AT&T Leverages HP Vertica Analytics Platform to Change the Economics of Providing Actionable Insights to Decision Makers

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1 IDC ExpertROI SPOTLIGHT AT&T Leverages HP Vertica Analytics Platform to Change the Economics of Providing Actionable Insights to Decision Makers Sponsored by: HP Matthew Marden November 2014 Overview AT&T has made Big Data analytics a core component of the business decision-making process to drive its growth and maximize customer satisfaction. In May 2013, the telecommunications company augmented its Enterprise Consolidated Data Warehouse with the HP Vertica Analytics Platform (HP Vertica) to improve the performance of critical analytics workloads. HP Vertica, a core engine of the HP HAVEn Big Data Platform, has surpassed AT&T's expectations and is providing company decision makers with actionable insights into areas such as customer and network use patterns. John Yovanovich, Director of Data Strategy, Delivery, and Support at AT&T, explained that his company chose the HP Vertica Analytics Platform after concluding that "we needed a platform that supported the columnar database technology required by critical workloads." This conclusion reflected the increasingly prominent position of Big Data analytics at AT&T and the potential value the company sees in it. Yovanovich credits HP Vertica with changing how analytics are consumed and used by AT&T's lines of business (LOBs). Above all, his internal LOB clients demand a robust analytics platform that can run required queries quickly and efficiently. Before deploying HP Vertica, AT&T could not fully exploit the potential of Big Data analytics because of the cost and time associated with running certain queries on its legacy platform. With HP Vertica, Yovanovich's team provides superior outputs at a much lower cost, so business teams are bringing many more projects to his team. Business Value Highlights Organization: AT&T Location: Dallas, Texas Challenge: Deploy cost-effective columnar-based analytics platform powerful enough to run workloads that support strategic business decision making Solution: HP Vertica Analytics Platform Five-Year Cumulative Benefits: $63.38 million (discounted) ROI of 657% Payback in 4.0 months Other Benefits: Improved performance at 2% of the cost of the legacy solution 140% improvement in data compression capabilities Up to 97% reduction in time needed to run complex queries 20% productivity gain for data warehousing team November 2014, IDC #252320

2 Yovanovich cited a number of ways in which HP Vertica drives value for AT&T. From the onset, the move avoided investment costs of $11 million in pending capacity expansion. Business decision makers get query results in less time and can run more complex queries and analyses. As such, they have more actionable information in their hands sooner, which helps them craft improved business strategies and make better decisions. This results in improved services for AT&T's customers, improved customer relationships, and operational efficiencies. Meanwhile, Yovanovich's team has benefited from the speed with which HP Vertica runs queries and its ease of use; he estimates that teams responsible for preparing and carrying out data queries have become roughly 20% more productive since deploying HP Vertica. Finally, AT&T is paying much less to run analytics workloads on HP Vertica than it was paying to run analytics workloads on its legacy platform. This allows business units to migrate certain workloads to HP Vertica and pay much less even as the quality and speed of the outputs improve substantially. Based on discussions with Yovanovich, IDC calculates that AT&T is achieving discounted benefits of $63.38 million over five years with its to-date deployment of 570TB of data on HP Vertica, including cost savings on analytical queries compared with its legacy row-based analytics platform, costs avoided for increasing its legacy platform's capabilities, more efficient retention of data, and improved productivity for its data analytics team. Over a projected five-year period, this results in a return on investment (ROI) of 657% and a payback period of 4.0 months. Implementation AT&T's Big Data strategy is centered on leveraging the voluminous customer use data that feeds into the company's Enterprise Consolidated Data Warehouse to create actionable insights and ultimately business advantages. As of October 2014, the warehouse employs 3.2PB of storage in total and supports all of AT&T's home and business solutions product and service lines. The foundation of AT&T's Big Data strategy is to feed this huge amount of information more than 100 million files an hour flow from AT&T cellular towers alone into shared relational databases and then move this data into the data warehouse via the Hadoop open source software framework for analysis driven by analytics platforms. Two years ago, AT&T began evaluating columnar-based analytics engines after concluding that performance limitations with its legacy row-based analytics solution would prevent it from fully leveraging data to drive its business. It had discovered that it could not economically run many of the complex data queries and analyses requested by its LOBs on its legacy row-based analytics platform. As a result, AT&T sought a more robust, query-oriented analytics platform with columnar-based analytics technology to enable it to handle more complex queries and handle queries more efficiently. AT&T carried out a proof of concept with several Big Data analytics engines and found that HP Vertica came out on top in both performance and cost. "No one came close to HP Vertica on price," Yovanovich said. "We also liked the fact that they are a market leader in columnar database technology with a proven track record among large-volume customers like us." 2014 IDC #

3 AT&T initially deployed HP Vertica in May 2013 over four days with four employees in support. Onsite training was initially provided for 15 employees and has since continued. "HP Vertica performed well out of the box," Yovanovich said. "It has exceeded my expectations. It's quicker, so we spend less time on design. Also, we're able to spend more time on development to make sure we put out the best-performing product possible." In the first year, AT&T deployed 70TB of new data that had never been sourced to another data analytics platform to HP Vertica. It also migrated about 160TB off of its legacy analytics platform to HP Vertica, which opened up space on that platform and improved its throughput. Yovanovich expects HP Vertica to support a growing percentage of AT&T's data warehousing operations over the next four years, fueled by new projects, mergers and acquisitions, and organic growth. Benefits "HP Vertica performed well out of the box. It has exceeded my expectations. It's quicker, so we spend less time on design. Also, we're able to spend more time on development to make sure we put out the best-performing product possible." HP Vertica has changed the economics of using Big Data analytics for AT&T's LOBs while minimizing the likelihood that performance bottlenecks will prevent business teams from realizing the full potential of Big Data analytics. As a result, AT&T's data analytics team can now provide more actionable data, and Big Data analytics has become an important component of the company's growth plans. Yovanovich described a number of ways in which AT&T's strategic decision makers are leveraging queries and analyses made possible by HP Vertica. He explained: "We're enabling our marketing team to create significant customer insights with HP Vertica based on data records that they never could before." This results in personalized customer marketing efforts because "we can determine which messages and ads to present to a customer based on the customer's profile and use history." "We're enabling our marketing team to create significant customer insights with HP Vertica based on data records that they never could before." Strategic business decision makers at AT&T are also increasingly leveraging analytics delivered by HP Vertica to make important decisions. Yovanovich explained that AT&T uses call detail analyses to understand how its customers use its network of cellular towers and then applies this understanding to its strategy for investing in and expanding its cellular network infrastructure. This analysis, which took 17 hours to complete on AT&T's legacy analytics engine, takes just more than 30 minutes to complete with HP Vertica. This means that AT&T can now run these analyses more often and provide its strategic decision makers with actionable data and insights into how its network is being used on a more regular, timely basis IDC #

4 The speed with which HP Vertica can run queries and analyses means that users get results faster and can better integrate them into their decision-making processes. AT&T is also leveraging HP Vertica's improved compression capabilities 6:1 rather than 2.5:1 with the legacy system to double the retention time of data for analytics use from three months to six months. Yovanovich said that this improves the quality of queries and analyses by providing more complete insights based on a longer history. He said, "My goal is to retain 13 months of data, and I expect to do this within a year or so, which would give us full seasonality." In addition to having a positive impact on AT&T's lines of business, HP Vertica has altered the economics of Big Data analytics. HP Vertica costs only a fraction per terabyte (TB) of what AT&T's legacy analytics platform costs. This means that Yovanovich's team can offer the win-win proposition of improved analytics outputs at a much lower price thanks to the savings it is achieving with HP Vertica. As a result, business teams can afford to support more projects with analytical queries and data. For Yovanovich, the result is straightforward: "We save our lines of business so much money on capital with HP Vertica that they give us more projects." AT&T's data analytics team handles this increased project workload in part because of efficiencies it gains by using HP Vertica. Yovanovich cited the ease of using HP Vertica and its ELT approach (Extract, Load, Transform): "Take the source data, load it onto the platform, and then transform it on Vertica. This allows you to go directly to provisioning the data because you don't need to get it ready to put on the platform." This allows his team to more accurately track any errant code and ultimately close tickets faster. Yovanovich estimated that his team is about 20% more efficient with HP Vertica because "we spend less time with system requirements and development to transform data into an appropriate model that our internal end users want to see." "We save our lines of business so much money on capital with HP Vertica that they give us more projects." HP Vertica has also helped AT&T achieve other cost savings related to its use of Big Data analytics engines. By migrating projects from its legacy analytics platform onto HP Vertica, AT&T lengthened the life span of its existing system by about 16 months, which is allowing it to avoid significant expenses associated with buying more space on the system IDC #

5 ($) Quantifying the Benefits Based on interviews with Yovanovich about AT&T's use of the HP Vertica Analytics Platform, IDC has quantified the benefits the company is realizing from its to-date deployment of 570TB. When projected over five years, the benefits from improved data analytical operations, cost reductions, and increased data warehousing team productivity averaged $17.81 million per year (see Figure 1). FIGURE 1 Average Annual Benefits 20,000,000 18,000,000 16,000,000 14,000,000 12,000,000 10,000,000 8,000,000 6,000,000 4,000,000 2,000,000 0 $16,530,000 Business productivity benefits/it infrastructure cost reductions Total: $17.81 million $1,280,000 IT staff productivity benefits Source: IDC, 2014 Business Productivity Benefits/IT Infrastructure Cost Reductions The HP Vertica Analytics Platform has allowed AT&T's lines of business to make analytics a more central part of their operations and planning. For the purposes of this study, IDC has quantified the benefits to these business teams as the difference in cost for the use of the 160TB of capacity on HP Vertica that was transitioned from the legacy row-based analytics solution while also taking into account employee time costs associated with making this transition. IDC calculates the value to AT&T's business teams at an average of $16.53 million per year over five years. In addition to these cost efficiencies, AT&T business teams benefit from HP Vertica by being able to afford to run more queries and analysis and being able to run more robust queries. This translates into productivity gains for business team end users as well as higher revenue for AT&T through the development of more powerful applications and enhanced strategic decision making, although these benefits have not been quantified separately for the purposes of this study IDC #

6 IT Staff Productivity Benefits AT&T's team dedicated to supporting data analytical operations has also become more efficient and productive since deploying HP Vertica. In particular, HP Vertica makes the data ingestion process faster and less labor intensive. This means that AT&T has been able to evolve its ELT approach so that staff spend less time on system requirements and development to transform data into deliverables that serve end users. In addition to benefiting end users by shortening the overall query process, it also means that the data analysis support team spends less time on each query or request. As a result, the teams supporting AT&T's data analysis efforts have been able to cope with higher demand for their services based on the lower price point for queries run with HP Vertica without a commensurate increase in staff size. This is a significant benefit for AT&T given that it has several hundred employees supporting its data analytics efforts. IDC calculates that this benefit has a value of $1.28 million per year over five years in increased efficiency and higher productivity for these team members. Return on Investment IDC projects that over five years, AT&T will achieve total discounted benefits of $63.38 million by using the HP Vertica Analytics Platform versus a discounted investment of $8.37 million. This results in a fiveyear ROI of 657%, with breakeven on its investment in HP Vertica occurring in 4.0 months (see Table 1). TABLE 1 Five-Year ROI Analysis Benefit (discounted) Investment (discounted) Net present value (NPV) $63.38 million $8.37 million $55.01 million Return on investment (ROI) 657% Payback period 4.0 months Discount rate 12% Source: IDC, IDC #

7 IDC conducted several interviews with AT&T to quantify the benefits and investment associated with its use of the HP Vertica Analytics Platform and created an ROI analysis from the results. IDC calculates the ROI and payback period in a three-step process: 1. Measure the benefits from increased IT staff and user productivity and other cost savings since deployment. 2. Ascertain the total investment. 3. Project the investment and benefit over five years and calculate the ROI and payback period. The ROI is the five-year net present value of the benefit divided by the discounted investment. To account for the time value of money, IDC bases the ROI and payback period calculations on a 12% discounted cash flow IDC #

8 About IDC International Data Corporation (IDC) is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications and consumer technology markets. IDC helps IT professionals, business executives, and the investment community make factbased decisions on technology purchases and business strategy. More than 1,100 IDC analysts provide global, regional, and local expertise on technology and industry opportunities and trends in over 110 countries worldwide. For 50 years, IDC has provided strategic insights to help our clients achieve their key business objectives. IDC is a subsidiary of IDG, the world's leading technology media, research, and events company. Global Headquarters 5 Speen Street Framingham, MA USA idc-insights-community.com 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 2014 IDC. Reproduction without written permission is completely forbidden. 4AA5-5934ENW, November 2014