. 6. FaCT: Oracle IT reduced the cost of IT infrastructure as a percentage of overall revenue from2.63 percent in 2006 to 1.85 percent in 2009, which contributed significantly to an overalldecrease in general and administrative (G&a) costs for Oracle. Timing Is Everything another critical factor for successfully integrating acquisitions into an organization is time. In a recent cIO executive board survey, the number one reason cited for failures was in the timely execution of the integration. When errors slowed the process, the integration was more likely to fail.3 Number One Deal Error as a Percentage of Total M&A Failed Initiatives 50% 44% 28% 28% 25% 0% Integration Strategy Value Value available In hindsight the Assumed greater but execution errors value was wrong value than actually available Figure 3. The M&a value was there, but execution errors in integration failed to deliver on the promised benefits. challenges a Perfect Storm of Challenges With Oracle’s organic growth and aggressive acquisition strategy in full force, Oracle IT was looking ahead to a “perfect storm” of challenges that would affect its ability to provide a timely, scalable response to Oracle’s aggressive growth. Failure to meet these challenges would have far-reaching consequences for Oracle in the marketplace. • Managing datacenter capacity • Understanding and satisfying client requirements • Taking advantage of technology • Growing aggressively through multiple acquisitions Joining Oracle from Siebel Systems, Mark Sunday became Oracle’s cIO in 2006 with firsthand knowledge of the challenges involved in managing datacenters. Under Sunday’s direction, Oracle IT embarked on a plan to transform Oracle IT from a tactical provider of individualized services to a strategic provider of scalable, end-to- end service solutions for the enterprise. 3 Source: Corporate Strategy Board research; Infrastructure Executive Council, “Avoiding M&A Integration Pitfalls, Washington, DC: Corporate Executive Board, 2006; CIO Executive Board research. ”4
  7. 7. Managing Datacenter Capacityas Oracle grew and as industry requirements and government regulations for managingand storing data increased, Oracle IT facilities around the world were facing severespace limitations and skyrocketing expenses. The demand for data storage andcomputing resources had doubled from the previous year and was accelerating faster REaL WORLD RESULTS:than even the most aggressive scenarios had predicted. electrical usage was growing ORaCLE ON DEMaNDat a compounded average rate of more than 100 percent from 2003 to 2006. adding Oracle On Demand is a key linemore servers wasn’t a solution—at prevailing growth rates, Oracle’s datacenters would of business for Oracle IT. Oraclebe running out of space by the end of the then current year. IT ensures efficient and effec- tive service delivery through a standardized and virtualizedMany of the more than 40 datacenters in Oracle’s IT network served only regional or infrastructure.local interests, and that number only increased with Oracle’s acquisitions—many with Line of business: Software astheir own datacenters. Managing and maintaining such a heterogeneous collection of a service (SaaS) and managedsiloed datacenters was inefficient and costly, and demanded significant IT resources. services Highlight: High efficiencyUnderstanding Customer Requirements Impact on datacenter afterOracle IT provides IT support and services to three distinct clients that require high- implementing transformation planavailability environments with high refresh rates. In addition, each individual client has • More than 4.5 million end usersits own issues, needs, and requirements. • 50 systems provisioned weekly,• Oracle On Demand. More than 4.5 million users around the globe are using Oracle 159 systems refreshed, and On Demand. no matter which Oracle applications are used—Oracle e-Business 30 patches applied (optimized using Oracle technologies) Suite, Oracle’s Hyperion enterprise performance management systems, Oracle’s JD edwards enterpriseOne applications, Oracle’s PeopleSoft enterprise applications, • 89 percent of servers running latest releases Oracle’s Siebel enterprise applications, or a combination of applications—Oracle On Demand must provide 24/7 availability. • 67 percent reduction in hardware• Oracle University. Relying on the high availability of Oracle IT environments, Oracle • Increase in cPU utilization from University courses are available in a variety of training formats to provide students 9 percent to 55 percent with flexible learning options. In addition to courses taught in classrooms worldwide, Oracle University offers live, interactive courses online, self-paced learning, classes at customer sites, and customized training.• Oracle internal operations and development. Internally, Oracle IT supports the operations and provides the development environments for the most demanding software development team in the world. as part of its internal datacenter services, Oracle IT manages large, single instance applications—including customer relationship management (cRM), financials, human resources, and business analytics—alongside the development environments needed to support the myriad of Oracle products at every stage of the product lifecycle. 5
  8. 8. REaL WORLD RESULTS: Employing TechnologyORaCLE UNIVERSITY With the mandate to maximize the benefits of Oracle’s acquisitions while minimizing theOracle University is a key line ofbusiness for Oracle IT. Through impact on their customers, Oracle IT looked to technology for scalable solutions thata standardized and virtualized would address the problems of integration, hardware performance, and cost controlinfrastructure, Oracle IT ensures both for now and into the future. In addition, Oracle was committed to taking advantageefficient and effective deliveryof services. of the advanced technology features offered in Oracle’s own software.Line of business: education ellison had made it clear that “If you want to put something in, you’ve got to takeServices something out. Given the space constraints, Oracle IT was tasked with replacing any ”Highlight: Dynamic provisioning hardware that was no longer cost-effective with energy-efficient equipment that wouldImpact on datacenter after enable the key efforts of consolidation, standardization, and virtualization.implementing transformation plan• 2,300 environments provisioned Growing Through Multiple acquisitions automatically every week Since 2005, Oracle had been integrating software companies at a pace of more than 10• Through virtualization initiatives, per year. Increased IT demand, skyrocketing expenses associated with consolidating reduced hardware footprint to the acquired companies, and the amount of time needed to bring the infrastructure of 1/10th of previous requirement those companies into the Oracle IT organization were significant—and costly. In• Increased cPU utilization from 7 percent to 73 percent addition, many of the companies were running their own datacenters to support their internal IT operations. The challenge was simple: reduce the time, resources, and• Reduced floor space by 50 percent expense associated with integrating the newly acquired companies into Oracle IT and not fail the integration.• Reduced power consumption by 40 percent• Increased ratio of server to administrator by10 times Solutions• Increased revenue per server by 10 times Transforming Oracle IT With such an important role in Oracle’s strategic vision, Oracle IT needed a systematic transformation plan to establish an IT services delivery organization. The plan would use the utility computing model and provide automated provisioning of a set of shared services to be delivered quickly, on an as-needed basis. Through the use of quotas, growth limits were set for the different business functions using Oracle IT’s services. In this scenario, IT runs as a “business within a business” to provide a customer-centric organization that leverages the Infrastructure Technology Information library (ITIl) framework and delivers low cost, efficient services and improved service levels. Oracle IT planned to accomplish this transformation with the following: 1. Operational efficiency through consolidation 2. Simplification through standardization 3. Utilization through virtualization 4. Services automation through utility computing6
  9. 9. FaCT: The word utility in utility computing makes an analogy to other services (such aselectrical power) that meet fluctuating customer needs by charging for resources based onusage rather than on a flat-rate basis. Sometimes known as “pay-per-use” or “metered”services, this approach is becoming increasingly common in enterprise computing.The end result is a successful datacenter that can manage and support Oracle’sgrowing IT requirements in a timely, cost-effective manner. With this type of scalablesolution, the IT organization can create an enterprisewide environment that providesa fast, efficient, and cost-effective, “no-hands” support strategy for Oracle IT clientsand its customers.The transformation plan spanned a time frame from 2005 to 2008 (and beyond as newcompanies are acquired). The first phase, consolidation, was planned for 2005 through2007; the second phase, standardization, took place from 2006 to 2008, as did the thirdphase, virtualization. The fourth and final phase, utility computing, began in 2008 andwill continue into the future. Phase 1: Phase 2: Phase 3: Phase 4: Consolidation Standardization Virtualization Utility Computing Consolidate datacenters Standardize on applications Abstract environment, Automated services including platform, provided on a pay-as- Consolidate hardware Standardize on platforms hardware, and applications you-go, as-needed basis Consolidate applications (through middleware) Increase server utilization Increase storage utilization 2005–2007 2006–2008 2006–2008 2008 and beyondFigure 4. The goal of the transformation plan for Oracle IT was to establish a utility computing modelfor the delivery of IT services.1. Operational Efficiency Through Consolidationconsolidation was an essential first step on the road toward IT as a service. In the past,Oracle had delivered IT by function—often focused only on a specific region or country.IT staff resources were assigned accordingly, leading to inefficient procedures and theduplication of jobs and responsibilities across the enterprise.a multitude of IT silos existed side by side with a variety of hardware, platforms, andenterprise applications. not surprisingly, the average server utilization across corporatedatacenters was at a low 7 percent.creating a shared services delivery model had to start with significant consolidationof Oracle’s IT infrastructure and supported applications. Instead of taking on thischallenge alone, Oracle IT worked with its clients to codevelop a strategic vision tobe used across Oracle worldwide. With executive buy-in, Oracle adopted IT servicemanagement (ITSM) methods to support its transformation from a function-orientedorganization to a true service-oriented, customer-focused organization. 7
  10. 10. Using best practices to help organizations align the delivery of their services with customer needs, the process-based ITSM helped Oracle IT work toward consolidation of all assets at all levels of the company and implemented these solutions. • Two pre-existing datacenter locations—one in austin, Texas, and one in colorado Springs, colorado—were selected from a field of more than 40 datacenters worldwide. (a third datacenter is currently being built in Utah, using state-of-the-art technologies.) • Servers throughout the company were consolidated into the centralized datacenters and updated to new hardware technology that offered more computing power in less space. • Storage hardware was consolidated and updated to media with more density so that more data could be stored in the same (or less) space. • all enterprise applications that supported key operational processes at Oracle (including procure-to-pay and hire-to-retire) were consolidated into one environment on a single platform. • Other applications were prioritized for decommissioning. • Storage hardware and platforms were reviewed with an eye toward standardization. 2. Simplifying Through Standardization The successful consolidation of assets (such as datacenters and servers) made the next phase of the Oracle IT transformation plan—standardizing processes, applications, platforms, and people skills—much easier to implement. In the past, Oracle IT was responsible for supporting and maintaining a variety of hardware platforms for computing and storage. This required a workforce with a variety of platform-specific skills. Only by reducing the number of platforms and standardizing processes would Oracle IT be able to deliver effective, cost-efficient services to its customers. Oracle IT used ITSM methods to help with the standardization of processes in the datacenter and applied a similar logic to the platforms needed to deliver those services. ITSM helped Oracle IT focus on real customer needs that added value. Oracle IT had already decided that, as long as the service level agreements (Slas) with their customers could be met or exceeded and the services delivered effectively, the actual hardware platform should be as cost effective as possible. The analysis of existing applications and technology resulted in three standard platforms for computing and storage. However, once the Sun acquisition was completed, Oracle IT was able to standardize on its own products—both hardware and software.8
  11. 11. The open standards used for the development of Oracle software products allowed for THE UTILITY COMPUTING MODELhardware independence, so Oracle IT selected three platforms for the standard: linux Utility computing is a serviceon x86, Oracle Solaris on SPaRc, and Oracle exadata. as part of the standardization provisioning model in whichphase, each configuration would be captured and kept up-to-date in a configuration a service provider makesmanagement database (cMDB) and used to reduce support requirements. computing resources and infrastructure management3. Increasing Utilization Through Virtualization available to the customer as needed, and then charges forafter consolidation and standardization, the next phase in the transformation plan was specific usage rather than thethe virtualization of all servers and storage assets. Virtualization was applied at the flat rate that is more typicalserver level to allow multiple operating system (OS) images to run on one physical of traditional IT organizations.server. Oracle IT was an early adopter of storage virtualization tools and techniques like other types of on-demand computing (including gridas a way to increase storage capacity while reducing the physical footprint. In addition, computing), the utility modelvirtualization meant becoming less dependent on specific vendor platforms, specific seeks to maximize the efficientapplications, and specific skill sets. use of resources and minimize associated costs.With virtualization, Oracle IT could focus more on availability and disaster recovery. The utility computing modelOracle IT used Oracle Real application clusters (Oracle Rac) to implement clustering, has significant challenges towhich significantly increased availability. Oracle IT also used the advanced technologies overcome as a result of the completely shared servicesin Oracle advanced compression and Oracle Partitioning to further slow the growth data storage. (This was especially helpful in the austin Data center where space • Preventing the comingling ofwas at a premium.) data in a shared environmentIn Oracle IT’s disaster recovery plans, the colorado Springs Data center serves as the • adjusting specific configurationactive stand by for the austin Data center. Specific options for the database—including items that affect multiple customers, such as singleOracle active Data Guard and Oracle Flashback—were implemented and contributed currenciesto a reduction in a mean time to recovery (MTTR) of less than an hour, with plans to • cross-charging and cross-billingreduce even further. for services4. Toward Utility Computing • Mixing on-premise and off-premise resourcesWith virtualization, Oracle IT established a complete abstraction of the physical hardware. • allocating resources basedan almost fully automated provisioning process now balanced demand and supply, and on demandOracle Fusion Middleware, a single integration middleware layer based on standard • enabling the elasticity ofOracle technology, allowed for standardized integration between applications. Oracle IT computing resources onused standard Oracle applications and technology to handle security and customer- the supply sidespecific configuration settings. Oracle IT was now ready to focus on the final phase of • Integrating different applicationsthe transformation plan. in a shared environment • ensuring security in terms ofestablishing utility computing—the self-service provisioning of environments for all its authentication and authorizationcustomers—is the final phase in the plan to transform Oracle IT into a utility computing • Offering self-service accessorganization where customers use self-service capabilities to start the automatic for requesting new servicesprovisioning processes. Once this capability is fully available, Oracle IT plans to allow or adjusting existing servicesself-service provisioning for any Oracle product. Source: national Institute of Standards and Technology 9
  12. 12. ORaCLE IT DaTaCENTERSThe current day, active-active Redefining the Successful Datacenterconnected Oracle IT datacenters The success of Oracle IT depended primarily on its ability to create datacenters thatare the result of an effort thatstarted with more than 40 could provide the services and availability needed by their clients. Using ITSM as thedatacenters that served only methodology and a utility computing model as the goal, Oracle IT implemented ITIlregional or local interests. to improve the specific processes associated with running a successful datacenter:Oracle IT now operates two maindatacenters to support its service • Planning the IT services and underlying architecturedelivery worldwide: the austin • Designing the services for the datacenterData center (aDc) in austin, Texas,and the Rocky Mountain Data • Operating the datacentercenter (RMDc) in coloradoSprings, colorado.RMDc covers 6,900 square feet PLaNNING DESIGN OPERaTIONSand serves as the back-up site for SLA Management Service DeskaDc, but its computing capacity is Services Planningalso used by Oracle developers and Configuration and Change Performances and Availabilityfor other internal Oracle functions. Management Managementa third facility is being built in Utahusing state-of-the-art technologies. Release Management Utilization ManagementThe 80,000 square feet aDc has Architectural Planning Security Managementbeen upgraded over the years and Provisioning and Patch Managementis certified by leadership in energy Information Lifecycle Managementand environmental Design (leeD).aDc is a Tier 4 datacenter, meaning Figure 5. Each step toward creating the successful datacenter includes a specific set of tasks.that it has 99.995 percent availability(0.4 hours or less of unplanned Improving Datacenter Planning Processesdowntime). aDc has multiple lay-ers of security (including biometric With the decision to offer a limited number of top-level services in the datacenter,security), seven back-up generators Oracle IT had to build a highly standardized environment that would put restrictionsthat total almost 14 megawatts,and enough fuel to run five days on the type of platforms supported, while still providing more than 20,000 internalat full capacity. Oracle developers with the access they needed to the environment. Building on experience gained over 30 years in business—experience that is reflected in the large number of practices across the planning, design, and operations areas of the datacenters—Oracle IT was able to improve the efficiency and effectiveness of the services it provided and offer solutions that met the requirements of their customers. For example • The Oracle On Demand line of business would offer only three platforms: linux on low-cost x86 hardware, Oracle Solaris on SPaRc, and Oracle exadata. • Oracle IT would enable Oracle internal developers to use self-service requests to auto-provision virtual environments and then release the environments at the end of the work day. This would free up valuable resources so they could be shared worldwide across Oracle’s developer community.10
  13. 13. • The underlying architecture for the datacenters specified datacenter services that were highly modular, allowing each component to be reused easily when new services needed to be developed. as a result, Oracle IT was able to cut development time for new services from months to weeks.• Oracle IT was able to standardize on Oracle products and technologies for the STaNDaRDIzING ON platform because of their availability and their performance architecture. ORaCLE PRODUCTS• The suite of JD edwards enterpriseOne applications were certified and ready to Oracle IT used these products go after only a few weeks. Oracle IT was able to compress the time for the in its transformation plan. delivery of this new service only because it could implement a standardized • Oracle Database 11g process, reuse existing services (such as backup, maintenance, and security), enterprise edition and deploy existing resources. • Oracle active Data Guard • Oracle Identity Management IMPROVING DaTaCENTER PLaNNING PROCESSES • Oracle advanced Security Planning Best Practices What Oracle Did • Oracle Partitioning Reduce number of services to a • Reduced the number of top-level services offered by Oracle IT to 70. • Oracle advanced compression few top-level services that can • Reused the components that made up existing services. • Oracle Real application be broken down into components. • Defined new services based on priority and available resources. clusters Make these components ready for reuse when developing new • Oracle BPel Process Manager services such as backup, security, and maintenance. • Oracle Real application Testing Reduce number of platforms • Made standardized platforms hardware-agnostic, reducing the need to • Oracle Database Vault (hardware and OS combinations) have as many vendors. Vendors can now provide hardware for computing • Oracle Secure Backup and standardize on as few and storage, and switching platforms or vendors can be done more easily. combinations as possible • Achieved US$3 million in capital expense savings by using Oracle on • Oracle Flashback based on workload. Demand in less than nine months by moving to faster servers (from dual • Oracle SOa Suite core to quad core) and reducing more than 50 rack space units. At the same time they were actually able to offer more computing capabilities • Oracle Fusion Middleware to their customers. • Oracle Total Recall Standardize application • Standardized the application integration infrastructure on Oracle Fusion integration infrastructure Middleware, creating an abstract integration layer for applications that • Oracle VM on one Oracle technology. simplified integration and increased the efficiency of offered services. Focus on space utilization as the • Maximized the utilization of space before focusing on improving server key criterion when improving utilization. The physical limitations of the Austin Data Center have led efficiencies in the datacenter, and to a creative use of available space. At least 20 percent of floor space then focus on server utilization. is now unused. • Agreed on key metrics to run the datacenter with buy in from all customers. Use technology instead of • Implemented standardized high availability disaster recovery infrastructure physical assets. with the Colorado Springs Data Center as active standby. Availability infrastructure is one-tenth the price of others through the use of clustering. • Used lessons learned from architecting the Oracle On Demand environment to gain efficiencies in the internal part of IT services for Oracle. • Decided to use the Colorado Springs center’s computing capacity for development instead of only for back-up purposes. Decision was facilitated by the strength of the clustered infrastructure, which created additional redundancy in the system.Figure 6. Oracle IT used best practices in datacenter planning processes. 11
  14. 14. Improving Datacenter Design Processes By reducing the number of configurations used in the datacenter and by maintaining a continuously updated cMDB, Oracle IT significantly reduced the number of service requests that originated from incorrect changes and from human error when applying changes. Oracle IT also used information lifecycle management (IlM) strategies in conjunction with Oracle technologies (such as the partitioning, compression, and deduplication technologies available in Oracle Partitioning and Oracle advanced compression) to reduce data storage requirements. Oracle IT has standardized service level agreement (Sla) definitions and tracks them through the limited number of agents on the server. To ensure that they meet all Sla goals, Oracle IT continues to work closely with its customers to understand their need for IT services now, in the near future, and long term. IMPROVING DaTaCENTER DESIGNING PROCESSES Designing Best Practices What Oracle Did Develop standard “gold” software • Created a dedicated lab environment for testing new configurations. images that can be provisioned • Created gold image of all software products. For example, only one image easily and consistently as a way exists for all desktop/ laptop deployments. to minimize human error. Follow through in limiting the • Limited the number of allowable configurations. number of supported platforms by standardizing configurations as well. Use a combination of technolo- • Reduced data storage demand through the implementation of compression gies and pragmatic approaches and deduplication. to reduce data storage growth. • Performed backups using standard Oracle products and technology, For example, limit the amount of including Oracle Active Data Guard and Oracle Secure Backup. data kept in active storage (data • Did most backups on tape. (A virtual tape library, or VTL, is being less than 30 days old). considered, but performance bottlenecks exist.) • Limited the amount of monitoring data (and other data) to be kept in active storage. • Implemented information lifecycle management methods resulting in US$10 million in cost avoidance for storage equipment. In a fully automated provisioning • Developed tools that allowed for a 50 percent increase in active storage environment, allow storage to run utilization. (In older scenarios, most storage hardware is not utilized at closer to capacity before provision- more than 50 percent.) ing additional storage hardware. • Implemented information lifecycle principles along with tiering and (Faster provisioning makes it partitioning. This led to a 25 percent reduction in overall active storage. possible to run much closer to full capacity of storage media.) Set a limit to the number of • Used agents for which the data can be easily plugged in the overall agents running on each server management environment such as Oracle Enterprise Manager. to reduce the performance impact • Implemented a maximum of one agent per server for monitoring purposes of those agents. to reduce the server overhead and to limit the amount of monitoring data generated. • Realized end-to-end monitoring across all assets using Oracle Enterprise Manager. Implement end-to-end security by • Standardized security using Oracle products and technologies. (Since considering single sign-on (SSO) Oracle and many Oracle On Demand customers are public companies, and—in particular—vertical se- Oracle IT has implemented the Oracle Advanced Security option for curity validation for OS, database, Oracle Database 11g for compliance.) middleware, and applications. Figure 7. Oracle IT used best practices in datacenter design processes.12
  15. 15. Improving Datacenter Operating ProcessesIn the actual operation of the datacenter, Oracle IT has automated many of theperformance, utilization, and provisioning processes. (It is difficult to automate the rackingand stacking activity.) Because of consolidation and standardization, Oracle IT has beenable to focus its personnel resources on flexible skill sets that allow those resourcesto fulfill most roles in the datacenter. as a result, Oracle IT has more than 76 percent ofits resources working remotely from low-cost locations, driving high levels of efficiency. IMPROVING DaTaCENTER OPERaTIONS PROCESSES Operations Best Practices What Oracle Did Standardized platforms, limited • Developed staff skills with the standardized approach in mind, and limited services, and a minimum number specialization except where needed. of configurations allow for • Trained all resources in using standard operating procedure. standardized skill sets. Reduce operations costs by • Reduced personnel costs by allocating 76 percent of resources in moving resources to low-cost low-cost areas. locations. Use BPEL and other datacenter • Developed and implemented BPEL engine to automate the provisioning automation tools to automate process, achieving an almost “touch free” environment. the provisioning and patching • Developed the capability to provision more than 15,000 accounts overnight. processes. • Developed the ability to upgrade 18,000 Linux servers within 24 hours. When adding storage, review • Used space and power requirements as key decision factors for adding and space and power requirements upgrading hardware. as the most important criteria. Reduce cost by limiting hardware • Optimized hardware investments through the reuse of part components. maintenance contracts to two • Limited hardware maintenance contracts, allowing for faster upgrades years or less. Reuse hardware and improved performance. components after depreciation period or after the failure of a component part. Improve availability and perfor- • Reduced planned downtime to one hour per week of which not all time mance using improved technology is used. Uptime approaching 100 percent with the use of clustering. and standardized platforms. • Achieved less than one hour MTTR through the use of commodity hardware. At any point in time, 30 systems are ready to be provisioned through a streamlined process. • Implemented network data compression that led to a 50 percent increase in transmission capacity.Figure 8. Oracle IT used best practices in datacenter operations processes.Looking aheadWith several elements in place for the next phase in Oracle IT’s master plan—toestablish utility computing—Oracle IT is focused on the self-service provisioning ofenvironments for all its customers. Once this capability is fully available, the aim ofOracle IT is to allow self-service provisioning of any of Oracle’s products. additionalinitiatives are focused on implementing a billing solution to support the utility model. 13
  16. 16. Integrating Sun With the recent US$7 billion acquisition of Sun, Oracle IT kicked off the process for .4 integrating Sun starting on day one and hasn’t looked back. armed with a set of proven capabilities and following the practices first outlined in 2006, Oracle IT is using its best practices in operational excellence and will be setting benchmarks for years to come. The following is a summary of practices that facilitate a smooth integration: • consolidate datacenters and address the unique challenges of closing leased facilities. • Integrate employees and partners in the appropriate processes such as hire-to-retire and procure-to-pay as established by the global single instance. • Reduce redundant infrastructure and enforce standard hardware configurations, resulting in lower capital expenses. • capitalize on unique capabilities that support Oracle’s long-term IT standards. For example, by using the facility offered by Oracle Solaris containers, Oracle IT can rapidly consolidate older Solaris instances in a virtualized Oracle Solaris 10 environment. as a result, a total of US$3 million in savings has already been achieved. • Reduce applications footprint by rapidly integrating Oracle’s Sun resources. also, stop patching noncritical applications that are on the retire list. More than 1,500 applications with 6,000 instances will be decommissioned and consolidated in the existing single global instance. • Implement storage optimization by switching to Sun open storage and replace blade servers with Sun Blade Servers. • Minimize new capital purchases through further optimization of existing Oracle infrastructure. Use space optimization as the key principle to drive infrastructure decisions. • execute the plan in place to achieve targeted cost savings through the Sun IT integration. Before the acquisition, Sun had accomplished significant changes in the way it managed its datacenter infrastructure through the use of consolidation and virtualization. Oracle IT will benefit greatly from the experiences gained by the Sun integration in its drive toward datacenter excellence. 2007 CHaLLENGES 2009 aCCOMPLISHMENTS IT demand growing exponentially • 88 percent space compression • New products, reorganizations, acquisitions • 61 percent utility reduction • Global expansions • US$9 million cost avoidance • 2.2 megawatt to 500 kilowatts Potential impact was significant • Multibillion dollar IT and R&D technical infrastructure • 450 percent compute increase • Globally, 1.3 million square feet of • 3,227-ton reduction in CO2 engineering and IT space • Consolidated 8 datacenters into 4 • 1,533 individual rooms Sun’s second largest expense was facilities • Real estate, utilities, taxes, and support costs Figure 9. Sun IT accomplishments in datacenter management prior to acquisition.14
  17. 17. BenefitsRealizing the Benefits of an Oracle SolutionOracle realized immediate benefits from the plan to transform Oracle IT to a servicesdelivery organization. as soon as the first phase (consolidation) was complete, Oracle ITwas able to measure impressive savings in operational efficiencies. With the completionof each of the following phases (standardization and then virtualization), OracleIT reported significant results from the simplification and the increased utilizationof resources. THEN (2006) NOW (2010) 50,000+ Oracle Employees 106,000+ Oracle Employees IT Cost 2.63% of Revenue IT Cost 1.85% of Revenue 40+ Datacenters 2 Datacenters Average PUE 2+ Average PUE 1.5 111% Utility Growth (compounded 4% Utility Average Growth average over 5 years) 1,400 IT FTE Resources 1,600 IT FTE Resources 20+ Platforms 7 Platforms No Services Defined 70+ Services Point-to-Point Integration 1 Standard Integration 5,000 DB Instances 18,000 DB Instances 300 DBAs 233 DBAs 7% Server Utilization 70% Server Utilization (Oracle University Grid) 6 Hours MTTR < 1 Hr MTTR Compression 0% Compression 40% DC Server Image Cost $5,000 DC Server Image Cost $1,500 Provisioning Time: Months Provisioning Time: MinutesFigure 10. Before and after the plan for transforming Oracle IT.More Efficient OperationsBy consolidating its overall infrastructure, Oracle IT experienced the benefits of moreefficient operations.• Reduced infrastructure costs. By consolidating operations, Oracle IT reduced IT costs as a percentage of overall revenue from 2.63 percent in 2006 to 1.85 percent at the end of 2009. This reduction contributed significantly to an overall decrease in Oracle’s G&a expenses. 15
  18. 18. Decreased Expenses $25 +8 Acquisitions 6.00% +11 Acquisitions 5.00% $20 +11 Acquisitions 4.00% Billions $15 +15 Acquisitions 3.00% $10 +13 Acquisitions 2.00% $5 1.00% $ 0.00% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Revenue in Billions G&A as Percentage of Revenue Figure 11. Oracle general and administrative (G&a) expenses have decreased with the consolidation of datacenters. • Faster integration of acquired companies. The consolidated infrastructure allowed newly acquired companies to be integrated more quickly, translating into savings both in economies of scale and also in fewer disruptions to the operations of the acquired companies. • Reduced facility costs. By consolidating the number of datacenters, basic facility costs were phased out or eliminated. The company also benefitted from obvious savings due to fewer facilities to operate and less duplication of datacenter personnel and responsibilities. • Reduced use of utilities. as Oracle datacenters expanded to handle more and more customers and requirements, the annual growth rate for the usage of electricity at the datacenters was growing at a rate of more than 100 percent compounded annually. If this trend continued, existing datacenters would soon be running out of available power and new datacenters would be needed to handle the huge increase in demand for computing and storage. By consolidating datacenters and implementing the other planned phases of standardization and virtualization of resources, Oracle IT was able to reduce the annual utility growth rate for datacenters to less than 4 percent.16
  19. 19. Decreased Electricity Rates 9 0.12 4% Growth 8 7 0.11 6 Average KWH price in US$ 5 0.10 Millions 111% Growth 4 3 0.09 2 1 0.08 0 2002 2003 2004 2005 2006 2007 2008 2009 kWhFigure 12. The growth rate for electricity used by Oracle datacenters has decreased dramatically.Reduced CO2 emissions. Oracle is committed to developing practices and productsthat help protect the environment. By slowing its overall growth rate for the use ofelectricity, Oracle also reduced cO2 emissions.Keeping It SimpleThrough standardization and virtualization in its datacenters, Oracle IT created a physicalenvironment with a high level of abstraction for platforms, servers, storage, andapplications. Skill sets for maintaining datacenter operations became more generic,so any available staff could be deployed to troubleshoot and support the set of tasksthat followed the standardized processes. even better, in many cases the tasks werecompletely automated.• Taking advantage of Oracle technology. By standardizing on Oracle Database 11g, Oracle IT was able to exploit the advanced features of the database. For example, Oracle IT used virtualization features in Oracle Database 11g to create a shared database services environment. as a result, server utilization increased from 7 percent to almost 70 percent for the Oracle University grid. Disaster recovery offered another example of taking advantage of Oracle technology. With Oracle Database 11g, specific options—including Oracle active Data Guard and Oracle Flashback—were implemented, taking the mean time to recovery from more than six hours to less than one hour. 17
  20. 20. • Reduced training costs. With standardized platforms and fewer configurations to support and maintain, Oracle IT support engineers could focus on learning a more- specific set of skills. In addition, each configuration was captured and kept up to date in a configuration management database that became an invaluable tool in reducing support requirements. The decrease in the number of configurations that needed to be maintained and supported led to a direct reduction in datacenter costs. • Greater resource allocation. The combination of standardized platforms and uniform processes had the added benefit of reducing the number of skill sets required to support the environment—much fewer than the number required in a more heterogeneous environment. Because of the common skill set for supporting the standard platforms, Oracle IT managers now have greater flexibility in assigning resources. • Increased agility in acquisitions. The agility of Oracle IT in managing the integration of acquisitions has made a huge impact on the success of the acquisitions and has made Oracle IT a major contributor to the acquisition integration plan. By offering acquisition integration as part of their service delivery, Oracle IT is able to “flip the switch” once ownership of the acquisition is transferred to Oracle. Getting More from Less The virtualization of storage and server resources has made a tremendous impact on the cost of IT infrastructure. • Increased storage utilization. Because of consolidation, Oracle IT can provide more-efficient management of storage pools. Datacenters now have only a few storage pools, but those storage pools are addressable by all servers with a need for storage capacity. as a result, datacenters can run storage media at a higher threshold before having to add capacity. • Increased capacity, same space. By upgrading to more efficient or higher capacity hardware, Oracle IT was able to support many more clients (and external customers) while using only 20 percent of the hardware footprint of the past. In 2009 alone, Oracle IT achieved more than US$10 million in cost avoidance as a direct result of applying data storage optimization technologies such as Oracle advanced compression and Oracle Partitioning.18
  21. 21. FaCT: Fewer IT resources are supporting many more internal and external clients andusing only 20 percent of the hardware footprint of the past. CHaLLENGES, SOLUTIONS, aND BENEFITS Aggressive Growth Through Multiple Acquisitions Solutions Benefits “We will take the best • Consolidate, standardize, and virtualize datacenters. • Faster integration of acquired companies means practices from Sun, • Provide IT services and provisioning for newly acquisitions are absorbed faster, maximizing their combined with the acquired companies, using a utility service model. prospects for success and minimizing disruptions to existing customers. great work that has • Integration of newly acquired companies follows a set been done at Oracle to path of smooth integration. create a high degree of Understanding and Satisfying Customer Requirements flexibility and efficiency • Engage clients (Oracle On Demand, Oracle • Buy-in at all levels of the company for in delivering services University, and internal Oracle product development transformation plan. groups) and use their input to decide what platforms, • First-hand information about which platforms and through our applications, and services to support. applications are critical to customers. datacenters. ” • Deliver effective and cost-efficient services to customers by adopting ITSM and ITIL processes Kristin Russell, to focus on real customer needs. VP Service Operations, Oracle • Standardize on platforms to reduce the number of configurations. Employing Technology to Reduce Costs and Increase Efficiencies • Scalable solutions for now and in the future. • Smooth, timely integration of acquired companies. • Standardizing on Oracle products and technology. • Increased server utilization from 7 percent to 70 • Clustering with Oracle RAC. percent (for Oracle University Grid). • Consolidate hardware and use new technology • Faster backup and recovery. Reduced mean time to within datacenter to reduce physical footprint. recovery (MTTR) went from more than 6 hours to less than 1 hour. • Increased storage compression from 0 to 40 percent. Redefining a Datacenter That Can Scale to Support Oracle’s Aggressive Growth Now and in the Future • Consolidate datacenters from more than 40 • Reduced cost of IT as a percentage of overall centers to 2 centers. (A third datacenter is revenue from 2.63 percent in 2006 to 1.85 percent currently being built in Utah, using state-of-the-art at the end of 2009. technologies.) • Reduced number of supported platforms from more • Adopt standardized processes using ITSM and ITIL. than 20 to 3. • Decrease facility costs (real estate, utility usage, • Reduced skyrocketing annual growth of electricity use hardware, and so on). from 100+ percent to 4 percent. (Reduced power use • Increase storage capacity with new hardware effectiveness [PUE] metric from more than 2 to 1.5.) technology that provides more density in the • Reduced or eliminated facility costs (including real same space. estate, utilities, administrative overhead). • Eliminate duplication of jobs and resources. • Contributed significantly to the decrease in general • Standardize on applications and platforms. and accounting (G&A). • Consolidate all enterprise applications that are • Reduced number of database administrators (DBAs) supporting key operational processes (for example, needed from 300 to 233. procure-to-pay and hire-to-retire programs) into • Standardized skill set for maintaining datacenters one environment supported on one platform. decreases training and support costs. • Reduced provisioning time from months to minutes for Oracle On Demand customers. • Reduced number of application production instances from 51 to 1.Figure 13. Oracle IT has achieved many benefits by using innovative solutions to address challenges. 19
  22. 22. conclusion With the completion of the four phases of the transformation plan, and with a major integration effort in process with the acquisition and integration of Sun, Oracle has implemented a solid foundation for utility computing through the adoption of the ITSM and the ITIl framework. By consolidating, standardizing, and virtualizing the technology stack, Oracle IT has provided the automation needed to be cost-efficient and effective at providing IT services and has achieved significant improvement in efficiencies by doing more with less. Oracle IT went from a siloed, function-oriented organization to become a key entity in the support of Oracle’s aggressive acquisition strategy. The scalability of IT processes—once seen as a real bottleneck for integrating companies—is now an example of IT excellence.20
  23. 23. CONTaCT USFor more information, please visit send an e-mail to 21
  24. 24. Oracle CorporationWORLDWIDE HEaDqUaRTERS500 Oracle ParkwayRedwood Shoresca 94065U.S.a.WORLDWIDE INqUIRIESPhone:+1.650.506.7000+1.800.ORacle1Fax:+1.650.506.7200oracle.comauthorsMark Sunday, Senior Vice President and Chief Information Officer, OracleKristin Russell, Vice President of Service Operations, OracleVenki Rajah, Senior Director, Oracle Industry Strategy and Insightnardo Van Der Rijst, Director, Oracle Industry Strategy and Insightcopyright © 2010, Oracle and/or its affiliates. all rights reserved. Published in the U.S.a. This document is provided for information purposes only, and the contents hereof aresubject to change without notice. This document is not warranted to be error-free, nor subject to any other warranties or conditions, whether expressed orally or implied in law,including implied warranties and conditions of merchantability or fitness for a particular purpose. We specifically disclaim any liability with respect to this document and no contractualobligations are formed either directly or indirectly by this document. This document may not be reproduced or transmitted in any form or by any means, electronic or mechanical, forany purpose, without our prior written permission.Oracle and Java are registered trademarks of Oracle and/or its affiliates. Other names may be trademarks of their respective owners.aMD, Opteron, the aMD logo, and the aMD Opteron logo are trademarks or registered trademarks of advanced Micro Devices. Intel and IntelXeon are trademarks or registeredtrademarks of Intel corporation. all SPaRc trademarks are used under license and are trademarks or registered trademarks of SPaRc International, Inc. UnIX is a registeredtrademark licensed through X/Open company, ltd.10041050 | C17248