Oracle Exadata and Allegro Group

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O R A C L E E X A D ATA C A S E S T U DY

Copyright © 2012, Oracle. All rights reserved. Oracle and Exadata are registered trademarks of Oracle and/or its affiliates. Other names may be trademarks of their respective owners.

Allegro Group Saves Millions with High-Performance Oracle Exadata Platform

EXECUTivE SUMMARY

For Eastern Europeans interested in picking up deals on everything from cars to

cat-sitters to kitsch, the online marketplace of choice is Allegro Group. Each day,

over 114 international websites run by the Poznan, Poland-based company receive

more than 500 million page views and process hundreds of thousands of online

transactions. With 20,000 new visitors every day, Allegro Group now ranks as one

of the largest e-commerce site in the world.

Since 2008, Allegro Group has consistently delivered annual growth rates of 20% —

a traffic and transaction boom that has brought with it a corresponding 65% increase

in data growth. By 2009, however, the sheer volume of transactions and data coming

in from its far-flung websites began to overwhelm its legacy data management system.

Furthermore, the company had no centralized enterprise-scale data warehouse — just a

collection of data repositories — and routed all queries and reports through a specially

created team in its IT department. As Allegro Group describes it, the company was

suffering from “a variegated panorama of data and platforms.”

“We were in a ‘we don’t know what we don’t know’ situation,” acknowledged Rafal

Kudlinski, business intelligence manager at Allegro Group. “The problem we had been

facing was a complete lack of centralization — the data handling was not capable of

supporting fast, real time reporting and decision-making.”

In response, Allegro Group launched a full-scale examination of its IT architecture with

a view toward rebuilding it on a unified and centralized platform intended for long-term

scalability, performance, and flexibility. The chosen system was Oracle Exadata Database

Machine, an engineered solution that is an innovative and integrated high-performance

enterprise data warehouse solution that uses intelligent storage to dramatically boost

system speed and deliver extreme performance.

Allegro Group immediately began seeing major system performance gains with Oracle

Exadata, including a 48x improvement in query times, uploading times that numbered

in minutes not hours, and a 15x improvement in data access time. Mainstay Salire

calculated a range of financial and operational benefits from Allegro Group’s move to the

integrated Exadata-based system, including millions saved from user productivity gains,

About Allegro Group

Poland-based Allegro Group is the leading e-commerce company in Eastern Europe and the second-largest online Marketplace in the world.

Headquarters: Poznan, Poland

Employees: 3,750

KEY BENEFiTS

• 64% ROI in three years

• Positive net benefits within 19 months

• Total savings of $7.5 million over three years

– $3.0M in user resource scaling benefits

– $1.3M in estimated fraud prevention benefits

– $2.0M in estimated revenue growth (margin benefit)

– $600K in IT scaling optimization costs

– $450K in estimated cost reduction in the SEM campaign spend

– $100K in hardware cost avoidance

• 48x faster query run time

• 15x faster data access time

• Able to upload data every 24 hours

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ORACLE PRODUCTS

• Oracle Exadata Database Machine

• Oracle Business Intelligence Enterprise Edition

• Oracle Consulting

fraud prevention, due to centrally managed and viewed set of data versus disparate

systems, hardware cost avoidance, and annualized revenue-growth support.

According to the assessment, Allegro Group’s investment in the Oracle Exadata

platform is projected to achieve payback in just under 2 years — delivering a 64% return

on investment (ROI) in the first three years and total benefits of $7.5 million.

BACKGROUND

With over 114 websites in 13 countries, Allegro Group is the No. 1 e-commerce company

in Eastern Europe, combining the classified listings of Craigslist, the Marketplace

capabilities of eBay, the shopping cornucopia of Amazon, and the price comparison

information of Shopping.com with the payment processing and service options of PayPal.

Its 40 million users generate 500 million page views per day, making it one of the most

heavily trafficked sites in the world. And that traffic shows no signs of slowing. Each day,

20,000 new users flock to Allegro Group sites, an influx that has pushed the number of

daily offers beyond 20 million in 2012 — twice as many as the company had been handling

only three years earlier.

Welcome as this was for the bottom line, Allegro Group’s growth spurt also began to

magnify the signs of age and strain of its disconnected legacy data management system.

As Allegro Group readily acknowledges, the cumbersome, patchwork system was slow,

fragmented, inflexible, labor-intensive — and needlessly expensive. To guide the company

into the future, management needed fast, real time data and reporting on which markets

to enter and what products to sell. Instead, it frequently found itself on the receiving end

of conflicting reports that took days to generate — a situation that not only hampered

decision-making, but raised the possibility it could be missing emerging trends.

“Because of our rapid growth, our knowledge gap became too big,” said Wojciech

Szczesny, chief technology officer of Allegro Group. “In addition, it became more and

more challenging to manage this growing volume of information.”

“Because of our rapid growth, our knowledge gap became too big. in addition, it became more and m ore challenging to manage this growing volume of information. Oracle Exadata changed all that.”

W O j C I E C h S z C z E S N y, C T O , A l l E G R O G R O u P


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Rather than continue to invest in different types of hardware and software for each

website and country, Allegro Group opted to install a standardized, centralized data

warehousing and analysis system that would transform operations throughout the

company. Among its top priorities:

• Uniteoperationsacrossallitswebsites

• Eliminateredundanciesandinefficiencies

• Storeandmanagetheexpandingvolumeofdata

• Generateuseful,actionablebusinessintelligenceaboutitsrapidlyexpanding

customer base

• Ensuremassivescalabilityovertime

• Provideflexiblereportingandanalytictoolslikeattractive,easy-to-usedashboards

• Giveitscustomersthehighestlevelsofserviceandprotectionagainstfraud

THE ORACLE EXADATA DATABASE MACHiNE SOLUTiON

Oracle Exadata Database Machine represents a breakthrough in information technology,

using an innovative software stack and unique architecture built on open standards.

The system combines servers, storage, networking, and software in a fully integrated

platform that delivers extreme performance, is hugely scalable, highly secure and

redundant, and less costly to operate.

Allegro Group deployed Oracle Exadata Database Machine Full Rack, which includes eight

database servers running Oracle Database 11g and Oracle Real Application Clusters on

Oracle Enterprise linux; the solution also included 14 Oracle Exadata Storage Servers

connected via InfiniBand communications links. After testing business intelligence tools

from Cognos, Business Objects, and Microstrategy, Allegro Group decided to leverage

the integration benefits by going with a single vendor and selected Oracle Business

Intelligence Enterprise Edition (“OBIEE”).

As Allegro Group observed, the result of the switch was significantly faster performance

for query times, data access, and report turnaround times, among other benefits. “All I

can say is that never in my life have I seen a database responding and retrieving so fast,”

Kudlinski said.

Because all of the core system components were built from an integrated Oracle

technology stack, deployment was straightforward. using only a small team of internal

database administrators and consultants from Oracle and its partner ISE GMBh Germany,

the system was up and running within seven months in 2009, including uploading over

9 TB of data from the old system and a business-critical table with more than 2 billion

records.


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OPERATiONAL AND FiNANCiAL BENEFiTS

Directly after moving to the Oracle platform, Allegro Group began to see an array of

operational and financial benefits, ranging from million-dollar cost optimization savings

to a nearly 100% boost in query-response time. From a strategic perspective, Exadata has

given the company the foundation it needs to support its massive data requirements and

expanding customer base; boost loyalty by giving customers more services and greater

fraud protection; and provide accurate, real-time data for well informed decision-making —

all while substantially lowering costs.

Specifically, Mainstay Salire found that the company would achieve the following

aggregate benefits over three years:

• $3millioninsavingsasaresultofbusiness-userscaling

• $648,000inITresourcescalingoptimization

• $1.3millioninfraudpreventionsavings

• $450KinestimatedcostreductioninSEMspend

• $100,000inhardwarecostavoidance

Operationally, the company achieved immediate improvements in query run time

(48x improvement) and data access time (15x faster), and gained the ability to upload

production data daily.

The company found the changes nothing short of remarkable. “We now have accurate figures

on a daily basis,” said Szczesny, Allegro Group’s CTO. “This simply wasn’t possible before.”

Supporting Growth of Queries and Bi

The move to Oracle Exadata enabled Allegro

Group to improve its query run time by 48x ,

as shown in Figure 1. “A query that used to

take 24 hours to complete now runs in less

than 30 minutes on Oracle Exadata — and

that’s without any manual query tuning,” said

Kudlinski, Allegro Group’s BI manager. Tables

containing more than 4 million records each can now be aggregated and summed in less

than 20 seconds. Meanwhile, the Smart Scan feature of the Oracle Exadata Storage

Servers works so fast that Allegro Group has done away with many of its indexes.

In the past, Allegro Group could only offer its business users simple Web reports and

statistics — on spreadsheets. Now that production data can be uploaded every 24 hours,

Allegro Group generates new reports and statistics each day and posts them online for

easy access. “Business users can drill down into data details and slice and dice the data

however they want without requesting IT support,” CTO Szczesny said.

Figure 1: Reduction in Query Run Time

24 hours

< 1 hourExadata

Legacy

“We now have accurate figures on a daily basis. This wasn’t possible before.”

W O j C I E C h S z C z E S N y, C T O , A l l E G R O G R O u P


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The following charts show the increases in total queries, ad hoc queries, and business

intelligence reports in the Oracle Exadata environment.

Figure 2: Growth in Total Queries

Figure 3: Growth in Ad Hoc Queries

Figure 4: Growth in Bi Reports

Aug.2009

Nov.2009

Feb.2010

May2010

Aug.2010

Nov.2010

Feb.2011

June2011

Aug.2011

Nov.2011

Jan.2012

0

20,000

30,000

40,000

50,000

10,000

60,000

70,000

80,000

Qu

erie

s

6,26613,811

20,58122,159

36,46040,400

45,40450,000

51,00057,000

67,000

0

10,000

15,000

20,000

25,000

5,000

An

alyt

ic Q

uer

ies

(ad

-ho

c)

2,2945,318

7,338 8,238

13,06514,344 15,257 15,700 16,700

18,30019,600

Aug.2009

Nov.2009

Feb.2010

May2010

Aug.2010

Nov.2010

Feb.2011

June2011

Aug.2011

Nov.2011

Jan.2012

Aug.2009

Nov.2009

Feb.2010

May2010

Aug.2010

Nov.2010

Feb.2011

Est.2012

0

10,000

15,000

20,000

25,000

5,000

30,000

35,000

40,000

BI

Rep

ort

s

3,972

8,493

13,243 13,921

23,39526,056

30,147

35,000

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15x Faster Data Access

Oracle Exadata also improved the overall flexibility of its IT department and allows Allegro

Group to more intelligently deploy its IT resources to strategically support core business

initiatives. Also, because its pre-Exadata environment had no enterprise data warehouse,

all data and report requests were routed through the IT department. It was a roundabout,

inefficient process that took anywhere from 30 minutes to three days before

management or researchers could see the results.

“Now reports are available immediately or

can be accessed in one to two minutes,”

Szczesny said. “And it has completely

reduced the burden on the IT department.”

The improvement in reporting speed is

estimated to be 93% faster than

previously.

Estimated $2M in Revenue Growth

Allegro Group is also expected to realize an estimated $2 million in annualized revenue

growth due in part to its use of Oracle Exadata to offload data processing from the

database server to storage. As a result, Allegro Group can process queries significantly

faster and provide business users with a range of capabilities to optimize revenue and

margins. For example, the Exadata environment has enabled Allegro Group to beef up

its business intelligence portal with hundreds of new reports for each business line,

from general KPIs (key performance indicators) to detailed analysis. Analysts can now

do weekly clickstream analyses, monitor the value of cross-selling activities, and stay

on top of customer buying trends.

The additional analytical capacity is also facilitating faster price changes, supporting the

company’s “allegro standard” program and enabling the fast distribution of personalized

newsletters and recommendations. All of these reporting and marketing enhancements are

conservatively estimated to contribute at least $2 million in additional revenue per year.

$1.3M Fraud Prevention Benefit

Allegro Group also boosted its ability to quickly detect and abort potentially fraudulent

transactions — one of the biggest headaches of large e-commerce sites. Furthermore,

refunds are now instantaneous, relieving customers of any concerns about collection

or losses. “Real-time data is now available, bringing immediate visibility to suspect

transactions,” Kudlinski said. “Every transaction is now secured, so users of Allegro

Group are 100 percent protected.”

Figure 5: Faster Data Access

1/2 hour

2 minutesExadata

Legacy

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$450K Savings in Search Engine Marketing Program

Exadata-driven real-time reporting also gives Allegro Group the ability to calculate

and immediately adjust its spending on search engine marketing (SEM) campaigns1,

which is helping the company optimize its SEM budget — and avoid unnecessary ad

purchases — by focusing on the highest-performing products.

$3M in Productivity Gains

Thanks to the new flexibility and scalability of the solution, Mainstay Salire has calculated

that the Allegro Group will save $1 million annually through user productivity gains. Today,

Allegro Group’s managers, various research departments, and other key users have direct

access to the data warehouse as well as its full cache of querying tools and features and

all the data interfaces. The combined performance advantages of the solution means that

Allegro will more quickly deliver accurate customer data and complex market analytics

into the hands of decision makers. Thereby enabling them to capitalize swiftly on market

shifts, respond to customer preferences and demands, and create precisely targeted

campaigns and product offerings.

“After so many years of fragmentation, managers are now able to strategize by product,

region, user group, and category,” Szczesny said. “Every product functionality leader has

immediate access to the data they need.

“let’s say you have a new payment channel,” the CTO continued. “leaders have

immediate visibility into how users have utilized the channel and how much they

should optimize earnings for that channel. It’s fast, clear, clean, and direct.”

Over $200K in Annual iT Resource Scaling

historically, Allegro Group maintained a full-time, six-person team of IT programmers at its

Polish headquarters to field and respond to report service requests from its international

operations. Requests ran the gamut from running queries on the production system and

conducting ad hoc queries to aggregating each day’s batches and dealing with queries

that required action. With Oracle Exadata, Allegro Group was able to redeploy the team

to focus on more strategic projects, saving over $200,000 per year.

1One example of a SEM program is Google AdWords, which provides pay-per-click advertising, cost-per-thousand advertising, and site-targeted advertising for text, banner, and rich-media ads.

“All i can say is that never in my life have i seen a database responding and retrieving so fast.”

R A FA l K u D l I N S K I , B u S I N E S S I N T E l l I G E N C E D I R E C T O R , A l l E G R O G R O u P

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$100K Saved on Hardware

As shown in Figure 6, Allegro Group is projected to save $100,000 in hardware cost

avoidance thanks to the massive capacity and scalability of Oracle Exadata. Despite

a 64% rise in data since 2007 — from 9 TB to 25 TB in 2011 — Allegro Group will be

able to accommodate that growth with no additional outlays for hardware.

Supporting Business Growth

Oracle Exadata is not only helping to support Allegro Group’s explosive growth in page

views and transactions, it is also supporting growth on its business side, which has risen

20% as a direct result of all its new Internet services, acquisitions, and incoming data

sources. By allowing Allegro Group to track what users view and what they are interested

in, Allegro Group can more effectively shape personalized marketing tools like e-mail

blasts and newsletters around user behavior rather than just transaction activity.

Business users also now have an array of flexible reporting tools to choose from,

including sophisticated dashboard functionality. Furthermore, the integrated capabilities

of the system encompass a range of business essentials such as planning departmental

budgets, workforce scheduling, sales territory assignments, and any other activities that

require “what if” modeling.

“If we had to do the entire data mapping, modeling, and transformations ourselves,

it would probably take three or four times longer than it took to implement the entire

prebuilt Oracle business intelligence and data warehousing solution,” Szczesny said.

Figure 6: Data Growth

9

14

2064%

25

0

10

15

20

25

30

5

Tera

byt

es (

TB

)

2009 2010 2011 2012(est.)

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Copyright © 2012, Oracle. All rights reserved. Oracle and Exadata are registered trademarks of Oracle and/or its affiliates. Other names may be trademarks of their respective owners.

ABOUT THiS CASE STUDY

Research and analysis for this study

was conducted by Mainstay Salire,

an independent consulting firm,

drawing from interviews with Allegro

Group employees, review of planning

documents and searches of industry

literature. ROI calculations use

industry-standard assumptions

regarding the time value of money.

Mainstay Salire is the leading

provider of independent value

assessment and IT strategy services.

For more information, please

visit www.mainstaysalire.com.

Information contained in this case

study has been obtained from sources

considered reliable but is not

warranted by Mainstay Salire.

2929 Campus Drive, Suite 150San Mateo, CA 94403

650.638.0575 ph 650.638.0578 fx

www.mainstaysalire.com

BENEFiTS SUMMARY

According to Mainstay Salire’s projections, Allegro Group’s investment in the Oracle

Exadata platform is expected to generate total business and IT benefits of approximately

$7.5 million over three years, as shown in the chart below. The largest portion of the

benefits will come through better analytical capabilities; faster querying; having a single,

unified data management platform throughout the enterprise; and being able to quickly

and accurately disseminate information for more effective marketing and product

selection. The Allegro Group will break even on its investment within 19 months,

and is on track to earn a 64% ROI over a three-year period.

Figure 7: Benefits by Category—Three-year view

HardwareCost

Avoidance

Improved IT Resource

Optimization

$0.1M$0.6M

$0.5M

$3.0M

$2.0M $7.5M

$1.3M

ReportUser Staff

Productivity Optimization

FraudPrevention

Benefits

Adword Campaign

CostOptimization

Incremental Revenue Impact(profit

margin only)

TotalBenefits

Oracle Exadata and Allegro Group

Retail

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