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The Controversial Graph
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| The above graph appears
in a lot of EasyCo's advertising. It asserts that Easy-Time ASP is a
dramatically less expensive solution than locally installed servers for
(a) small systems, (b) very large systems, and (c) any sort of complex system,
including systems where some users must have remote access. To some,
the basis of conclusion is not intuitively obvious. While we could spend
20 pages of fine print to prove the specifics to you, what we will do here
is give you the intuitive arguements. Once you understand these, even if
you might argue about a percentage of change either way, because of the
way you might engineer a solution, you can accept the central thesis of
low cost ASP for mvDBMS and use it effectively. |
| 1. |
The average effective total cost of
Easy-Time ASP basic service (inclusive database rental) ranges from
about $35 to $70, depending upon database and a few other options,
with some possible increase above this for the first user, depending
upon implementation method, connecting hardware, and other client
conditions. You can confirm these numbers either by looking at our
published prices, or by using our estimator software. |
| 2. |
The average costs of the telecommunications
to connect to Easy-Time service tend to run between $5 and $25 per
user, depending upon circumstances. While it is possible to spend
more than this, the same is not necessary from the perspective of
"good" performance. |
| 3. |
The cost of connecting
Easy-Time service to an existing system can range from negligible
to moderate costs, depending upon the type of pre-existing client
devices. For instance, in the case of service provision to a single
PC, install and configuration can range from 5 to 25 minutes, and
an existing 16-user serial system can normally be retrofitted in 1-2
hours of work. |
| 4. |
mvDBMS does not normally
provide any special solutions for the single-user database. Thus,
most individual users cannot take advantage of a pre-existing PC to
reduce server costs. When users tend to use the few solutions available,
they tend to find themselves saddled with very high support costs
or high costs of failure. The same can occasionally be catestrophic. |
| 5. |
The cost of a locally installed and
configured database server is normally quite high. It tends to range
from a base-low of around $8,000 to a base-high of around $20,000
at end-user prices. To this must, of course, be added any local connectivity
hardware, and other features dependent upon size or number of users
of the database. |
| 6. |
Any locally installed server must be
financed, or if not financed has an imputed cost of capital. On a
5 year lease, 40% of the monies paid by a user are actually finance
costs. |
| 7. |
Any locally maintained server system
must plan on maintenance costs of 15% to 20% of the original purchase
price per year of use. If paying less than this, the user must assume
that they will eventually pay near-the-same in service costs and loss
of productivity when the server eventually fails. |
| 8. |
Any locally installed server, if coincidentally
connected to the Internet, either for the purposes of allowing outsiders
access to its data, or to allow those within the premises to have
access to the Internet, must plan on significantly increased costs,
due to the consulting and customization needed to securely firewall,
as well as the need to provide for secure remote connectivity. This
cost can be extreme, as well as on-going. |
| 9. |
As the number of users served by a particular
server increases, while unit hardware costs tend to decrease, unit
labor costs tend to increase at some exponent of the number of users.
In systems much beyond 40 users, administrative labor tends to become
the all-dominant cost, often running at over $100, and even $200 per
effective user-month. |
| 10. |
Inflexibility has a cost. In
any 5 year period, any business is likely to change dramatically.
Companies grow, shink, and move. Employees come and go. New pressures
and rules change how the company does business. A purchase can lock
one into a long term cost structure, even though 1/3rd or 1/2 of this
cost may become useless 6 months after acquisition. In many such scenarios,
additional capital burden and work burden can turn a company otherwise
capable of adapting into an unprofitable, rather than profitable,
business. |
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Using the above, what
one finds is that the total base-cost of a server ranges, with financing
and general support from a base of $20,000 to $50,000 in lifetime costs,
with incremental costs for additional users, and significant incremental
costs in the event of Internet connectivity. Dividing this out by the
number of users and months of anticipated life, one can determine the
nominal monthly costs per user.
One has then to compute
one's ongoing monthly administrative labor and related costs. While this
is a relatively small amount for small systems, perhaps only amounting
to $5 to $10 per user month, it (a) tends to increase at a significantly
higher rate than the proportional increase in users as complexity increases,
and (b) tends to jump in significant increments as, after a time, there
is a need to hire employees rather than use independent contractors.
Finally, one must allow for costs of specific complexity.
While a database server tailored as the only service available to a company's
users tends to be low, as soon as the system becomes more complex, either
due to the user's needing third-party services (e-mail, web, etc.) or
outsiders needing access to the company's data, the costs of setup, security,
and administration increase exponentially rather than proportionately.
Calculate your own numbers, but don't forget ANY of your
costs. Many users forget that they will spend $400 to $600 a year
in backup and cleaning media if following manufacturer's guidelines. Similarly,
many with high employee turn-over forget that if they have their own system
then they must retrain in systems operation and administration, rather
than just application use. They forget that a good proportion of the money
they pay their VARs is for administrative rather than applications support.
Finally, those who cut corners on maintenance and similar costs forget
to compute the costs of extended down-time -- being out of business for
a week can be very costly once one has come to depend upon a computer.
When you tally up all of the costs associated with owning an on-site computer,
you will find that the privilege of ownership is far more expensive than
you ever realized. Rental really does make more economic sense in many,
if not most, cases because it reduces the complexity, and thus cost, of
doing business.
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