Prepared fr Oracle Crpratin March, 2009 The Ttal Ecnmic Impact Of Oracle Enterprise Manager Cnfiguratin Management Pack, And Prvisining And Patch Autmatin Pack Multicustmer Analysis Prject Directr: Michael Speyer, Frrester Cnsulting
Table Of Cntents Executive Summary...3 Purpse...3 Methdlgy...3 Apprach...4 Abut Oracle Enterprise Manager...4 Key Findings...5 Disclsures...6 Organizatin Interview Highlights...7 Cmmn Objectives And Challenges Slved By Oracle Enterprise Manager...7 Sample Organizatin...9 Descriptin Of The Sample Organizatin...9 Csts, Benefits, And Risk...11 Csts...11 Cst Details...11 Benefits And Savings...12 Benefits And Savings Details...12 Risk...14 Financial Analysis...15 Findings and Cnclusins...16 Appendix A: Ttal Ecnmic Impact Primer...18 Appendix B: Risk-Adjustment Factrs...21 2009, Frrester Research, Inc. All rights reserved. Unauthrized reprductin is strictly prhibited. Infrmatin is based n best available resurces. Opinins reflect judgment at the time and are subject t change. Frrester, Techngraphics, Frrester Wave, RleView, TechRadar, and Ttal Ecnmic Impact are trademarks f Frrester Research, Inc. All ther trademarks are the prperty f their respective cmpanies. Fr additinal infrmatin, g t www.frrester.cm. - 2 -
Executive Summary In March 2009, Frrester Cnsulting initiated wrk n a research prject cmmissined by Oracle Crpratin that fcused n examining the ptential return n investment (ROI) that enterprises may realize by adpting Oracle Enterprise Manager. This study specifically examines the benefits f Oracle Enterprise Manager Cnfiguratin Management Pack and Oracle Enterprise Manager Prvisining and (cllectively referred t as Packs ) fr managing databases, middleware, and applicatins, as well as hardware and perating systems. This study highlights the benefits and csts f deplying these Packs acrss the enterprise f a sample Organizatin (see descriptin f sample Organizatin starting n page 9. The findings in this study are, in a large part, based n in-depth interviews cnducted with six rganizatins currently using the Packs. The study examines the estimated ROI fr the sample Organizatin and presents the aggregate findings derived frm the interviews and analysis prcess as well as Frrester s independent research. The study fund that fr the sample Organizatin, the Packs prvided benefits and savings in the fllwing areas: Reductin in nging csts f managing IT cnfiguratins, cmpliance, patching, and prvisining. Increased administratr and IT peratins staff prductivity thrugh standardizatin f glden cnfiguratin standards, and by replacing errr-prne manual tasks with autmatin. Increased respnse t business needs and ability t scale envirnment thrugh autmated mass deplyment. A 20% reductin (ver three years) in capital spending n servers mnitred by Oracle Enterprise Manager. This sample Organizatin achieved a risk-adjusted and a very favrable 124% ROI (130% nnrisk-adjusted ROI) ver a three-year perid with a risk-adjusted payback perid f 15 mnths (14 mnths nn-risk-adjusted). Purpse The purpse f this study is t prvide readers with a framewrk t evaluate the ptential financial impact f Oracle Enterprise Manager Cnfiguratin Management Pack and Oracle Enterprise Manager Prvisining and. Frrester s aim is t clearly shw all calculatins and assumptins that g int the analysis. This study shuld be seen as a guide t better understand and evaluate Oracle Enterprise Manager Cnfiguratin Management Pack and Prvisining and. Methdlgy Oracle selected Frrester fr this prject because f ur expertise in enterprise IT management technlgies and Frrester s Ttal Ecnmic Impact (TEI) analysis methdlgy. TEI nt nly measures csts and benefits (areas that are typically accunted fr within IT); it als weighs the enabling value f a technlgy in increasing the effectiveness f verall business prcesses. Frrester emplyed three fundamental elements f TEI (see Appendix A) in this study: - 3 -
Cst and cst reductin. Benefits and savings t the entire rganizatin. Risk. Given the increasing sphisticatin that enterprises have regarding cst analyses related t IT investments, the TEI methdlgy serves an extremely useful purpse by prviding a cmplete picture f the ttal ecnmic impact f purchase decisins. Apprach Frrester used a fur-step apprach fr this study: 1. Frrester interviewed Oracle marketing and prduct management emplyees t fully understand the value prpsitin f Oracle Enterprise Manager Cnfiguratin Management Pack and Oracle Enterprise Manager Prvisining and. 2. Using knwledge f Oracle Enterprise Manager Cnfiguratin Management Pack and Oracle Enterprise Manager Prvisining and, as well as input frm existing Frrester research and Oracle, a Frrester representative cnducted in-depth discussins with six f Oracle s custmers regarding their experiences with Oracle slutins. 3. Frrester cnstructed a financial value mdel representative f the data cllected in the interviews. 4. Frrester created this study, which represents and examines the estimated value f the findings derived frm the custmer interview and analysis prcess and frm Frrester s independent research. Abut Oracle Enterprise Manager Oracle Enterprise Manager is Oracle s slutin fr managing IT applicatins running n Oracle s enterprise applicatin stack, which spans Oracle packaged applicatins, Oracle Fusin Middleware, Oracle Database, Oracle Enterprise Linux, and Oracle VM. Oracle Enterprise Manager emplys a tp-dwn apprach t applicatin management, enabling custmers t reduce IT csts while increasing the quality f services delivered with its enterprise applicatins. Oracle Enterprise Manager prvides the fllwing capabilities: Applicatin perfrmance management. Prvides a brad range f capabilities including user experience mnitring; mdel-based mnitring fr all middleware cmpnents, database mnitring cmbined with crss-tier diagnstics, and autmated remediatin f perfrmance issues. Cnfiguratin management, prvisining, and patching. Prvides capabilities including autmatic IT asset discvery, real-time change detectin, risk mitigatin fr IT cnfiguratins, and IT cmpliance autmatin, in additin t autmated prvisining f systems and patches fr Oracle and nn-oracle technlgies. Applicatin quality management. Prvides a set f slutins fr testing applicatins including accelerated testing slutins fr Oracle packaged applicatins; Web-based and - 4 -
SOA applicatin testing; Oracle Database testing slutins, using real prductin wrklads, and secure data sharing; Fr mre infrmatin n Oracle Enterprise Manager, visit racle.cm/enterprisemanager. Key Findings Frrester s interviews and research shw that the Packs prvide significant value t rganizatins. There were several cmmn benefits cited by the six interviewed rganizatins that are described briefly belw, and in mre detail in the Benefits And Savings sectin f this study (page 12). Frm these cmmn value statements, Frrester was able t generate a ptential ROI fr a sample Organizatin. The bjective was t illustrate hw the cmmn benefit and cst estimates can be applied t ther rganizatins cnsidering the purchase f Oracle Enterprise Manager. As stated abve, fr ur sample Organizatin, the Packs prvided benefits and savings in the fllwing areas: Reductin in nging csts f managing IT cnfiguratins, cmpliance, patching, and prvisining. Increased administratr and IT peratins staff prductivity thrugh standardizatin f glden cnfiguratin standards, and by replacing errr-prne manual tasks with autmatin. Increased respnse t business needs and ability t scale envirnment thrugh autmated mass deplyment. A 20% reductin (ver three years) in capital spending n servers mnitred by Oracle Enterprise Manager. This sample Organizatin is using the Packs and achieved a very favrable 124% ROI (riskadjusted) ver a three-year perid with a payback perid f 15 mnths. On a nn-risk-adjusted basis, the sample Organizatin achieved a system 130% ROI ver a three-year perid with a payback perid f 14 mnths. Table 1 shws a three-year summary f the ROI, payback perid, net present value (NPV), csts, and risk-adjusted benefits fr ur sample Organizatin. Table 1: Three-Year Summary Financial Results Sample Organizatin (Risk-Adjusted) Summary financial results Original estimate Risk-adjusted ROI 130% 124% Payback perid (mnths) 14 15 Ttal csts (PV) ($1,784,832) ($1,784,832) Ttal benefits (PV) $4,106,273 $3,991,180 Ttal (NPV) $2,321,442 $2,206,349 * Frrester used a discunt rate f 10% t calculate PV and NPV. Surce: Frrester Research, Inc. - 5 -
The three-year ttal risk-adjusted net present value (NPV) f $2,206,349 represents the incremental net cst savings and benefits attributed t successfully implementing and using the Packs. Prir t implementatin, the sample Organizatin was experiencing and trying t remedy the fllwing histrical issues: Inability t track and maintain system cnfiguratins. Difficulty in fllwing mandated security and cmpliance standards. System errrs and dwntime as a result f applying incrrect sftware patches and updates. Inability t perfrm rt-cause analysis n system failures. Inefficient use f administratr resurces when executing planned and unplanned system management events. Cst and benefits details are prvided belw in the Csts, Benefits, And Risk sectin (page 11). A risk-adjusted ROI that demnstrates a cmpelling business case raises cnfidence that the investment is likely t succeed because the risks that threaten the prject have been taken int cnsideratin and quantified. The risk-adjusted numbers, because they represent the expected value cnsidering risk, shuld thus be taken as realistic expectatins. Assuming nrmal success at mitigating risk, the risk-adjusted numbers shuld mre clsely reflect the expected utcme f the investment. The bjective f this study is t illustrate the savings and benefits that the sample Organizatin realized frm deplying the Packs. The results can guide ther rganizatins expectatins with respect t the savings and benefits that might be realized in their particular business envirnments. Disclsures The reader shuld be aware f the fllwing disclsures assciated with this study: The study was cmmissined by Oracle and delivered by the Frrester Cnsulting grup. Oracle reviewed and prvided feedback t Frrester, but Frrester maintained editrial cntrl ver the study, its findings, and the financial data. Frrester did nt accept any changes t the study that cntradicted its findings, bscured the meaning f the study, r changed any f the data cllected. The custmer names fr the interviews were prvided by Oracle. Frrester makes n assumptins as t the ptential ROI ther enterprises will receive within their wn envirnments. Frrester strngly advises that the reader use his r her wn estimates within the framewrk prvided in the study t determine the apprpriateness f implementing the Oracle slutin. This study is nt an endrsement by Frrester f Oracle r its fferings. The study is nt a cmpetitive prduct analysis. - 6 -
Organizatin Interview Highlights Frrester s cnclusins were derived in large part frm infrmatin received in a series f in-depth interviews with executives and persnnel at six rganizatins that were carefully selected t represent a brad range f industries, gegraphies, and size. These rganizatins are current users f the Packs. The fllwing is a brief descriptin f each f the interviewed rganizatins: 1. A Eurpean-based internatinal bank and financial services firm with mre than 500 billin in assets. The firm s dedicated Oracle department f 40 administratrs manages mre than 600 databases and has been using Oracle Enterprise Manager Cnfiguratin Management Pack and Oracle Enterprise Manager Prvisining and fr 18 mnths. 2. An internatinal scientific research cnsrtium that has been using Oracle Enterprise Manager Cnfiguratin Management Pack fr tw years and Oracle Enterprise Manager Prvisining and fr fur years. Fifteen administratrs regularly use Oracle Enterprise Manager. 3. A Eurpean manufacturing firm with lcatins in 52 cuntries. The firm has been using Oracle Enterprise Manager Cnfiguratin Management Pack and Oracle Enterprise Manager Prvisining and fr 12 mnths t manage 300 systems. 4. A mtr vehicle rental firm with extensive peratins in Eurpe and Nrth America. The firm has been using the Packs fr mre than three years t manage mre than 300 database and middleware systems. 5. An ecnmic and banking regulatry agency that has been using Oracle Enterprise Manager Prvisining and fr mre than a year t manage 170 databases and middleware systems. 6. A university-based, gvernment-funded research facility that has been using the Packs fr 18 mnths t help manage its hardware, perating systems, databases, and middleware that reside n 72 systems, as well as varius strage subsystems and lad-balancing appliances. Cmmn Objectives And Challenges Slved By Oracle Enterprise Manager The custmers Frrester interviewed had several cmmn high-level business bjectives, as well as tactical prblems r issues that they were hping t address and slve by investing in Oracle Enterprise Manager Cnfiguratin Management Pack and Oracle Enterprise Manager Prvisining and. These bjectives and challenges are shared by this study s sample Organizatin (see sample Organizatin descriptin belw, n page 9). Cmmn high-level business bjectives r strategies included: Reduce the nging csts f managing IT cnfiguratins, cmpliance, patching, and prvisining. Imprve administratr prductivity t keep pace with business grwth by replacing errrprne manual tasks with autmatin. Establish baseline r gld cnfiguratins in rder t reduce cnfiguratin drift, simplify systems management, and reduce unplanned utages. - 7 -
Free up administratrs time t perfrm mre value-added advisry and strategic services (beynd installing, tuning, patching, and upgrading databases). These value-added services include: addressing security issues and capacity planning. Adhere t security and cmpliance standards and quickly prduce apprpriate audit reprts. Implement prcesses t reduce errrs in and the effrt required t apply critical and nncritical sftware patches. Have a centralized platfrm t practively mnitr alerts fr databases/systems and servers/clusters 24x7 s prblems can be reslved quickly. Ensure high availability f missin-critical applicatins t internal and external users. Reduce capital spending in the area f servers and assciated maintenance. Cmmn tactical prblems r issues included: Crrecting a gvernance issue with t many custm scripts being created by all the administratrs. The rganizatins wanted t standardize practices and reduce the pssibility f human errr in these scripts. Cnducting IT asset tracking and discvery f majr cmpnents such as perating systems, hardware, databases, middleware, and applicatins within their envirnments. Managing unplanned dwntime due t unauthrized cnfiguratin changes in their critical business applicatins, which affected business end user prductivity. Preparing fr regulatry and cmpliance audits using time-cnsuming manual scripts, prcesses, and spreadsheets t track cnfiguratin changes and critical patch levels. Current manual prcesses remve key IT staff frm day-t-day peratinal tasks and business-critical prjects. Difficulty maintaining a system fr managing gld standards fr deplying new servers and sftware. Dealing with unpredictable demands frm the business fr rlling ut new services while maintaining and ensuring cmpliance t crprate gvernance practices and standards. T many human errrs in the sftware patching prcess, which resulted in cnfiguratin incnsistencies and system dwntime. Reduce the time and effrt needed t prvisin new systems in rder t meet end user service-level agreements. - 8 -
Sample Organizatin Frrester examined the csts and benefits f Oracle Enterprise Manager by cnducting in-depth interviews with six Oracle Enterprise Manager Cnfiguratin Management Pack and Oracle Enterprise Manager Prvisining and custmers. The resulting data, alng with Frrester s independent research, generated a baseline t determine the ptential ROI fr rganizatins cntemplating their wn deplyment f these slutins. Frrester s sample Organizatin belw has similar csts, benefits, gals, and bjectives as the six cmpanies that were interviewed. The purpse f the sample Organizatin is t shw the ptential ROI. Descriptin Of The Sample Organizatin With revenue f just ver $2 billin, this glbal enterprise has 150 prductin databases and 25 missin-critical business applicatins running its supply chain, CRM system, finance, HR, and partner exchange prtal. The rganizatin als has an ecmmerce Web site that allws custmers t rder and track nline purchases. The enterprise has mre than 200 CPUs with ne majr data center, three reginal data centers, and mre than 40 wrldwide branch ffices. This rganizatin participates in bth the cmmercial and cnsumer markets selling a brad range f durable gds and services. Prir t implementing Oracle Enterprise Manager, the Organizatin was experiencing a rapid rate f business change and slwing IT respnse t business requirements. Management cnsidered its IT peratinal csts t high, while its IT budget remained relatively flat year-ver-year. The rganizatin experienced difficulty achieving service levels due t unauthrized system changes, cnfiguratin incnsistencies, and discrepancies in systemwide patching. The cmpany s ability t cmmissin new systems in respnse t business needs fr new IT services and prcesses suffered, creating bstacles fr the cmpany s grwth. The Organizatin s specific challenges were: Decreasing the peratinal verhead and time needed t manage their IT envirnment and prvisining f new services. Business grwth demanded rapid deplyment f new systems, and manual deplyment prcesses were t lengthy and cstly. Tracking and maintaining system cnfiguratins was a lengthy and errr-prne prcess. Cnfiguratin errrs were causing system dwntime, which affected the business. An inability t meet reprting deadlines fr security and cmpliance audits, which stemmed frm the manual prcesses used t track sftware patch applicatins and cnfiguratin changes. The IT rganizatin was facing increasing pressure t meet security and cmpliance standards. Difficulty in identifying which systems needed patching. The prcess f determining which systems needed patch updates tk t lng, and systems wuld change during the discvery prcess. This wuld result in incrrect patches being applied, which caused system dwntime. Inability t perfrm rt-cause analysis fr system failure, because it was t difficult t determine system cnfiguratins changes. Flat IT budgets required the cmpany t maximize hardware and sftware resurce utilizatin. Pr asset tracking capabilities were making it difficult t determine which assets the Organizatin wned and utilized. An verall IT gal t implement ITIL management prcesses. - 9 -
Critical success factrs and high-level business bjectives r strategies that the sample Organizatin hpes t achieve by implementing Oracle Enterprise Manager include: Reduce the frequency and recvery time fr unplanned utages that may result frm cnfiguratin errrs and incrrectly applied patches. Track system cnfiguratins and cnfiguratin drift with gal f achieving standardized cnfiguratin. Accurately maintain hardware and sftware inventries. Reduce database administratr labr effrt assciated with planned events like sftware patch updates and prvisining new systems. Enfrce and maintain security and cmpliance standards. Reduce human errrs in the patching and prvisining prcesses. The CIO fr this Organizatin is in charge f the adptin f IT technlgies that supprt business prcess autmatin a requirement frm the Organizatin s line-f-business managers. This has resulted in the increased adptin f packaged and custm-built applicatins that take advantage f mdern technlgies such as SOA, grid cmputing, and virtualizatin. Fr the sample Organizatin, it has becme increasingly critical t effectively manage such applicatins and its underlying infrastructure. The Organizatin chse Oracle Enterprise Manager Cnfiguratin Management Pack and Oracle Enterprise Manager Prvisining and t help with the challenges assciated with maintain its perating systems, databases, middleware, and applicatins. The ultimate gal f this sample Organizatin is t ensure the health f business applicatins that drive revenue. An investment in Oracle Enterprise Manager Cnfiguratin Management Pack and Oracle Enterprise Manager Prvisining and includes the fllwing csts (see the Csts, Benefits, And Risk sectin fr quantificatin f the csts): Internal planning fr the implementatin f Oracle Enterprise Manager. Tw servers t hst Oracle Enterprise Manager. Oracle Enterprise Manager Cnfiguratin Management Pack sftware licenses and Oracle Enterprise Manager Prvisining and licenses. Onging Oracle Sftware Update License and Supprt fr bth Oracle Enterprise Manager Cnfiguratin Management Pack and Oracle Enterprise Manager Prvisining and Patch Autmatin Pack. Onging administratr time t maintain Oracle Enterprise Manager. Oracle Enterprise Manager training (Oracle Database 10g Administratin Wrkshp and Oracle Enterprise Manager Grid Cntrl 10g Wrkshp). - 10 -
Csts, Benefits, And Risk Csts Csts and cst reductin are imprtant parts f the TEI mdel. Csts are calculated as a change in csts primarily t IT as a result f the intrductin f the technlgy t the Organizatin. Therefre, the intrductin f Oracle Enterprise Manager Cnfiguratin Management Pack and Oracle Enterprise Manager Prvisining and affects IT budgets bth negatively (with the implementatin and purchase f the slutin) and psitively (in terms f cst savings and efficiencies created bth in IT and in the business). The sample Organizatin incurred csts in the fllwing categries: ne-time csts related t internal planning f Oracle Enterprise Manager implementatin; tw servers and sftware license csts assciated with Oracle Enterprise Manager Cnfiguratin Management Pack and Oracle Enterprise Manager Prvisining and ; annual sftware supprt and maintenance csts; and Oracle training csts. These csts ttaled $1,918,250 ver the three years f this study. Fully burdened csts fr servers, training, planning, and maintenance are used. Cst Details Planning (time/effrt) t implement Oracle Enterprise Manager: $31,250 500 hurs at $130,000 annual cst per full-time equivalent (FTE). Tw servers t hst Oracle Enterprise Manager: $39,000 initial hardware csts, plus $3,000 in annual supprt csts. License cst fr Oracle Enterprise Manager Prvisining and : $525,000 $2,625 per each f the 200 CPUs Supprt csts: $346,500 ($115,500 annually) 22% f license csts, r $577.50 per CPU. License cst fr Oracle Enterprise Manager Cnfiguratin Management Pack: $525,000 $2,625 per each f the 200 CPUs. Supprt csts: $346,500 ($115,500 annually) 22% f license csts, r $577.50 per CPU. Training csts: $27,000 $3,000 each fr fur administratrs t attend Oracle Database 10g Administratin Wrkshp, and $3,750 t attend Oracle Enterprise Manager 10g Grid Cntrl Wrkshp. Administratr effrt t maintain Oracle Enterprise Manager: $78,800 20% f ne administratr s time annually at $130,000 annual cst per full-time equivalent (FTE). The financial results in this study assume that the sample Organizatin purchased and deplyed the Oracle Enterprise Manager Cnfiguratin Management Pack, and Oracle Enterprise Manager Prvisining and at a nrmal discunt frm Oracle as f March 2009. Other rganizatins may incur different prices; therefre, they shuld cntact their Oracle sales representative r the Oracle Stre http://raclestre.racle.cm. Frrester makes n assumptin that ther rganizatins will achieve similar results as thse cited in the study. - 11 -
Table 2: Incremental Csts Assciated With Implementing Oracle Enterprise Manager Cnfiguratin Management Pack And Oracle Enterprise Manager Prvisining And Patch Autmatin Pack (Risk-Adjusted) Prjected csts Initial Year 1 Year 2 Year 3 Ttal Cst t implement and deply Oracle Enterprise Manager Annual administratr labr t maintain Oracle Enterprise Manager License and supprt csts fr Oracle Enterprise Manager Prvisining and Patch Autmatin Pack License and supprt csts fr Oracle Enterprise Manager Cnfiguratin Management Pack Tw servers t hst Oracle Enterprise Manager Administratr training expense Ttal Surce: Frrester Research, Inc. Present value ($31,250) ($31,250) ($31,250) ($26,000) ($26,000) ($26,000) ($78,000) ($64,658) ($525,000) ($115,500) ($115,500) ($115,500) ($871,500) ($812,231) ($525,000) ($115,500) ($115,500) ($115,500) ($871,500) ($812,231) ($30,000) ($3,000) ($3,000) ($3,000) ($39,000) ($37,461) ($27,000) ($27,000) ($27,000) ($1,138,250) ($260,000) ($260,000) ($260,000) ($1,918,250) ($1,784,832) Benefits And Savings The implementatin f Oracle Enterprise Manager Cnfiguratin Management Pack and Oracle Enterprise Manager Prvisining and was the catalyst that helped the sample Organizatin achieve benefits in the fllwing areas: administratr prductivity savings, business prductivity (aviding dwntime, increased availability), and capital expenditure savings (servers). These benefits are described and quantified belw and ttal $4,916,781 (risk-adjusted) ver the three years f this study. There are three adjustments that Frrester made t the benefit numbers t arrive at the riskadjusted numbers. These adjustments are related t: the learning curve f Oracle Enterprise Manager Cnfiguratin Management Pack and Oracle Enterprise Manager Prvisining and Patch Autmatin Pack; the variatin in the amunt f benefits that a cmpany may experience; and variatin in the number f benefits that a cmpany may experience. These adjustments are described in the Risk sectin. Benefits And Savings Details Administratr Prductivity Savings The Organizatin was able t imprve administratr prductivity by a ttal f 63% in the first year, by 100% in the secnd year, and by 125 % in the third year as a result f prductivity imprvements achieved using Oracle Enterprise Manager Cnfiguratin Management Pack and Oracle Enterprise Manager Prvisining and. The Organizatin achieved a risk-adjusted $1,498,725 in administratr labr savings (ver a three-year perid) frm using the Packs based n labr saved in the fllwing tasks: Oracle Enterprise Manager Prvisining and : Planned patch events (e.g., patchset r majr patches) fr any OS, database, middleware, r applicatin. - 12 -
Unplanned patch events (e.g., critical r minr patches) fr any OS, database, middleware, r applicatin. Single-instance database prvisining. Real Applicatin Cluster (RAC) prvisining. Bare Metal Linux prvisining. Oracle Enterprise Manager Cnfiguratin Management Pack: Track current system inventry and/r discver new hardware r sftware. Cmpare systems against baseline cnfiguratins r gld images t check fr cnfiguratin drift. Mnitr systems fr changes in cnfiguratin r t check cnfiguratin histry. Search fr hardware/sftware assets r specific settings acrss yur data center. Mnitr systems fr cmpliance against plicies r standards. Business Prductivity Savings (Aviding Dwntime, Increased Availability) The Organizatin achieved a risk-adjusted $2,555,556 in benefits (ver a three-year perid) frm a reductin in system dwntime and a crrespnding increase in availability frm the use f Oracle Enterprise Manager Cnfiguratin Management Pack and Oracle Enterprise Manager Prvisining and based n the fllwing capabilities: Oracle Enterprise Manager Prvisining and : Dwntime reductin due t autmated patching f sftware. Dwntime avidance by extending capacity t mitigate nde failure. Oracle Enterprise Manager Cnfiguratin Management Pack: Reductin in time needed t make repairs (MTTR) based n identifying f ut-f-band cnfiguratin changes causing dwntime. Dwntime reductin due t autmated plicy vilatin detectin and mitigatin. Capital Expenditure Savings (Servers) The Organizatin achieved a risk-adjusted $862,500 in benefits (ver a three-year perid) frm capital spending avidance n servers frm the use f Oracle Enterprise Manager Cnfiguratin Management Pack and Oracle Enterprise Manager Prvisining and based n the fllwing capabilities: Oracle Enterprise Manager Prvisining and : - 13 -
Servers nt purchased thrugh cnslidatin with prvisining autmatin. Oracle Enterprise Manager Cnfiguratin Management Pack: Servers nt purchased thrugh identificatin, utilizatin, and management f all knwn servers. Table 3: Benefits And Savings Assciated With Implementing Oracle Enterprise Manager Cnfiguratin Management Pack And Oracle Enterprise Manager Prvisining And Patch Autmatin Pack (Risk-Adjusted) Prjected benefit (risk-adjusted) Initial Year 1 Year 2 Year 3 Ttal PV Administratr prductivity savings frm Oracle Enterprise Manager Prvisining and $0 $14,402 $23,043 $28,803 $66,247 $53,776 Administratr prductivity savings frm cnfiguratin management pack $0 $311,408 $498,253 $622,816 $1,432,478 $1,162,809 Business prductivity savings frm Oracle Enterprise Manager Prvisining and Patch $0 $388,889 $622,222 $777,778 $1,788,889 $1,452,125 Autmatin Pack Business prductivity savings frm Oracle Enterprise Manager Cnfiguratin $0 $166,667 $266,667 $333,333 $766,667 $622,339 Management Pack Capital expenditure savings frm Oracle Enterprise Manager Prvisining and Patch $0 $37,500 $60,000 $75,000 $172,500 $140,026 Autmatin Pack Capital expenditure prductivity savings frm Oracle Enterprise Manager $0 $150,000 $240,000 $300,000 $690,000 $560,105 Cnfiguratin Management Pack Ttal benefits $0 $1,068,865 $1,710,185 $2,137,731 $4,916,781 $3,991,180 Surce: Frrester Research, Inc. Risk Risk-adjusted ROI is discussed in this study, and the sample Organizatin s benefits are quted in risk-adjusted (wrst-case) terms. Csts are nt risk-adjusted in this study because 95% f the csts are related Oracle firm-quted prducts and server hardware. The assessment f risk prvides a range f pssible utcmes based n the risks assciated with IT prjects in general and specific risks relative t rganizatins implementing Oracle Enterprise Manager Cnfiguratin Management Pack and Oracle Enterprise Manager Prvisining and Patch Autmatin Pack. Frrester s research discvered that implementing Oracle Enterprise Manager was a relatively lw-risk endeavr. Since the future cannt be accurately predicted, there is risk inherent in any prject. Measurement f risk is a methd f incrprating the levels f cnfidence and uncertainty regarding the benefit estimates f a given investment. Higher cnfidence that the benefit estimates will be met implies that the level f risk is lwer, and the variatin between the risk-adjusted and nn-risk-adjusted utcmes is minimized. The fllwing risks were cnsidered in this reprt: 1. The learning curve factr. The rganizatins Frrester interviewed cited a fairly significant learning curve in benefits realizatin, hence Frrester assumes that in Year 1, the sample Organizatin achieves - 14 -
50% f the ptimum level f benefits; in Year 2, it increases t 80%; and in Year 3, Frrester assumes (and interviewed rganizatins reprted) a full 100% achievement f the benefits. 2. Variatin in the value f realized benefits. The rganizatins Frrester interviewed reprted significant variatins in the value f the benefits realized fr the management tasks used t evaluate ROI. Based n reprted data, Frrester develped high, lw, and mst likely values fr each benefit. The riskadjusted value is the mean f the distributin f thse pints. Fr the administratr prductivity benefits, the mst likely average task time savings is 1.5 hurs. Fr dwntime reductin, the mst likely average dwntime time saving is 0.63 hurs per event. Refer t Appendix B fr a detailed accunting f the variance in time savings realized. 3. Variatin in the number f realized benefits. The rganizatins Frrester interviewed did nt all realize the same benefits because they did nt all use the same features r functins ffered by the Packs. Fr example, if Cmpany A did nt use the single database prvisining feature, it culd nt derive a benefit assciated with this. T accunt fr the variatin in the number f realized benefits fr the sample Organizatin, Frrester determined the percent f interviewed rganizatins that realized each benefit and adjusted the value f the benefit by this amunt, i.e., if nly 50% f cmpanies used a specific feature and realized the assciated benefit, then the value f benefit was adjusted by 50%. On average, the value f all benefits was adjusted by 63%. Refer t Appendix B fr a detailed accunting f this risk-adjustment factr. If a risk-adjusted ROI still demnstrates a cmpelling business case, it raises cnfidence that the investment is likely t succeed, since the risks that threaten the prject have been taken int cnsideratin and quantified. The risk-adjusted numbers shuld be taken as realistic expectatins, since they represent the expected value cnsidering risk. Assuming nrmal success at mitigating risk, the risk-adjusted numbers shuld mre clsely reflect the expected utcme f the investment. Financial Analysis Belw, Table 1 (repeated frm the Key Findings sectin) shws a three-year summary f the ROI, payback perid, net present value (NPV), csts, and risk-adjusted savings and benefits fr ur sample Organizatin. Table 1: Three-Year Summary Financial Results Sample Organizatin (Risk-Adjusted) Summary financial results Original estimate Risk-adjusted ROI 130% 124% Payback perid (mnths) 14 15 Ttal csts (PV) ($1,784,832) ($1,784,832) Ttal benefits (PV) $4,106,273 $3,991,180 Ttal (NPV) $2,321,442 $2,206,349 * Frrester used a discunt rate f 12% t calculate PV and NPV. Surce: Frrester Research, Inc. The three-year risk-adjusted ttal net present value (NPV) f $2,206,349 represents the incremental net cst savings and benefits attributed t successfully implementing and using Oracle Enterprise - 15 -
Manager Cnfiguratin Management Pack and Oracle Enterprise Manager Prvisining and Patch Autmatin Pack. Cst and benefits details are prvided in the Csts, Benefits, and Risk sectin. A risk-adjusted ROI that demnstrates a cmpelling business case raises cnfidence that the investment is likely t succeed because the risks that threaten the prject have been taken int cnsideratin and quantified. The risk-adjusted numbers, because they represent the expected value cnsidering risk, shuld thus be taken as realistic expectatins. Assuming nrmal success at mitigating risk, the risk-adjusted numbers shuld mre clsely reflect the expected utcme f the investment. The bjective f this study is t illustrate the savings and benefits the sample Organizatin realized frm deplying Oracle Enterprise Manager Cnfiguratin Management Pack and Oracle Enterprise Manager Prvisining and, nt thse that ther rganizatins might btain by ding s. The results can nevertheless guide ther rganizatins expectatins with respect t the savings and benefits that might be realized in their particular business envirnments. Findings and Cnclusins This study is meant t prvide the reader with a framewrk fr examining the csts and benefits f deplying Oracle Enterprise Manager Cnfiguratin Management Pack and Oracle Enterprise Manager Prvisining and (the Packs). Based n ur in-depth discussins with six current Oracle custmers, Frrester was able t estimate csts, benefits, and risks fr a sample Organizatin. Our findings indicate that the Organizatin shuld achieve a three-year riskadjusted NPV f $2,206,349, a very favrable 124% ROI, and a payback perid f 15 mnths. As with the custmers interviewed fr this study, the implementatin f the Packs was the catalyst that helped the sample Organizatin achieve benefits in the fllwing areas: administratr prductivity savings, business prductivity (aviding dwntime, increased availability), and capital expenditure savings (servers). Organizatins that are likely t achieve these benefits have the fllwing characteristics: Organizatins with many OS, database, middleware, r applicatins being managed by many administratrs having varying skill and experience levels and using nnstandard practices. IT departments experiencing a direct linear relatinship between the grwth in systems and the grwth f administratr headcunt, and that are lking t achieve prductivity gains. Organizatins that have a decentralized administratin functin and that need a mre centralized platfrm t practively mnitr alerts fr systems. Small-t-medium-size rganizatins with a part-time administratr, and/r system administratrs perfrming administratr tasks that are lking fr a mre cst-effective and efficient way t manage their IT cnfiguratins. Businesses that rely n technlgy t generate revenues and prfits and that are striving t be mre cmpetitive in their industry. Fr ur sample Organizatin, the Packs carry a lw level f risk, a very psitive 124% riskadjusted ROI, and a payback perid f 15 mnths t recup the investment. - 16 -
Fr the sample Organizatin, the favrable risk-adjusted ROI and payback perid raises cnfidence that an investment in Oracle Enterprise Manager is likely t succeed, since the risks that may threaten the prject have already been taken int cnsideratin and quantified. It s imprtant t nte that the value f the benefits realized will vary with the number f features and capabilities f each management pack that are utilized. Frrester makes n assumptins regarding the effects f Oracle s slutins at ther rganizatins. This study examines the ptential impact attributable t the six rganizatins that participated in the examinatin and applies the cmmn csts and benefits t the representative sample Organizatin. The underlying bjective f this dcument is t prvide guidance t technlgy decisin-makers seeking t identify areas where value can ptentially be created by using Oracle Enterprise Manager. - 17 -
Appendix A: Ttal Ecnmic Impact Primer Ttal Ecnmic Impact is primarily a cmmn language tl that is designed t capture and prperly cmmunicate the value f IT initiatives in a cmmn business language. In s ding, TEI cnsiders fur elements f any initiative: Benefits. Csts (smetimes referred t as ttal cst f wnership, r TCO). Flexibility. Risk. Figure 1 shws the TEI methdlgy cnceptually. Benefits, flexibility, and csts are cnsidered, thrugh the filter f risk assessment, in determining an expected ROI fr any given initiative. Figure 1: The Ttal Ecnmic Impact Methdlgy Optins created Base fr future Valued financially Cmmunicated Business value Quantified and valued Measured utside f IT BU accuntability Flexibility Benefits R I S K Ttal Ecnmic Impact (TEI) Technlgy cst IT budget IT accuntability Csts (TCO) Uncertainty Impact f assumptins Mre accuracy Higher success Surce: Frrester Research, Inc. Benefits Benefits represent the value delivered t the business by the prpsed prject. Often, IT prject justificatin exercises fcus n cst (e.g., TCO) and cst reductins. Amng industry leaders, IT is deplyed as an ffensive weapn with value expectatins greater than simple cst reductin, especially when thse cst reductins tend t fcus within IT. TEI captures the value prpsitin f the prpsed prject by measuring the benefits against the incurred csts. All benefits captured by TEI must be traceable back t ne r mre critical success factrs (CSFs). These CSFs are directly linked t a higher-level business strategy. If a prpsed technlgy investment generates benefits that cannt be satisfactrily linked t a CSF, then it will nt be - 18 -
included as a benefit fr the rganizatin in the mdel. In these cases, TEI requires that the benefit be discarded. Under TEI, benefits may nly accrue t the business units. Benefits derived thrugh cst reductins within IT accrue as negative TCO t the IT budget, thereby shwing a reduced TCO. (TCO is cnsidered by TEI t be a single-dimensin, cst-centric fcus n the IT budget.) The TEI prcess begins with a discvery f ptential benefit areas. A representative, wh has the ability t capture the benefit in questin frm the rganizatin under examinatin, must validate each benefit captured during discvery. In ther wrds, values cannt be arbitrarily assigned t a benefit if that persn is nt in a psitin t deliver that benefit shuld the prject be apprved. Additinally, prjects that are expected t deliver business value require sme effrt n the part f the business t realize that value. That effrt may be in the frm f training, rganizatinal change, r a mdificatin f existing business prcesses. Therefre, TEI requires dialg with the business leaders respnsible fr making the necessary changes in rder t capture the prpsed benefit during the justificatin phase. TEI captures this dialg in the frm f the names f the individuals, which validates the value calculatin f each benefit. Within TEI, each benefit entered has a specific capture date. Althugh the benefit may be captured ver time, TEI requires the specificatin f a date when mst f the benefit has been captured. TEI will then place the value delivered in the apprpriate time frame within the prject. Csts Csts represent the investment necessary t capture the value, r benefits, f the prpsed prject. IT r the business units may incur csts. These may be in the frm f fully burdened labr, subcntractrs, r materials. Additinally, csts cnsider all the investment and expenses necessary t deliver the value prpsed. Flexibility Flexibility, which is nt a subject f this study, represents investing in additinal capacity that can, fr sme future additinal investment, be turned int a business benefit fr instance, an investment in an enterprisewide upgrade f the desktp wrd prcessr applicatin where the primary driver may be standardizatin (t increase efficiency) and licensing (t decrease IT csts). Hwever, a cllabrative wrkgrup feature may translate int greater wrker prductivity when the rganizatin is ready t absrb the discipline necessary t capture that benefit. The cllabratin feature des nt prmise benefit during this phase f the prject and must be captured later, incrprating additinal investment, mst likely in the frm f training. Hwever, the existence f the ptin has a present value that can be estimated. The flexibility cmpnent f TEI captures that value. Risk Risks are used t widen the pssible utcmes f the prject. Since the future cannt be accurately predicted, there is risk inherent in any prject. TEI captures risk in the frm f risks-t-benefits and risks-t-csts. Risks-t-benefits cnsiders all pssible risks t each pssible benefit. Likewise, risks-t-csts cnsiders all pssible risks t each pssible cst. Then a range is chsen by applying best judgment fr each cst and benefit, based n the set f risks assigned t each cst and benefit. The - 19 -
range is entered in the frm f a lw estimate, a mst-likely value, and a high estimate. Fr example, the risks t a cst may result in a range frm the expected value as the lw estimate t tw times the expected value as the high fr a particular cst (representing a ptential tw times cst verrun). TEI applies a prbability density functin knwn as triangular distributin t the values entered. The expected value the mean f the distributin is used as the risk-adjusted cst r benefit number. The risk-adjusted csts and benefits are then summed t yield a cmplete risk-adjusted summary and ROI. Typical prject risk factrs t cnsider include the fllwing: Vendrs. The risk that the vendr f a prduct r technlgy may need t be replaced at sme pint during the prject duratin. Prducts. The risk that a prduct will nt deliver the functinality expected. Architecture. The risk that the current prduct architecture will nt allw future infrastructure decisins and changes. Culture. The risk that an rganizatin will be unable t absrb the new technlgy r adapt t its implementatin. Delays. The impact n revenues f a prject delay r cancellatin. Size. The direct crrelatin f prject risk t the size f the prject, as measured by applicatin size r budget. - 20 -
Appendix B: Risk-Adjustment Factrs Table 4 prvides details regarding the variance in task time benefits and percent f benefit realized that were used t calculate the risk-adjusted benefits. Table 4: Benefit Categry Risk Adjustment Factrs Benefit categry Value f realized benefit (hurs) Lw Mst likely High Percent f benefit realized Planned patch events (e.g., patchset r majr patches) fr any OS, database, middleware, r applicatin 0.5 2.2 3.5 67% Unplanned patch events (e.g., critical r minr patches) fr any OS, database, middleware, r applicatin 2 2.67 3.67 67% Single-instance database prvisining 0.5 2.75 3.75 33% Real Applicatin Cluster (RAC) prvisining 0.5 2.08 3.67 33% Bare Metal Linux prvisining 0.5 3 5.5 50% Dwntime reductin due t autmated patching f sftware 0.5 1.0 1.0 50% Dwntime avidance by extending capacity t mitigate nde failure 0.5 1.0 1.0 67% Server (assets) saved thrugh cnslidatin with prvisining autmatin 50% Track current system inventry and/r discver new hardware r sftware. 0.15 0.5 0.83 83% Cmpare systems against baseline cnfiguratins r gld images t check fr cnfiguratin drift. 0.5 0.98 2.67 67% Mnitr systems fr changes in cnfiguratin r t check cnfiguratin histry. 0.5 0.73 1.5 67% Search fr hardware/sftware assets r specific settings acrss yur data center. 0.08 0.25 0.5 83% Mnitr systems fr cmpliance against plicies r standards. 0.33 0.5 0.83 83% Reductin in time needed t make repairs (MTTR) based n identifying f ut-f-band cnfiguratin changes causing dwntime 0.17 0.25 0.33 67% Dwntime reductin due t autmated plicy vilatin detectin and mitigatin 0.17 0.25 0.33 67% Servers (assets) nt purchased thrugh identificatin, utilizatin, and management f all knwn servers 50% Surce: Frrester Research, Inc. - 21 -