WHITE PAPER Business Value of JBoss Enterprise Application Platform

Transcription

1 WHITE PAPER Business Value of JBoss Enterprise Application Platform Sponsored by: Red Hat Inc. Maureen Fleming December 2010 Randy Perry EXECUTIVE SUMMARY Global Headquarters: 5 Speen Street Framingham, MA USA P F As companies continue to develop custom applications to manage their business, the issues of high costs and inefficiency become paramount. Over the past few years, enterprises have begun to reassess their use of traditionally licensed application servers and are increasingly opting to decrease costs by moving to well-trusted, open source alternatives. IDC studied the business value of adopting the JBoss Enterprise Application Platform on behalf of Red Hat by interviewing six large United States based companies that used JBoss to develop custom applications and have been running the applications for at least 12 months. On average, the companies in the study gained more than $6 million a year in financial benefits by moving from traditional proprietary application servers to JBoss Enterprise Application Platform. This translated to $20,240 per 100 users. The six companies in the study were able to realize the following key benefits: Time to develop custom applications was reduced by an average of 16 weeks (39%). Developer hours for each application were reduced by 24%. Infrastructure costs supporting application development were reduced by 65%. Costs to manage applications following deployment were reduced by 89%. Because of more efficient application development, companies were able to develop 51% more applications per year. Over a three-year period, companies deploying JBoss generated an ROI of 569% and paid back their initial investment in less than six months after the platform was fully deployed. SITUATION OVERVIEW Enterprises are heavily dependent on application server software to run both customized and packaged applications. When a new network-based application is required, developers typically package and deploy the application logic and related files and the configuration scripts on an application server. The software also coordinates the various services data access, authentication, session management, etc. required for application functionality.

2 Over the past few years, enterprises have begun to reassess their use of traditionally licensed application servers. Because this middleware is mature and because the license and maintenance expenses represent a hefty and growing element of IT operating costs, there is an effort to decrease costs by moving to well-trusted, open source alternatives. For this study, we interviewed six customers that run Red Hat's JBoss Enterprise Application Platform in mission-critical production environments. Five of these six customers use proprietary source application servers but are making the shift to open source application servers either with a migration strategy or as a joint standard. The sixth company previously used closed source application servers but migrated its application portfolio to JBoss. All of the study participants made their decisions to move to open source to reduce costs and to provide some control over price increases from their primary vendor during renewal periods, when contract prices can be increased. One study participant adopted the JBoss Enterprise Application Platform when the company's sole application server provider presented it with an unusually large price increase. Faced with the increase, the participant's IT organization decided it was no longer willing to be held captive, adopted JBoss as a second standard, and began a long process of migrating and divesting its primary application server provider. While decreasing cost and reducing the risk of cost increases were the primary reasons JBoss was adopted, the participant group found additional benefits: Better audit functionality. Because JBoss is configuration file based, it provides one participant with clear audit records about what was changed from environment to environment. With the other application server in use from a closed source vendor, the customer cannot trace changes between the development and production environment. The fact that it can do this with JBoss is proving to be as beneficial as the lower software costs. Lightweight and configurable. Several participants mentioned the ease with which developers can work with only the capabilities they need, making JBoss more lightweight and more easily configurable than competing application servers. More productive development life cycle. According to one participant, "JBoss gave us the ability to give to the developers exactly what they have in production on their desktop, which is something that we can't do with any of the other middleware providers." This ultimately reduces support costs "because if it breaks on their desktop, it's going to break in production. Better compliance with standards. Several capabilities are supported in the environments of JBoss' closed source competitors that allow developers to be more productive. But these workarounds lock the enterprise into a proprietary environment and make it more difficult to support standards. JBoss conforms more tightly with standards, according to participants. 2 # IDC

3 JBoss Enterprise Application Platform JBoss Enterprise Application Platform is an open source application server environment for highly transactional Java Enterprise Edition (JEE) applications. The platform provides capabilities for building, deploying, and hosting an application in a production environment. It supports a variety of popular programming models and deployment options as well as private and public cloud deployments. The platform offers the following key features: Enterprise-class performance and scalability via integrated clustering and high-availability features including failover, caching, intelligent load balancing, and distributed deployment. Second-generation, service-based architecture based on the JBoss Microcontainer architecture provides class loading, performance, life-cycle management, and flexibility across a wide variety of programming and component models including JEE, POJOs, OSGi, and Spring. The Microcontainer separates enterprise services from the core application server runtime engine to deliver a configurable and flexible Java application platform. Integrated frameworks for building rich Internet applications and integrating all of the technologies required to build common types of Java applications, from simple Web applications to highly transactional JEE applications. Stable, enterprise-grade versions of each framework are integrated, certified, and kept up to date as part the JBoss Enterprise Application Platform product life cycle so that both development and deployment platforms are operationally in sync. Enhanced application security, beyond required Java security standards, to meet rigorous industry security requirements such as Common Criteria. JBoss Enterprise Application Platform includes features for password masking, instance-based access control, security negotiation, audit, and integration support with common single sign-on solutions. Simplified application management and configuration via JBoss Enterprise Application Platform's administration console. Developers and administrators can easily adjust configuration settings, execute controls, and drill into application performance metrics. For enterprisewide management, leverage JBoss Operations Network to control, administer, and proactively manage all of your development, testing, and deployment environments. BUSINESS VALUE ANALYSIS Study Demographics IDC interviewed six companies that used JBoss to develop custom applications and have been running the applications for at least 12 months. These are large enterprises with an average of 37,945 employees. They are located in the United States and come from the financial services, healthcare, and insurance industries. All 2010 IDC #

4 of the companies moved to JBoss to lower their costs to develop applications although two companies also stated that they were unhappy with the performance of the legacy system. All companies deemed these applications critical to their businesses, and in one case, these applications were the main revenue-generating activity (see Table 1). TABLE 1 Demographics Category Average Employees 37,945 IT users 31,965 IT staff 5,003 Applications built annually 21 Regions Industries U.S. Financial services, healthcare, insurance Source: IDC, 2010 BENEFITS ANALYSIS On average, the companies in the study enjoyed over $6 million a year in financial benefits from application development and management by moving to JBoss Enterprise Application Platform. This translates to $20,240 per 100 users or $2 million for a company with 10,000 users (see Figure 1). Benefits came from the following areas: Staff savings. Companies were able to save $15,049 per 100 users annually by reducing the labor costs to develop, deploy, and manage custom applications. Infrastructure savings. Inherent in creating a more efficient platform for application development are reduced infrastructure costs. Companies were able to reduce the costs for development hardware, software, storage, and facilities by $4,106 per 100 users annually. Business benefits. Companies were able to develop applications faster, easier, and with lower failure rates. They were able to increase their operational income by $1,085 per 100 users annually or roughly $100,000 for a company of 10,000 users. 4 # IDC

5 FIGURE 1 Average Annual Savings per 100 Users Business benefit ($1,085) Infrastructure cost reduction ($4,106) IT staff postdevelopment management ($690) IT staff application development ($14,360) Source: IDC, July 2010 Optimizing Application Development The companies in the study were able to reduce the time to develop their custom applications by an average of 16 weeks (39%). The savings were not just in terms of time saved but reduced effort as well. Using JBoss made each phase of the application development process faster, simpler, and more automated, with the major impact being felt in the testing and deployment phases. Overall, companies were able to reduce the labor costs per application by 24%, saving $163,000 per application. Staff savings from optimizing application development accounted for $14,360 per 100 users annually or 71% of total benefits. A company with 10,000 users could experience savings of $1.4 million annually. More efficient application development usually yields a better quality application. We measure quality by assessing the costs of managing the application in the first days of general rollout and the average costs over the first year. The first days of the postdeployment period are significant for any new application and especially custom applications integrated into existing frameworks. In a typical IT project, IT managers must deal with a higher volume of service desk calls and application downtime issues as users get through early problems and IT support staff learn their way around the new applications. Customers interviewed indicated more positive experiences with JBoss over traditional proprietary application servers. JBoss' highly optimized structure yielded more reliable quality than traditionally developed applications. Service desk call volume associated with these new custom applications declined by 23%. Calls issues were more easily identified and resolved, resulting in an average reduction in help desk costs of 25% IDC #

6 Downtime instances for new applications within the first 30 days of deployment declined by 56%, reflecting the benefits of a more efficient testing process prior to release. This quality carried on past the initial break-in period as annual downtime for the custom applications dropped by 94%. Total IT staff savings associated with firstyear application management totaled $690 per 100 users. A company with 10,000 users could experience savings of $69,000. Creating a More Efficient Development Process By migrating to JBoss, companies in our study changed their strategy for developing applications and as a result built a more efficient process. In addition to saving developer and IT support staffing resources, companies were able to reduce the costs for the infrastructure supporting application development. This savings includes annual costs for development servers and software as well as the infrastructure space, power, and networking directly tied to those servers. This savings means that these companies were able to reduce capital expenses while increasing the volume of application development by 51%. A company with 10,000 users could experience savings of $400,000. One of the drivers for migrating to JBoss was the need to develop more applications. Finding that developing custom applications is now quicker and less expensive prompted several companies in the study to increase the number of future custom development projects. On average, companies went from developing 21 custom applications annually to 32 applications. At this rate, companies on average will save an additional $2.2 million annually in application development costs (see Table 2). TABLE 2 Application Development Highlights Traditional JBoss Savings % FTEs per application development FTEs per application ongoing support Average development time per application (weeks) Number of applications developed annually Source: IDC, # IDC

7 Reducing the Total Cost per Application Combining the initial development costs with the annual costs over three years, we can see that the companies in this study using JBoss were able to reduce the total costs of their custom application development and management operations by 45% compared with building the applications using the traditional approach. Over a threeyear period, they were able to save a total of $475,000 per application (see Figure 2). FIGURE 2 Three-Year TCO per Application 1,200,000 1,000, ,000 ($) 600, , ,000 0 Traditional JBoss Developer staff costs IT management cost postdeployment Infrastructure costs Source: IDC, July 2010 Business Benefits IT remains the most resource-constrained business operation. As such, companies are quick to take advantage of any technology that enables faster and more efficient operations. By reducing the time to generate custom applications by 39% and reducing the level of effort (developer labor) by 64%, the companies in the study not surprisingly responded by increasing the number of custom applications they developed annually by 51%. As a result, they experienced a number of business benefits: 1. Time to market. By getting to market quicker, companies gained a competitive advantage by being the first to offer new services IDC #

8 2. Improved services. In addition to increasing project velocity, companies increased service quality, which yielded high customer satisfaction (internal and external customers) and reduced lost revenue from customer churn (external only). 3. New revenue. For companies creating new services for customers, more applications mean more revenue. In an extreme case, one company increased its output and accompanying revenue by a factor of five. While each company benefited differently from moving to JBoss, on average, companies experienced an additional $3.5 million in annual revenue. IDC's standard methodology is to take this top-line benefit to the bottom line, where we can combine it with cost savings. IDC recognizes only the operating income, which is calculated by applying an operating profit margin of 10% to the revenue. Companies recognized $690 in operational income per 100 users. ROI ANALYSIS The companies in this study realized over $6 for every $1 invested in the JBoss Enterprise Application Platform for an ROI of 569% (see Table 3). IDC's methodology for ROI analysis involves assessing the discounted cash flows generated by the investment over a three-year period. Our standard discount rate, which typically is the cost of capital, is 12%. This is sufficiently high to cover most organizations' cost of capital plus any additional risk associated with higher than average investment or delayed recognition of benefit. This approach yields a conservative result. The investment in the JBoss Enterprise Application Platform includes the initial hardware and software, the installation, consulting services and upfront training, and annual subscription fees, which include access to software, patches and updates, support, and maintenance. Over a three-year period, companies saw discounted benefits of $45,938 per 100 users and average investment of $6,864 per 100 users, resulting in a net present value (NPV) of the investment of $39,074 per 100 users. For a company of 10,000 users, this would be $3.9 million. Due to Red Hat's subscription model, most of the companies in the analysis had few up-front software costs. The companies in the study found JBoss relatively easy to deploy and use, so the IT labor associated with installing JBoss and migrating application development activities and training was also low. The initial costs accounted for only 17% of the total three-year investment in JBoss. Typically, in an IT solution cost analysis, initial costs account for 40 50% of the total investment. The low initial investment and the rapid deployment enabled JBoss customers to achieve payback in less than six months. 8 # IDC

9 TABLE 3 Three-Year ROI Analysis Value Per 100 Users Benefit (discounted) $14,684,018 $45,938 Investment $2,193,994 $6,864 Net present value $12,490,024 $39,074 ROI = NPV/investment 569% 569% Payback = investment/npv Source: IDC, 2010 CHALLENGES/OPPORTUNITIES Because application server middleware is both critical and mature, many enterprises have invested in tools that automate the shifts between development and testing and testing and deployment. These tools tend to focus on the enterprise's standard application server, and investments are made to update their configuration and deployment tooling with each new version of application server software. Despite the resistance to change because of the investments to support a standardized approach to application servers, many enterprises have reached a tipping point. They've realized they require at least a second standard if not a full migration strategy to a lower-cost alternative. Several factors have emerged to create this environment for change, including: Frustration with being a captive recipient of excessive price increases Growing number of application servers that accumulate to a large IT expense Increasing focus on driving down the cost of IT Recognition that open source providers are driving innovation around lighterweight application servers that better align with needs such as virtualization and dynamic Web applications Participants in this study were satisfied with their cost savings through the adoption of JBoss Enterprise Application Platform and were surprised and pleased to find additional benefits around lower costs of problem resolution as well as faster speed to configure in development, testing, and deployment IDC #

10 To prepare for adoption, developers will need to spend some effort understanding coding changes on the new platform, and the operations team will need to adapt its existing configuration tools as well as clustering and updating. Participants in this study from large enterprises took a gradual approach to adoption, testing development, configuration, and scalability. They are gradually using JBoss for increasingly sophisticated applications. Some see no difference and are comfortable with adopting JBoss for any type of application, while others are only partially through their planned adoption curve. Regardless of the level of JBoss application server maturity, however, participants expressed satisfaction in being able to meet the challenges of adoption, while the benefits far outweighed any challenges. CONCLUSION For many years, the tension between the proprietary source application server vendors and open source has revolved around the idea of enterprise-class performance. The larger, proprietary source vendors try to scare their customers from adopting open source, particularly JBoss, telling them the software is too hard to use and too hard to configure and does not scale. Based on the results of this study, that is clearly not the case. Many enterprises are disregarding the fear-uncertainty-doubt campaigns of their primary application server vendors and are successfully moving to open source. The growth rate for the JBoss application server portfolio is more than double that of its larger competitors, measured by revenue. The consistency of findings across the study group indicates good value. In addition, there was also agreement among participants that the configurability of JBoss makes it a higher-value option for developers to use to speed up and improve the application life cycle. APPENDIX IDC utilized a standard ROI methodology for this project. This methodology is based on gathering data from current users of the technology as the foundation for the model. Based on these interviews, IDC performs a three-step process to calculate the ROI and payback period: 1. Measure the savings from reduced IT costs (staff, hardware, software, maintenance, and IT support), increased user productivity, and improved revenues over the term of the deployment. 2. Ascertain the investment made in deploying the solution and the associated training and support costs. 3. Project the costs and savings over a three-year period and calculate the ROI and payback for the deployed solution. 10 # IDC

11 IDC uses the NPV of the savings and increased revenue over three years in calculating the ROI and payback period for the deployment. The NPV of the savings is determined by subtracting the amount that would have been earned by investing the original sum in an instrument yielding a 12% return (to allow for the missed opportunity cost that could have been realized using that capital). IDC bases the payback period and ROI calculations on a number of assumptions, which are summarized below: 1. Time values are multiplied by burdened salary (salary + 28% for benefits and overhead) to quantify efficiency and manager productivity savings. 2. Downtime values are a product of the number of hours of downtime multiplied by the number of users affected. 3. The impact of unplanned downtime is quantified in terms of impaired end-user productivity and lost revenue. 4. Lost productivity is a product of downtime multiplied by burdened salary. 5. Lost revenue is a product of downtime multiplied by the average revenue generated per hour. 6. The NPV 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. 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 firstyear savings. Copyright Notice External Publication of IDC Information and Data Any IDC information that is to be used in advertising, press releases, or promotional materials requires prior written approval from the appropriate IDC Vice President or Country Manager. A draft of the proposed document should accompany any such request. IDC reserves the right to deny approval of external usage for any reason. Copyright 2010 IDC. Reproduction without written permission is completely forbidden IDC #