Calculating Database Return on Investment
Database impact on Profit & Loss
When it comes to analyzing your profit and loss statements, it’s likely that you only think about your database choice when you review how much you’re spending on licensing costs. After all, it’s the area most directly and obviously impacted by your database selection, and license costs can add up quickly, especially as you onboard new customers and need to increase capacity.
But when you really dig into your P&L, you’ll find that the database affects a great deal more of your margin - from application development and customer retention costs to market share and customer acquisition rates - than first appearances suggest.
In working with our customers, we've identified the following six core areas (aside from the obvious license cost savings) - some related to cost savings, some to expanded opportunity - that the database directly affects.
Let’s tackle the elephant in the room first. For a SaaS company, database license costs can make up 40-70 percent of your overall operational costs for running a cloud application. And everything you do - from growing your user base to satisfying customers with less downtime and improved performance - can exponentially increase license costs.
NuoDB’s cloud-centric licensing model natively incorporates cloud advantages at a lower cost, typically saving customers hundreds of thousands - and often millions - of dollars for customers over a five-year period.
For a customized analysis of how much your database choice can impact your license costs, check out our license cost calculator.
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...NuoDB increase(s) our value to our customers by minimizing application response times, ensuring application availability, and lowering infrastructure costs - by as much as 90% in some cases.
— Tim Gage, Head of Research and Development, Alfa
The Database Iceberg:
Hidden Costs
Beyond the obvious licensing line item, there are a number of hidden costs that correlate to the database.
Want to improve your bottom line by cutting costs?
Here are a number of areas where your choice of database can have an outsized impact on your expenses.
Hardware/ Infrastructure
Since traditional database architecture is so rigid, companies compensate by overplanning and overprovisioning. That means buying bigger hardware than you need “to plan for future growth” and dormant infrastructure for “business continuity.”
With NuoDB, you can add capacity when you need it (and not before) - and automate disaster recovery without wasting resources.
Customer Onboarding and Retention
Successful SaaS companies make quick customer onboarding and high retention rates a priority.
With NuoDB, adding new customers is as easy as adding new machines to the database - no extra development time needed. Meanwhile, NuoDB’s lower TCO, high availability, and familiar development interface make it easy to add new features cost-effectively to keep customers happy.
Application Development
The cost of application development is a major part of the cost of doing business. But today’s “lower cost” databases require specialized skills and longer development times because they force data management logic into the application rather than keeping it in the database.
NuoDB maintains the features developers need - transactional consistency, data integrity, and a SQL interface - to keep costs manageable.
A multi-billion dollar software vendor estimates that NuoDB has saved them $5 million in database licensing costs and $1.5 million in cloud infrastructure costs.
Capitalizing on
Opportunity
The connection between your database choice and your opportunity for growth is rarely readily apparent. But even though it may not be obvious, your database can either hold you back from or propel you forward toward greater success.
Here are just a few examples of how you can improve your top line.
Customer Acquisition Rates
Traditional databases are limited in their ability to accommodate higher volumes on demand. So once you hit the database limit, you may be physically unable to accommodate new customers without a costly, risky, and complex database migration.
NuoDB makes it easy to grow the database by just adding new servers, which means you - not your database - control your growth rate.
New Markets
Building new revenue streams - especially the SaaS offerings your customers demand - is critical to growing your business.
Multi-billion dollar software companies have turned to NuoDB to bring new products to market faster. Whether by minimizing the effort it takes to migrate an on-premises application to the cloud or build a brand new one, NuoDB helps you expand to new markets.
Competitive Advantage
The difference between you and your competition can be as “simple” as delivering faster performance, better availability, or new features more quickly or at lower cost.
NuoDB enables you to keep your application available by maximizing utilization, improve responsiveness with premium hardware only where you need it, and update your product more often with simpler development.
Want to learn more?
Database selection can have both financial and strategic implications for SaaS companies and software vendors moving to a SaaS model.
Download "The Financial Impact of Database Selection."
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