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Sponsored by: Red Hat Tim Grieser July 2010 Randy Perry
INTRODUCTION
Linux-based applications have become essential to many organizations for delivering and supporting ecommerce, Web, and mission-critical business applications and databases. As Linux grows in importance and value to the business, IT must deliver high service quality for availability, security, and performance in order to support business success. Red Hat Inc. distributes and supports the Red Hat Enterprise Linux operating environment and JBoss Enterprise Middleware for development, deployment, and production operation of Java and Web-based applications. Red Hat provides the JBoss Operations Network (JBoss ON) management platform for centralized systems management (server-agent) of JBoss Enterprise Middleware. JBoss ON provides management functions for the JBoss SOA Platform, the JBoss Enterprise Application Platform, the JBoss Enterprise Web Server, and other JBoss components. JBoss ON management functions include discovery and inventory, configuration management, application deployment, availability management, performance management, and content management. This ROI study focuses on the quantitative benefits gained from using the JBoss ON management platform.
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EXECUTIVE SUMMARY
IDC conducted a series of in-depth interviews with staff members of IT organizations that have deployed JBoss Operations Network to manage their JBoss Enterprise Middleware environments. A structured set of questions was used to assess and quantify the internal and external costs of performing certain administrative, operational, and support functions and how costs changed as a result of implementing JBoss Operations Network. Table 1 shows the key results of this study.
T ABLE 1
Three-Year ROI Analysis
Category Benefit Investment Net present value (NPV) ROI = NPV/Investment Payback = Investment/NPV
Source: IDC, 2010
The study was based on standard IDC ROI methodology used to calculate average cost savings resulting from higher availability, including changes in downtime, improved IT efficiency, and increased user productivity resulting from using JBoss Operations Network. Data from the survey was used as the basis for the IDC ROI analysis. IDC's ROI analysis methodology is described in the Appendix.
KEY FINDINGS
Based on data from interviews with IT managers from organizations using JBoss Operations Network, IDC's JBoss ON ROI analysis yielded an average 634% ROI more than six times the initial investment and an average payback period for the initial investment of a short 5.3 months for the IT organizations in this study, as shown in Table 1. A key metric was the improvement in the number of JBoss Middleware environments managed per system administrator. The number of Linux servers running JBoss Middleware managed per system administrator more than doubled, increasing from an average of 38 Linux servers per administrator before deploying JBoss ON to 84 Linux servers per administrator after deploying JBoss ON. The IT organizations reported a substantial savings in staff hours expended on managing JBoss Enterprise Middleware by using JBoss Operations Network, resulting in annual IT productivity increases. IT managers also claimed improved end-user productivity, while downtime hours per month were reduced. Participants also identified other annual savings through improvements in IT efficiency, absolute software/hardware savings, and other indirect cost savings. These results are illustrated in Figure 1 in terms of average annual savings per 100 users.
IDC's JBoss ON ROI analysis yielded an average 634% ROI more than six times the initial investment and an average payback period for the initial investment of a short 5.3 months. The number of Linux servers running JBoss Middleware managed per system administrator more than doubled, increasing from an average of 38 Linux servers per administrator before JBoss ON to 84 Linux servers per administrator after deploying JBoss ON.
FIGURE 1
Average Annual Benefits of JBoss Operations Network per 100 Users
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Deployment of JBoss ON achieved a very impressive average annual benefit of $147,212 per 100 JBoss users. Revenue increase accounted for 40.5% of this benefit, while improvements in IT staff efficiency constituted 23.7% of the total. Other major benefits came from cost reduction (19.2%) and improved user productivity (16.6%).
STUDY DEMOGRAPHICS
To assess the benefits of Red Hat Systems Management, IDC conducted in-depth telephone interviews with staff members from IT organizations located in companies headquartered in North America; South America; Europe, the Middle East, and Africa (EMEA); and Asia/Pacific that have deployed JBoss ON. The industries of the companies supported by the IT organizations include financial services, media, and business services. Table 2 shows the survey demographic averages across the IT organizations.
T ABLE 2
JBoss ON Survey Demographics
Demographic Employees IT staff IT operations management staff before JBoss ON IT operations management staff after JBoss ON Servers managed per system administrator before JBoss ON Servers managed per system administrator after JBoss ON Regions
Source: IDC, 2010
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FIGURE 2
Reasons for Implementing JBoss ON
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IT Staff Efficiency
IT staff efficiency is based on the amount of staff time needed to perform specific management tasks and the ability to achieve higher scalability in IT operations. One JBoss customer commented, "In the past we had to get into each console to do administration; now we have one central console that we use to manage all 76, so it's a huge time savings." Scalability achieved through the use of management software helps IT operations to keep up with rapidly growing infrastructure demands. For example, one respondent observed, "While the FTEs have remained the same [just me], I am now able to do the work that would have required 34 people [to manage our current environment]." JBoss ON customers are seeing significant efficiency benefits related to help desk operations. According to one user, "Before JBoss ON, our T1/T2 help desk was fielding 50 calls a day; now it's down to 10 calls per day. For T3 calls ... it now takes me about a half hour on average, and before JBoss ON, it used to take me about 1 hour on average per call." Another comment related to staff efficiency in a wider set of operations: "We also get greater efficiencies in our IT staff across our entire operation. I would guess of the 20 people in our IT organization who touch JBoss ON [besides myself], they are maybe 10% more efficient overall. Those 20 people consist of system administrators and DBAs."
User Productivity
User productivity is influenced by such factors as slowdowns, downtime, and loss of application availability. JBoss ON helps IT operations prevent incidents and respond more quickly to analyze and repair problems when they do occur. One key metric is the mean time to repair (MTTR). In terms of the study respondents, the average MTTR was reduced from 1 hour before JBoss ON to 15 minutes after JBoss ON an impressive 75% reduction. Downtime has a direct impact on user productivity: Fewer hours "in the dark" means users have more time to complete tasks. One user noted that with JBoss ON, "we have seen reduced downtime, as well as rapid relief in terms of things like patches for example, if we have a problem or need a particular update to our environment, we can go to Red Hat and they will do a one-off patch." Another user commented, "Before its implementation, we had probably 3 downtime incidents per month, and each incident probably averaged 23 hours of downtime. We even had some times we were down a whole day. Now with JBoss ON, in the past year, we had only one issue with downtime, and it lasted only an hour." On average, downtime hours per year were reduced by 83% with JBoss ON for the study respondents. User productivity is impacted by incidents requiring help desk support. JBoss ON customers have been able to reduce the number of support calls to the help desk and also shorten the amount of time spent on each support call. The average number of support calls per week was reduced by 73%, from 268.8 to 73.2, while the average amount of time spent per support call was reduced by 66%, from 25.8 minutes to 8.3 minutes. On average, in this study, customers experienced an equivalent of $24,392 per 100 users in annual user productivity increase.
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Revenue Increase
Revenue increase is driven by such factors as reduction in downtime and limitations in accessing key business applications. One respondent explained that before JBoss ON, "our call center reps couldn't access their systems for long periods of the day, and that gave us a lot of problems. If a customer called the insurance company with an insurance proposal in hand, and we told them, 'We can't help you,' it would definitely affect our business." For the survey population as a whole, the average yearly revenue loss from downtime was reduced from $5.7 million to $966,000 with the use of JBoss an 83% improvement.
FIGURE 3
Benefit, Investment, and Cash Flow
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Return on Investment
The three-year IDC ROI analysis on JBoss Operations Network is based on initial and annual investments compared with the benefit over the three years. Based on the data gathered from the customers in this study, this solution offers an ROI of 634% and payback occurs at 5.3 months. Table 1 displays the ROI results (details on how these figures are calculated are available in the Appendix).
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These technological advances pose opportunities for Linux management vendors to develop new and extended functionality for system management software. Other opportunities exist for increased integration of core Linux management capabilities with major application platforms, commercial databases, and enterprise management suites. The further development of Linux management software by companies such as Red Hat can offer IT organizations the opportunity to achieve positive ROI benefits in expanded areas of their operations.
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APPENDIX
IDC'S ROI Methodology
IDC's ROI methodology measures the efficiency of management software products and processes and uses the findings to calculate ROI for the deployed management software. The method does this in four steps: 1. Evaluates the internal and external costs of administering the systems, networks, and applications before deploying the management software tools. Ascertains the investment in the purchase, implementation, and deployment of the management software tools. It is important to estimate not only the initial purchase cost of software but also the required implementation, integration, and training costs. To measure the total deployment investment required, IDC is careful to include questions not only about the cost of purchasing and setup of the software but also about the integration and the annual software maintenance fees. Measures the cost savings and gains in productivity, availability, and efficiency achieved using the management software tools. Portions of the interviews are dedicated to the discovery of cost savings including both "hard" IT costs, such as savings in software rental and maintenance fees, and "soft" costs, such as IT staff productivity, IT management efficiency, and application availability. IT staff productivity. To measure changes in IT productivity, IDC asks about the use of staff time in such deployment and operational areas as setting up servers, deploying and updating software, tracking hardware and software assets, and dealing with user problems. Staff time for these tasks before and after implementation is recorded, together with the fully burdened (i.e., after fringe benefits and overhead) hourly staff salary rate. IT management efficiency. IT management efficiency pertains to efficiencies achieved in user administration and support by obtaining better management scalability. Some questions asked relate to the ability to centrally manage remote locations to achieve reductions in travel costs, while others relate to the additional staff that would be required to support expected growth in the user or server population, with and without the tools. Application availability and user productivity. To measure the effects of application availability, IDC concentrates on determining the effect on user productivity and business revenue caused by downtime by asking questions about systems, network, and application unavailability patterns before and after implementation. The fully burdened hourly salary rates of the user base are also required, and an estimate is sought of the loss of business that would be associated with an hour of downtime. 4. Calculates the payback period and ROI for the deployed enterprise management software. Based on the interview data, IDC calculates the average payback period and rate of return based on the overall cost savings resulting from the investments in JBoss Operations Network software. To normalize the data, IDC presents the results in terms of per 100 users.
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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.
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