The Standish Group: Make the Right Database Investment

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The Standish Group: Make the Right Database Investment

  1. 1. Make the Right    Database Investment    Strong reasons make strong actions. -William Shakespeare  In our annual research on IT priorities for 2009, investment tops the list. This is not a big surprise given the current economic  environment. It is also not a new priority for IT. For many years IT has been pressured to do more for less. Investment, in resources into solutions to enrich the organization        the context of IT, is the action of putting           through increased services.                 IT investment is one of the fundamental decisions of IT management   most of             and it drives  all other decisions throughout the IT organization. Today, IT is more and           on investment (ROI),  more focused on the total cost of ownership (TCO), return                     and risk to justify investments versus technology capability. Standish offers financial      and           assessment services  provides meaningful advice in the form of presentations and This research   based       reports.    note is  on one such engagement.            and the results  a Standish Group TCO rough order of magnitude  This is a condensed example of a real assessment     of                            (TROM) estimate done for and on the behalf of one our customers. Please note this concise assessment document is   of    given as an example of the type of value assessment capabilities of The Standish Group. This was an actual assessment              for a client; the client’s name is not publishable and some of the attributes of the real organization have been changed        to the confidentiality agreement of the true organization. This case  due       IT TOP 10         study is confirmation of    the thousands of case studies and data points  our VirtualADVISOR®  in      system. The Standish Group International, Inc. 1 Investments           has collected cases studies and gathered data to (Standish)   a number of   2 Security    meaningful comparative estimates. The intent of    provide   this information           3 Project Management Leadership is so customers can make a more intelligent and economical decision          if they should migrate their current applications, and what is about how or    4 Green Computing          cost-effective solution. the most     5 Compliance    a    The customer is  leading provider of     futures trading services to the   6 SOA  marketplace, operating exclusively on an   platform. It is        electronic  7 Optimization           global marketplace for financial instruments committed to being a premier       8 Readiness and an infrastructure provider and partner in                the securities business-to-               9 Business Process Management business marketplace. The assessment     gathering   project consisted of   cost and transaction information from the customer and mapping these 10 Open Source & Std Infrastructure  properties against the Standish Unit of Work Model (SUW) and other research instruments. The customer presently runs currency future systems on a proprietary mainframe using proprietary infrastructure software including database, middleware, and operating system. The current system runs at a high level of availability, and the new system must have a similar operating environment. The application suite consists of approximately one and a half million lines of Cobol and C code. The new trading application is to be written in Java with an estimated 250,000 lines code. There are many supporting systems, such as clearing and network systems, but for the purpose of this study we concentrated on the trading engine. The application runs at 3,000 transactions per second at peak and runs 800 hours at peak with a total yearly transaction load at 6 billion. There will be a decision to migrate the trading application to a commodity system. The hardware platform is Intel blades. There are two data centers with identical operating environments. There is one primary data center and an unmanned backup site. The cost model provided includes both the primary and backup installation. The TROM is needed to help decide what database to use. Presently the customer uses both Oracle and Sybase databases on other applications. The current database decision is between Oracle11g and Sybase ASE 15. A Standish Group Research Note Copyright © 2009
  2. 2. One of the overriding concerns is latency of transactions. A one one-hundredth of a millisecond decrease in round-trip transactions can mean millions of dollars in additional contracts and revenue. This, coupled with the high cost of adding new features and functions to the current mainframe trading application, is the prime motivation for moving from the existing system. However, cost is always a consideration and The Standish Group was engaged to assess the TCO of the existing system and project the TCO of a new system. The TCO chart shows the trading application running Currency Trading on a Linux blade server with both Oracle and Sybase. Basic Cost ($000) Oracle Sybase Difference The TCO model looks at three types of costs: basic, Hardware Cost 398 374 6% application, and the cost of downtime. Software Cost 144 140 3% The basic costs are generally the “computer room” Manpower Cost 253 255 -1% costs. The hardware is calculated on a three-year Maintenance Cost 303 297 2% operating lease using actual street prices, not vendor Other Cost 286 283 1% list price. It includes all computer equipment – disk drives, tape drives, communications controllers, Total Basic Cost 1,384 1,349 3% and other equipment. In this case the client was Application Cost ($000) using commodity blades. Sybase has a significant Basic Cost 1,384 1,349 3% performance advantage by running the same Software Infrastructure 552 459 17% workload with less compute power and several fewer Database & Systems CPUs, giving a savings of 6%. The system software 312 281 10% Administration includes the operating system, system utilities, and Application Maintenance 343 311 9% other system management systems. In this case the Other Cost 96 88 8% difference is slight, with a savings of about $4,000 per Total Operating Cost 2,687 2,488 7% year for Sybase. The maintenance includes the cost Cost of Downtime 200 145 28% of maintenance fees for both hardware and software, Cost, Including Downtime 2,887 2,633 9% and again, Sybase has a small advantage of 2%. The manpower is the labor cost to operate and manage the The above chart shows the trading application running on a Linux blade server computer system and that advantage goes to Oracle with both Oracle and Sybase. Overall the cost is about 9% cheaper for Sybase. with a 1% savings. The other costs include electricity, air conditioning, backup power, real estate, and any other computer room costs. Sybase has a 1% advantage in this category. The basic cost shows very little difference, with an overall cost of $1,384,000 for Oracle and $1,349,000 for Sybase, with a savings for Sybase of $35,000 per year or 3%. The application costs start with the basic cost. Next is the software infrastructure. Software infrastructure includes the database, in this case either Oracle or Sybase, middleware, and any software that is needed to operate and manage the application. This category also includes the maintenance of these products. The infrastructure cost is about 17% cheaper on Sybase, with a yearly cost of $552,000 for Oracle and $459,000 for Sybase. Database and system administration is the labor cost to manage and monitor the database and system. Here we see a 10% advantage for Sybase. Application maintenance has two items: internal and external labor to maintain the application and vendor package maintenance fees. The model shows that it cost about 9% less to support the application on a Sybase platform. Other costs include anything that was not included in the other categories, such as supplies, management, and consulting fees. The cost of downtime is the third cost. We can calculate of cost of downtime on a given platform by setting a single variable. In this case the only variable is the database itself. We have a default cost for a trade. We used these standard costs to calculate the cost of downtime. The cost of downtime is derived from three instruments. First, we multiply the Footnote: The original full report includes the costs to migrate the application. These costs include both internal and external manpower, transitional software, training, education, and any other expenses related to migrating from one version of software to another or from one platform to another. The report also contains a risk assessment of the project, called Project HealthCheck, which identified the risks and provided methods to minimize the risk. Finally, the report contains the expected return on investment. These items are not presented in this condensed version. A Standish Group Research Note Copyright © 2009
  3. 3. typical cost of a lost trade by the number of trades APPLICATION ORACLE SYBASE % lost during a downtime period. These costs include lost revenue, compliance fees, and all costs Billing $1,435 $1,168 19% related to not processing a trade. Second, we CRM $11,279 $10,163 10% have an average cost for a downtime incident on trading applications. We then multiply the projected Portfolio $2,673 $2,348 12% number of incidents by the cost per incident to give Purchasing $2,036 $1,778 13% us a second number. Third, we have a standard cost per downtime minute for trade applications. The customer case is not an anomaly. The table above shows the TCO of four mission- critical applications. It compares them running on Oracle versus Sybase over Linux. We then multiply the cost per minute of downtime by the projected downtime minutes to give us another cost. We then average the three to calculate the cost of downtime. There are also methods, such as the cost of a lost customer or major contract, which are factored into our cost of downtime equation as well. In this case we calculate the cost of downtime on an Oracle platform to equal $200,000 per year versus Sybase at $145,000 per year. Overall, the cost is about 9% cheaper for Sybase when considering downtime. The cost per currency trade using Oracle on Linux is $.0036, while the same trade with Sybase on Linux is $.0032, with a yearly total cost of ownership on the Oracle platform of $2.9 million while the Sybase platform is $2.6 million. Oracle has made great strides in improving its TCO and that coupled with Linux, commodity hardware, and greater centralized management provides a persuasive TCO. Additionally, our research shows that some customers now employ fewer DBAs for Oracle than six years ago; it is because there has been a trend to outsource the Oracle DBA functions, which has affected the lower manpower cost. On the other hand, Oracle is still way behind Sybase in TCO. All and all, if you want a highly reliable application with the preeminent total cost of ownership, you must consider Sybase on Lintel. PROCeSS OveRvIew The engagement was done in the following standard TROM steps: SteP 1. Preliminary Communication: In this step we gathered as much information as possible from the account team and general public sources. SteP 2. Two-Day Review Meeting: In this step we met with the customer and walked through their operation, talked to the staff, and reviewed financial and transaction data. We also reviewed the application’s characteristics. SteP 3. Follow-up Information: After the review meeting, we had a number of follow-up questions and clarification. There were a number of e-mails and telephone conversations between customer personnel and Standish. SteP 4. Verification of Numbers: Once we had all the customer numbers we then did several sanity checks verifying comparative data within our database and other sources. SteP 5 . Case Work: Here we built the Standish Units of Work and then matched them against cases in our database. We were very careful to choose cases that matched the customer’s operating environment. (See VirtualADVISOR System.) SteP 6. Presentation and Review: Once we had all the cases built and felt the numbers were correct; we created the presentation and presented our findings to the customer. SteP 7. Report: Delivered final report to the customer. A Standish Group Research Note Copyright © 2009
  4. 4. ABOut the vIRtuALADvISOR® The VirtualADVISOR® System is designed to improve the efficiency and value of IT performance, while increasing the delivery speed of critical applications and IT infrastructure. The VirtualADVISOR® System is a collection of proven wisdom-based management tools used by Standish Advisors (STARs) to help IT managers increase their understanding of their business and IT environment by providing case-based and enterprise-wide alternative solutions. Using highly advanced case-based reasoning technology, STARs are able to profile your project, application, or systems for total cost of ownership (TCO), return on investment (ROI), and risk against 70,000 project cases and 2,000 system cases. You can apply these cases against more than 100 applications and uses with over 20 system types, seven database types, and many types of middleware, making the VirtualADVISOR truly virtual. There are several major features that make the VirtualADVISOR an IT management system without comparison: Freshness: The case database is always fresh and up to ASSetS PROJeCtS date; no case in the cost database is older than six months. Since the VirtualADVISOR is a web-based thin-client tool, new +1200 CIOs 5,000 IT/PMs data is added and existing data is updated in the background. 2,000 CASES 70,000 Cases Therefore, each time a STAR runs a case for you, you are getting 8-12 Hours/Case 1-4 Hours/Case the most up-to-date results. 10 x 2K = 20K Hours 2 x 70K = 140K/Hrs 2,500 Days 18,000 Days 12.5 CIO Years 84 Years No Assumption: It is our database of actual cases that drives the conclusions; there are no assumptions used. Your case profile will match against cases in the database. Items in the database have been thoroughly scrutinized and categorized for importance. Each item has a dynamic weight to ensure the maximum relevance to your profile. Currently we are experiencing a 90% match rate. Extensive: Each TCO case in the database takes about 50 hours of work to complete, usually by several people. This equates to 56 IT person-years of work for the initial database. Every six months we retire a number of cases and update all the rest, plus each month we collect downtime information for about another 40 person-years of IT effort. The project case database, which we accumulate, has about 50 IT person-years of work as well. Diversity: While the VirtualADVISOR database represents more than 100 years of CIO, IT executive, and IT professional work, its real strength is in its diversity of input. More than 20,000 people have contributed to the database across 100 countries, countless industries, and a wide range of company sizes. This diversity of experience gives you a collection of expertise rather than one person’s opinion or the opinion of a small group with their natural limited experience. User Driven:The TCO was developed by user input; all data is collected from users and NO price data, performance, or any other input is derived from vendors. We do not use benchmarks or consultant opinions to calculate cost or risk. This makes the VirtualADVISOR a true unbiased source. The risk model was developed from 14 years of CHAOS University input and CHAOS data of more than 70,000 projects. ABOut the StAnDISh GROuP InteRnAtIOnAL, InC. Since 1985 The Standish Group, the leader in spotting future trends, has been helping end users and vendors of technology solutions prepare for the future. The Standish Group delivers fast, consistent, reliable, independent IT advice built on a solid foundation of primary research. For further information visit our website at: http://www.standishgroup.com. The Standish Group International, Inc. • 60 State Street, Suite 700 • Boston, MA 02109 • P: (508) 760-3600 A Standish Group Research Note Copyright © 2009

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