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Home > Articles > Total Cost of Ownership (TCO) and Return On Investment (ROI)

Maximizing Return on Your Database Investment
June 15, 2001 by Vitus Chak


The deployment cost of adopting a technology or system is the most visible, and therefore is a natural focus in making purchase decisions. Yet this alone does not usually lead to the best choice, as the ongoing cost of ownership may quickly offset any initial price advantage. A lot of 'soft costs' go into entering and maintaining the data, and significant productivity gains will soon recover the higher price of the better system.

Let us now look at the cost issues, and by minimizing them we can maximize our ROI (return on investment).

1.

The Basic Total Cost of Ownership Formula

 

TCO = deployment + maintenance + upgrade + training

2.

Deployment

 

This is the cost of purchasing all necessary software licenses. If a particular solution requires extra equipment or hardware to deliver the same set of functions and level of performance as other systems, their costs need to be included as well.

3.

Maintenance

 

All databases require administrative attention. At least someone must control user access rights and ensure that the database is regularly and properly backed up. That said, the cost of maintaining a database may vary widely. My experience is that solutions based on 4th Dimension (4D), if executed properly, require very little maintenance. Most of our users know little about 4D, and yet we receive very few support calls over the years relating to our systems. Other solutions may be entirely different. A full-time DBA (database administrator) is surely needed for large systems. Departmental or SMB (small to medium businesses) databases may be well taken care of by your solution vendor under a support contract.

 

This part of the TCO is basically the value of the service contract, or the portion of the in-house administrator's salary associated with maintaining the system.

 

To lower system maintenance cost, you need to look for a system that is stable, reliable and simple to maintain. Check also whether the system needs to be tuned to reach optimum performance level, how the database is backed up, and how to recover from disasters. Complexity of these processes affects this cost significantly.

4.

Upgrade

 

This part of the TCO includes hardware and software upgrades that are necessary to keep the system running and productive.

 

4D-based solutions have a real advantage here. The 4D Server application is both a database and an application server. Only one copy of the database software is installed at the server. All user workstations use the same client software regardless the database application they are using. When they access the 4D Server, all needed software code and resources are automatically downloaded and managed by the system without the users' or the administrator's intervention. This translates into very significant cost benefits if you are upgrading the software with, say, 100+ users at many different sites. All you have to do is simply replace the compiled database software in the server machine and nothing else.

5.

Training

 

Initial and ongoing training costs must be included as it can be significant for large and sophisticated systems. In some cases, the loss of productivity of staff being trained should also be added to this part of the TCO.

 

To lower training costs, look at the quality, consistency, and user-friendliness of the database system's front-end interface. Check carefully all the system documentation provided to assess the actual training needs. We worked very hard on designing our software interface and system manuals so that our users do not need training services from us if they don't want to. This is possible and you should likewise consider using whatever is already included in the system.


A recent study shows that 4D-based solutions have a much lower TCO than the industry average. The full report can be found at 4D Embedded Database Cost of Ownership Study. Besides the above TCO factors, there are other considerations that may have indirect cost impacts down the road:

1.

Productivity Gains

 

If the system is so streamlined that repetitive tasks like data entry and update can be completed easier and faster than other systems, the ROI will be significantly higher even though there is no direct reduction in the TCO.

2.

Availability

 

System downtime means a total loss of productivity and is usually not acceptable. To minimize this possibility and its impact, the system must provide solid backup and disaster recovery facilities. Additional solutions include hardware or data redundancy.

 

The 4D Server application comes with 4D Backup, which is a capable backup and recovery tool that manages scheduled database backup. It also allows you to use the database update log to recover from disasters or roll back database changes to any point.

3.

Open Connectivity

 

No database should be an island. To protect your efforts and investment in building and maintaining the database, it must be possible to connect it to other data sources or clients using open technology.

 

Contrary to what most people perceive, 4D is actually very open in its connectivity capabilities. For details you are recommended to download and read Adventures in Connectivity with 4th Dimension. The following figure is an overview.



4.

Scalability

 

As data access load increases, there must be ways to upgrade the performance level of your database system. Clustering is a common method with MS SQL servers. With Oracle systems there are many things you can do, depending on where the bottlenecks are.

 

4D is not an enterprise database (at least not now), and it lacks high-end capabilities like connection multiplexing, distributed databases with advanced replication, and database parallelization etc. But this doesn't lessen the fact that it IS a powerful database that can serve any need at the departmental or SMB levels. It can well handle millions of records and serve 100+ concurrent users. To scale up the performance of a 4D server, you essentially look at upgrading resources on a single server box, like memory, disk I/O speed, CPU, networking and operating system.

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