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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 |
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TCO = deployment + maintenance + upgrade
+ training
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2. |
Deployment |
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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.
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3. |
Maintenance |
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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.
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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.
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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.
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4. |
Upgrade |
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This part of the TCO includes hardware and
software upgrades that are necessary to keep the system
running and productive.
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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.
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5. |
Training |
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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.
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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 |
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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.
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2. |
Availability |
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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.
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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.
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3. |
Open Connectivity |
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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.
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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.
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4. |
Scalability |
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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.
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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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