Insight Impact Series

Oracle Information Technology: Building a Foundation for Future GrowthTransformation Through Datacenter Optimization

TaBle OF cOnTenTS

1 executive Overview

2 Industry Trends

4 challenges

6 Solutions

10 Redefining the Successful Datacenter

15 Benefits

20 conclusion

1

In 2006, Oracle ceO larry ellison met with Mark Sunday, Oracle’s cIO, to discuss the impending tidal wave of acquisitions that would hit the shores of the information technology (IT) department. The challenge was to have a clear strategy for scaling IT processes that would accommodate the acquisitions, reduce costs, and maintain Oracle IT’s traditionally high levels of service.

executive Overview

Oracle IT was faced with significant physical and power limitations—a common problem for many datacenters. each year, electricity usage was growing at a rate of more than 100 percent, and demand for data storage and computing resources was almost doubling—accelerating beyond even the most aggressive scenarios. The proliferation of servers, storage, and communications hardware represented significant capital expense for the company. In addition, operating expenses were increasing as resource allocation and planning in the datacenters took a backseat to coping with everyday tactical activities. These symptoms highlighted the underlying problem of IT’s organic growth.

While it was clear that Oracle IT needed to change its way of operating and managing IT services, exactly what to change and how to implement those changes were not as obvious. What Oracle IT needed was a new way of thinking about how to provide IT services—a transformation of Oracle IT into a strategic engine that could support Oracle’s scale and propel its business forward.

With a strong vision, Oracle set out to transform the IT function in a series of systematic actions. From the foundations of hardware and physical infrastructure to advanced services, every layer of IT services was redefined. Oracle employed four main phases during the transformation: consolidation, standardization, and virtualization, leading to utility computing. The end result was a highly effective, fuel-efficient computing infrastructure backed by financial results.

Since the transformation started, Oracle has increased revenue from US$14 billion to US$26 billion, while reducing the cost of IT from 2.6 percent of revenue to 1.85 percent. Benefits range from lower capital investment in facilities and hardware to lower operational costs of power and resources.

Many cIOs face the issues of IT costs and scalability every day. By sharing Oracle IT’s transformation story, our intent in this executive report is to reveal the best practices that can benefit organizations confronting similar challenges.

2

1“ IT in the New Normal: McKinsey Global Survey Results,” Roger Roberts and Johnson Sikes, McKinsey Quarterly, Dec. 2009.

Industry Trends

The Impetus for Change

a recent McKinsey survey of IT executives highlighted how the primary role of IT groups is moving from a low-cost, commodity provider of IT to a strategic partner in improving business efficiency. In the survey, some respondents indicated that their IT groups were playing a more critical role than they had in the previous year by improving business efficiencies and reducing costs across the enterprise.1

among those executives whose organizations had involved IT in the development of their business strategies, 66 percent of business leaders and 46 percent of the IT leaders felt that their IT groups were effective. The numbers for those executives whose organizations had not linked their IT and business strategies were much lower: only 8 percent of the business leaders and 16 percent of the IT leaders in those situations felt that the IT groups in their organizations were effective.

Business and IT strategy are tightly integrated and influence each other

Current Business/ IT Strategy

Composite metric representing the percentage of respondents who rated three or more activities “extremely” or “very” effectiveN=444

Total

47 27

18

19

16

27

28

8

66

35

16

46

Business Leaders IT Leaders

Business strategy is developed with some input from ITBusiness strategy is developed firstand used to guide IT strategyBusiness and IT strategy are not linked

Figure 1. More business and IT leaders feel that IT is effective when it is linked to business strategies.

In the same survey, notably fewer respondents cited “lowering costs” as their primary focus for IT, suggesting that—instead of planning to cut back on the role of IT in their company—executives are seeing better results when they increase the role of IT throughout the enterprise.

The focus for IT was shifting—from a tactical, reactive role to a strategic, proactive role that could provide value, improve efficiencies, and support the company’s specific business processes in a timely manner. It was against this background that Oracle began implementation of the plan that would take Oracle IT down the road toward operational excellence.

FaCT: as a strategic operational entity, Oracle IT enabled Oracle to complete more than 60 acquisitions in five years.

ORaCLE IT aT a GLaNCE

Oracle IT has been key in helping Oracle achieve the expected benefits of acquisitions made over the past five years, including PeopleSoft (2005), Siebel (2006), Hyperion (2007), agile (2007), Bea (2008), and Sun (2010). Many of these acquired companies were operating datacenters to support their internal IT operations.

Oracle IT operates at a very low cost compared with its peers, and in the last five years, has reduced IT infrastructure costs as a percentage of overall revenue from 2.63 percent in 2006 to 1.85 percent in 2009. This also contributed significantly to an overall decrease in general and administrative (G&a) expenses.

3

“In the last three years, Oracle has rapidly and successfully integrated more than 30 acquisi-tions, including seven in the last four months.To make that happen, integration has to begin on day one.”

Mark Sunday, CIO, Oracle Oracle OpenWorld 2007

Providing Value

In the world of mergers and acquisitions, many benefits attributed to an acquisition are found in the synergies between the two organizations. The critical synergies for enterprise software industry acquisitions are in core IT and software product development—comprising nearly 55 percent of the value of the merger.

IT Synergies 25%

Non-IT LedSynergies

45%

IT-Enabled Synergies

30%

Figure 2. In the enterprise software industry, CEOs expect IT departments to deliver a significant portion of the benefits realized from an acquisition.2

Improving Efficiencies

The postacquisition results from an IT group include improved efficiencies simply by eliminating duplicate processes. In addition, however, the economies of scale—the benefits that an organization gains from expansion—can be significant. With the right technology choices, IT groups can easily deliver improved efficiencies that can directly affect the bottom line. economies of scale can be realized in hardware (servers, storage), software (applications, database), facilities (energy, physical footprint), and, of course, in human resources.

Supporting Business Processes

By supporting the specific processes used by a business, IT can provide standardization that will result in more efficient, better supported services with higher availability at a lower cost. Human resource and financial processes are excellent candidates for standardized support from IT because the processes are the same throughout the enterprise. Standard business processes needing variations for localized support are incorporated into the configuration processes for individual sites.

FaCT: In a recent survey of cIO executive boards, the number one reason cited for integration failures was slow execution of the integration process.

Source: corporate Strategy Board research; Infrastructure executive council, “avoiding M&a Integration Pitfalls,” Washington, Dc: corporate executive Board, 2006; cIO executive Board research.

2 Source: Corporate Strategy Board research; Infrastructure Executive Council, “Avoiding M&A Integration Pitfalls,” Washington, DC: Corporate Executive Board, 2006; CIO Executive Board research.

4

FaCT: Oracle IT reduced the cost of IT infrastructure as a percentage of overall revenue from 2.63 percent in 2006 to 1.85 percent in 2009, which contributed significantly to an overall decrease in general and administrative (G&a) costs for Oracle.

Timing Is Everything

another critical factor for successfully integrating acquisitions into an organization is time. In a recent cIO executive board survey, the number one reason cited for failures was in the timely execution of the integration. When errors slowed the process, the integration was more likely to fail.3

Number One Deal Error as a Percentage of Total M&A Failed Initiatives

IntegrationValue available

but execution errors

StrategyIn hindsight the value was wrong

ValueAssumed greater

value than actually available

44%50%

25%

0%

28% 28%

Figure 3. The M&a value was there, but execution errors in integration failed to deliver on the promised benefits.

challenges

a Perfect Storm of Challenges

With Oracle’s organic growth and aggressive acquisition strategy in full force, Oracle IT was looking ahead to a “perfect storm” of challenges that would affect its ability to provide a timely, scalable response to Oracle’s aggressive growth. Failure to meet these challenges would have far-reaching consequences for Oracle in the marketplace.

Managing datacenter capacity•

Understanding and satisfying client requirements•

Taking advantage of technology•

Growing aggressively through multiple acquisitions•

Joining Oracle from Siebel Systems, Mark Sunday became Oracle’s cIO in 2006 with firsthand knowledge of the challenges involved in managing datacenters. Under Sunday’s direction, Oracle IT embarked on a plan to transform Oracle IT from a tactical provider of individualized services to a strategic provider of scalable, end-to- end service solutions for the enterprise.

3 Source: Corporate Strategy Board research; Infrastructure Executive Council, “Avoiding M&A Integration Pitfalls,” Washington, DC: Corporate Executive Board, 2006; CIO Executive Board research.

5

Managing Datacenter Capacity

as Oracle grew and as industry requirements and government regulations for managing and storing data increased, Oracle IT facilities around the world were facing severe space limitations and skyrocketing expenses. The demand for data storage and computing resources had doubled from the previous year and was accelerating faster than even the most aggressive scenarios had predicted. electrical usage was growing at a compounded average rate of more than 100 percent from 2003 to 2006. adding more servers wasn’t a solution—at prevailing growth rates, Oracle’s datacenters would be running out of space by the end of the then current year.

Many of the more than 40 datacenters in Oracle’s IT network served only regional or local interests, and that number only increased with Oracle’s acquisitions—many with their own datacenters. Managing and maintaining such a heterogeneous collection of siloed datacenters was inefficient and costly, and demanded significant IT resources.

Understanding Customer Requirements

Oracle IT provides IT support and services to three distinct clients that require high-availability environments with high refresh rates. In addition, each individual client has its own issues, needs, and requirements.

Oracle On Demand. • More than 4.5 million users around the globe are using Oracle On Demand. no matter which Oracle applications are used—Oracle e-Business Suite, Oracle’s Hyperion enterprise performance management systems, Oracle’s JD edwards enterpriseOne applications, Oracle’s PeopleSoft enterprise applications, Oracle’s Siebel enterprise applications, or a combination of applications—Oracle On Demand must provide 24/7 availability.

Oracle University.• Relying on the high availability of Oracle IT environments, Oracle University courses are available in a variety of training formats to provide students with flexible learning options. In addition to courses taught in classrooms worldwide, Oracle University offers live, interactive courses online, self-paced learning, classes at customer sites, and customized training.

Oracle internal operations and development.• Internally, Oracle IT supports the operations and provides the development environments for the most demanding software development team in the world. as part of its internal datacenter services, Oracle IT manages large, single instance applications—including customer relationship management (cRM), financials, human resources, and business analytics—alongside the development environments needed to support the myriad of Oracle products at every stage of the product lifecycle.

REaL WORLD RESULTS: ORaCLE ON DEMaND

Oracle On Demand is a key line of business for Oracle IT. Oracle IT ensures efficient and effec- tive service delivery through a standardized and virtualized infrastructure.

Line of business: Software as a service (SaaS) and managed services

Highlight: High efficiency

Impact on datacenter after implementing transformation plan

More than 4.5 million end users•

50 systems provisioned weekly, •

159 systems refreshed, and 30 patches applied (optimized using Oracle technologies)

89 percent of servers running •

latest releases

67 percent reduction in •

hardware

Increase in cPU utilization from •

9 percent to 55 percent

6

Employing Technology

With the mandate to maximize the benefits of Oracle’s acquisitions while minimizing the impact on their customers, Oracle IT looked to technology for scalable solutions that would address the problems of integration, hardware performance, and cost control both for now and into the future. In addition, Oracle was committed to taking advantage of the advanced technology features offered in Oracle’s own software.

ellison had made it clear that “If you want to put something in, you’ve got to take something out.” Given the space constraints, Oracle IT was tasked with replacing any hardware that was no longer cost-effective with energy-efficient equipment that would enable the key efforts of consolidation, standardization, and virtualization.

Growing Through Multiple acquisitions

Since 2005, Oracle had been integrating software companies at a pace of more than 10 per year. Increased IT demand, skyrocketing expenses associated with consolidating the acquired companies, and the amount of time needed to bring the infrastructure of those companies into the Oracle IT organization were significant—and costly. In addition, many of the companies were running their own datacenters to support their internal IT operations. The challenge was simple: reduce the time, resources, and expense associated with integrating the newly acquired companies into Oracle IT and not fail the integration.

Solutions

Transforming Oracle IT

With such an important role in Oracle’s strategic vision, Oracle IT needed a systematic transformation plan to establish an IT services delivery organization. The plan would use the utility computing model and provide automated provisioning of a set of shared services to be delivered quickly, on an as-needed basis. Through the use of quotas, growth limits were set for the different business functions using Oracle IT’s services. In this scenario, IT runs as a “business within a business” to provide a customer-centric organization that leverages the Infrastructure Technology Information library (ITIl) framework and delivers low cost, efficient services and improved service levels.

Oracle IT planned to accomplish this transformation with the following:

1. Operational efficiency through consolidation

2. Simplification through standardization

3. Utilization through virtualization

4. Services automation through utility computing

REaL WORLD RESULTS: ORaCLE UNIVERSITY

Oracle University is a key line of business for Oracle IT. Through a standardized and virtualized infrastructure, Oracle IT ensures efficient and effective delivery of services.

Line of business: education Services

Highlight: Dynamic provisioning

Impact on datacenter after implementing transformation plan

2,300 environments provisioned •

automatically every week

Through virtualization initiatives, •

reduced hardware footprint to 1/10th of previous requirement

Increased cPU utilization from •

7 percent to 73 percent

Reduced floor space by •

50 percent

Reduced power consumption •

by 40 percent

Increased ratio of server to •

administrator by10 times

Increased revenue per server •

by 10 times

7

The end result is a successful datacenter that can manage and support Oracle’s growing IT requirements in a timely, cost-effective manner. With this type of scalable solution, the IT organization can create an enterprisewide environment that provides a fast, efficient, and cost-effective, “no-hands” support strategy for Oracle IT clients and its customers.

The transformation plan spanned a time frame from 2005 to 2008 (and beyond as new companies are acquired). The first phase, consolidation, was planned for 2005 through 2007; the second phase, standardization, took place from 2006 to 2008, as did the third phase, virtualization. The fourth and final phase, utility computing, began in 2008 and will continue into the future.

Phase 1: Consolidation

Phase 2: Standardization

Phase 3: Virtualization

Phase 4: Utility Computing

Consolidate datacenters

Consolidate hardware

Consolidate applications

Standardize on applications

Standardize on platforms

Abstract environment, including platform, hardware, and applications (through middleware)

Increase server utilization

Increase storage utilization

Automated services provided on a pay-as- you-go, as-needed basis

2005–2007 2006–2008 2006–2008 2008 and beyond

Figure 4. The goal of the transformation plan for Oracle IT was to establish a utility computing model for the delivery of IT services.

1. Operational Efficiency Through Consolidation

consolidation was an essential first step on the road toward IT as a service. In the past, Oracle had delivered IT by function—often focused only on a specific region or country. IT staff resources were assigned accordingly, leading to inefficient procedures and the duplication of jobs and responsibilities across the enterprise.

a multitude of IT silos existed side by side with a variety of hardware, platforms, and enterprise applications. not surprisingly, the average server utilization across corporate datacenters was at a low 7 percent.

creating a shared services delivery model had to start with significant consolidation of Oracle’s IT infrastructure and supported applications. Instead of taking on this challenge alone, Oracle IT worked with its clients to codevelop a strategic vision to be used across Oracle worldwide. With executive buy-in, Oracle adopted IT service management (ITSM) methods to support its transformation from a function-oriented organization to a true service-oriented, customer-focused organization.

FaCT: The word utility in utility computing makes an analogy to other services (such as electrical power) that meet fluctuating customer needs by charging for resources based on usage rather than on a flat-rate basis. Sometimes known as “pay-per-use” or “metered” services, this approach is becoming increasingly common in enterprise computing.

8

Using best practices to help organizations align the delivery of their services with customer needs, the process-based ITSM helped Oracle IT work toward consolidation of all assets at all levels of the company and implemented these solutions.

Two pre-existing datacenter locations—one in austin, Texas, and one in colorado •

Springs, colorado—were selected from a field of more than 40 datacenters worldwide. (a third datacenter is currently being built in Utah, using state-of-the-art technologies.)

Servers throughout the company were consolidated into the centralized datacenters •

and updated to new hardware technology that offered more computing power in less space.

Storage hardware was consolidated and updated to media with more density so that •

more data could be stored in the same (or less) space.

all enterprise applications that supported key operational processes at Oracle •

(including procure-to-pay and hire-to-retire) were consolidated into one environment on a single platform.

Other applications were prioritized for decommissioning.•

Storage hardware and platforms were reviewed with an eye toward standardization.•

2. Simplifying Through Standardization

The successful consolidation of assets (such as datacenters and servers) made the next phase of the Oracle IT transformation plan—standardizing processes, applications, platforms, and people skills—much easier to implement. In the past, Oracle IT was responsible for supporting and maintaining a variety of hardware platforms for computing and storage. This required a workforce with a variety of platform-specific skills. Only by reducing the number of platforms and standardizing processes would Oracle IT be able to deliver effective, cost-efficient services to its customers.

Oracle IT used ITSM methods to help with the standardization of processes in the datacenter and applied a similar logic to the platforms needed to deliver those services. ITSM helped Oracle IT focus on real customer needs that added value.

Oracle IT had already decided that, as long as the service level agreements (Slas) with their customers could be met or exceeded and the services delivered effectively, the actual hardware platform should be as cost effective as possible. The analysis of existing applications and technology resulted in three standard platforms for computing and storage. However, once the Sun acquisition was completed, Oracle IT was able to standardize on its own products—both hardware and software.

9

The open standards used for the development of Oracle software products allowed for hardware independence, so Oracle IT selected three platforms for the standard: linux on x86, Oracle Solaris on SPaRc, and Oracle exadata. as part of the standardization phase, each configuration would be captured and kept up-to-date in a configuration management database (cMDB) and used to reduce support requirements.

3. Increasing Utilization Through Virtualization

after consolidation and standardization, the next phase in the transformation plan was the virtualization of all servers and storage assets. Virtualization was applied at the server level to allow multiple operating system (OS) images to run on one physical server. Oracle IT was an early adopter of storage virtualization tools and techniques as a way to increase storage capacity while reducing the physical footprint. In addition, virtualization meant becoming less dependent on specific vendor platforms, specific applications, and specific skill sets.

With virtualization, Oracle IT could focus more on availability and disaster recovery. Oracle IT used Oracle Real application clusters (Oracle Rac) to implement clustering, which significantly increased availability. Oracle IT also used the advanced technologies in Oracle advanced compression and Oracle Partitioning to further slow the growth in data storage. (This was especially helpful in the austin Data center where space was at a premium.)

In Oracle IT’s disaster recovery plans, the colorado Springs Data center serves as the active stand by for the austin Data center. Specific options for the database—including Oracle active Data Guard and Oracle Flashback—were implemented and contributed to a reduction in a mean time to recovery (MTTR) of less than an hour, with plans to reduce even further.

4. Toward Utility Computing

With virtualization, Oracle IT established a complete abstraction of the physical hardware. an almost fully automated provisioning process now balanced demand and supply, and Oracle Fusion Middleware, a single integration middleware layer based on standard Oracle technology, allowed for standardized integration between applications. Oracle IT used standard Oracle applications and technology to handle security and customer-specific configuration settings. Oracle IT was now ready to focus on the final phase of the transformation plan.

establishing utility computing—the self-service provisioning of environments for all its customers—is the final phase in the plan to transform Oracle IT into a utility computing organization where customers use self-service capabilities to start the automatic provisioning processes. Once this capability is fully available, Oracle IT plans to allow self-service provisioning for any Oracle product.

THE UTILITY COMPUTING MODEL

Utility computing is a service provisioning model in which a service provider makes computing resources and infrastructure management available to the customer as needed, and then charges for specific usage rather than the flat rate that is more typical of traditional IT organizations.

like other types of on-demand computing (including grid computing), the utility model seeks to maximize the efficient use of resources and minimize associated costs.

The utility computing model has significant challenges to overcome as a result of the completely shared services environment.

Preventing the comingling of •

data in a shared environment

adjusting specific configuration •

items that affect multiple customers, such as single currencies

cross-charging and cross-billing •

for services

Mixing on-premise and •

off-premise resources

allocating resources based •

on demand

enabling the elasticity of •

computing resources on the supply side

Integrating different applications •

in a shared environment

ensuring security in terms of •

authentication and authorization

Offering self-service access •

for requesting new services or adjusting existing services

Source: national Institute of Standards and Technology

10

Redefining the Successful DatacenterThe success of Oracle IT depended primarily on its ability to create datacenters that could provide the services and availability needed by their clients. Using ITSM as the methodology and a utility computing model as the goal, Oracle IT implemented ITIl to improve the specific processes associated with running a successful datacenter:

Planning the IT services and underlying architecture•

Designing the services for the datacenter•

Operating the datacenter•

Figure 5. Each step toward creating the successful datacenter includes a specific set of tasks.

Improving Datacenter Planning Processes

With the decision to offer a limited number of top-level services in the datacenter, Oracle IT had to build a highly standardized environment that would put restrictions on the type of platforms supported, while still providing more than 20,000 internal Oracle developers with the access they needed to the environment.

Building on experience gained over 30 years in business—experience that is reflected in the large number of practices across the planning, design, and operations areas of the datacenters—Oracle IT was able to improve the efficiency and effectiveness of the services it provided and offer solutions that met the requirements of their customers. For example

The Oracle On Demand line of business would offer only three platforms: linux •

on low-cost x86 hardware, Oracle Solaris on SPaRc, and Oracle exadata.

Oracle IT would enable Oracle internal developers to use self-service requests to •

auto-provision virtual environments and then release the environments at the end of the work day. This would free up valuable resources so they could be shared worldwide across Oracle’s developer community.

ORaCLE IT DaTaCENTERSThe current day, active-active connected Oracle IT datacenters are the result of an effort that started with more than 40 datacenters that served only regional or local interests.

Oracle IT now operates two main datacenters to support its service delivery worldwide: the austin Data center (aDc) in austin, Texas, and the Rocky Mountain Data center (RMDc) in colorado Springs, colorado.

RMDc covers 6,900 square feet and serves as the back-up site for aDc, but its computing capacity is also used by Oracle developers and for other internal Oracle functions. a third facility is being built in Utah using state-of-the-art technologies.

The 80,000 square feet aDc has been upgraded over the years and is certified by leadership in energy and environmental Design (leeD). aDc is a Tier 4 datacenter, meaning that it has 99.995 percent availability (0.4 hours or less of unplanned downtime). aDc has multiple lay-ers of security (including biometric security), seven back-up generators that total almost 14 megawatts, and enough fuel to run five days at full capacity.

PLaNNING DESIGN OPERaTIONS

Services PlanningSLA Management Service Desk

Configuration and Change Management

Performances and Availability Management

Architectural Planning

Release Management Utilization Management

Security ManagementProvisioning and Patch Management

Information Lifecycle Management

11

STaNDaRDIzING ON ORaCLE PRODUCTS

Oracle IT used these products in its transformation plan.

Oracle Database 11• g enterprise edition

Oracle active Data Guard•

Oracle Identity Management•

Oracle advanced Security•

Oracle Partitioning•

Oracle advanced compression•

Oracle Real application •

clusters

Oracle BPel Process Manager•

Oracle Real application Testing•

Oracle Database Vault•

Oracle Secure Backup•

Oracle Flashback•

Oracle SOa Suite•

Oracle Fusion Middleware•

Oracle Total Recall•

Oracle VM•

The underlying architecture for the datacenters specified datacenter services •

that were highly modular, allowing each component to be reused easily when new services needed to be developed. as a result, Oracle IT was able to cut development time for new services from months to weeks.

Oracle IT was able to standardize on Oracle products and technologies for the •

platform because of their availability and their performance architecture.

The suite of JD edwards enterpriseOne applications were certified and ready to •

go after only a few weeks. Oracle IT was able to compress the time for the delivery of this new service only because it could implement a standardized process, reuse existing services (such as backup, maintenance, and security), and deploy existing resources.

Figure 6. Oracle IT used best practices in datacenter planning processes.

IMPROVING DaTaCENTER PLaNNING PROCESSES

Planning Best Practices What Oracle Did

Reduce number of services to a few top-level services that can be broken down into components. Make these components ready for reuse when developing new services such as backup, security, and maintenance.

Reduced the number of top-level services offered by Oracle IT to 70.•

Reused the components that made up existing services.•

Defined new services based on priority and available resources.•

Reduce number of platforms (hardware and OS combinations) and standardize on as few combinations as possible based on workload.

Made standardized platforms hardware-agnostic, reducing the need to •

have as many vendors. Vendors can now provide hardware for computing and storage, and switching platforms or vendors can be done more easily. Achieved US$3 million in capital expense savings by using Oracle on •

Demand in less than nine months by moving to faster servers (from dual core to quad core) and reducing more than 50 rack space units. At the same time they were actually able to offer more computing capabilities to their customers.

Standardize application integration infrastructure on one Oracle technology.

Standardized the application integration infrastructure on Oracle Fusion •

Middleware, creating an abstract integration layer for applications that simplified integration and increased the efficiency of offered services.

Focus on space utilization as the key criterion when improving efficiencies in the datacenter, and then focus on server utilization.

Maximized the utilization of space before focusing on improving server •

utilization. The physical limitations of the Austin Data Center have led to a creative use of available space. At least 20 percent of floor space is now unused.Agreed on key metrics to run the datacenter with buy in from all customers.•

Use technology instead of physical assets.

Implemented standardized high availability disaster recovery infrastructure •

with the Colorado Springs Data Center as active standby. Availability infrastructure is one-tenth the price of others through the use of clustering.Used lessons learned from architecting the Oracle On Demand environment •

to gain efficiencies in the internal part of IT services for Oracle.Decided to use the Colorado Springs center’s computing capacity for •

development instead of only for back-up purposes. Decision was facilitated by the strength of the clustered infrastructure, which created additional redundancy in the system.

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Improving Datacenter Design Processes

By reducing the number of configurations used in the datacenter and by maintaining a continuously updated cMDB, Oracle IT significantly reduced the number of service requests that originated from incorrect changes and from human error when applying changes. Oracle IT also used information lifecycle management (IlM) strategies in conjunction with Oracle technologies (such as the partitioning, compression, and deduplication technologies available in Oracle Partitioning and Oracle advanced compression) to reduce data storage requirements.

Oracle IT has standardized service level agreement (Sla) definitions and tracks them through the limited number of agents on the server. To ensure that they meet all Sla goals, Oracle IT continues to work closely with its customers to understand their need for IT services now, in the near future, and long term.

IMPROVING DaTaCENTER DESIGNING PROCESSES

Designing Best Practices What Oracle Did

Develop standard “gold” software images that can be provisioned easily and consistently as a way to minimize human error.

Created a dedicated lab environment for testing new configurations.•

Created gold image of all software products. For example, only one image •

exists for all desktop/ laptop deployments.

Follow through in limiting the number of supported platforms by standardizing configurations as well.

Limited the number of allowable configurations.•

Use a combination of technolo-gies and pragmatic approaches to reduce data storage growth. For example, limit the amount of data kept in active storage (data less than 30 days old).

Reduced data storage demand through the implementation of compression •

and deduplication.Performed backups using standard Oracle products and technology, •

including Oracle Active Data Guard and Oracle Secure Backup. Did most backups on tape. (A virtual tape library, or VTL, is being •

considered, but performance bottlenecks exist.)Limited the amount of monitoring data (and other data) to be kept in active •

storage. Implemented information lifecycle management methods resulting in US$10 •

million in cost avoidance for storage equipment.

In a fully automated provisioning environment, allow storage to run closer to capacity before provision-ing additional storage hardware. (Faster provisioning makes it possible to run much closer to full capacity of storage media.)

Developed tools that allowed for a 50 percent increase in active storage •

utilization. (In older scenarios, most storage hardware is not utilized at more than 50 percent.) Implemented information lifecycle principles along with tiering and •

partitioning. This led to a 25 percent reduction in overall active storage.

Set a limit to the number of agents running on each server to reduce the performance impact of those agents.

Used agents for which the data can be easily plugged in the overall •

management environment such as Oracle Enterprise Manager.Implemented a maximum of one agent per server for monitoring purposes •

to reduce the server overhead and to limit the amount of monitoring data generated.Realized end-to-end monitoring across all assets using Oracle •

Enterprise Manager.

Implement end-to-end security by considering single sign-on (SSO) and—in particular—vertical se-curity validation for OS, database, middleware, and applications.

Standardized security using Oracle products and technologies. (Since •

Oracle and many Oracle On Demand customers are public companies, Oracle IT has implemented the Oracle Advanced Security option for Oracle Database 11g for compliance.)

Figure 7. Oracle IT used best practices in datacenter design processes.

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Improving Datacenter Operating Processes

In the actual operation of the datacenter, Oracle IT has automated many of the performance, utilization, and provisioning processes. (It is difficult to automate the racking and stacking activity.) Because of consolidation and standardization, Oracle IT has been able to focus its personnel resources on flexible skill sets that allow those resources to fulfill most roles in the datacenter. as a result, Oracle IT has more than 76 percent of its resources working remotely from low-cost locations, driving high levels of efficiency.

IMPROVING DaTaCENTER OPERaTIONS PROCESSES

Operations Best Practices What Oracle Did

Standardized platforms, limited services, and a minimum number of configurations allow for standardized skill sets.

Developed staff skills with the standardized approach in mind, and limited •

specialization except where needed.Trained all resources in using standard operating procedure.•

Reduce operations costs by moving resources to low-cost locations.

Reduced personnel costs by allocating 76 percent of resources in •

low-cost areas.

Use BPEL and other datacenter automation tools to automate the provisioning and patching processes.

Developed and implemented BPEL engine to automate the provisioning •

process, achieving an almost “touch free” environment. Developed the capability to provision more than 15,000 accounts overnight. •

Developed the ability to upgrade 18,000 Linux servers within 24 hours.•

When adding storage, review space and power requirements as the most important criteria.

Used space and power requirements as key decision factors for adding and •

upgrading hardware.

Reduce cost by limiting hardware maintenance contracts to two years or less. Reuse hardware components after depreciation period or after the failure of a component part.

Optimized hardware investments through the reuse of part components.•

Limited hardware maintenance contracts, allowing for faster upgrades •

and improved performance.

Improve availability and perfor-mance using improved technology and standardized platforms.

Reduced planned downtime to one hour per week of which not all time •

is used. Uptime approaching 100 percent with the use of clustering. Achieved less than one hour MTTR through the use of commodity •

hardware. At any point in time, 30 systems are ready to be provisioned through a streamlined process.Implemented network data compression that led to a 50 percent increase •

in transmission capacity.

Figure 8. Oracle IT used best practices in datacenter operations processes.

Looking ahead

With several elements in place for the next phase in Oracle IT’s master plan—to establish utility computing—Oracle IT is focused on the self-service provisioning of environments for all its customers. Once this capability is fully available, the aim of Oracle IT is to allow self-service provisioning of any of Oracle’s products. additional initiatives are focused on implementing a billing solution to support the utility model.

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Integrating Sun

With the recent US$7.4 billion acquisition of Sun, Oracle IT kicked off the process for integrating Sun starting on day one and hasn’t looked back. armed with a set of proven capabilities and following the practices first outlined in 2006, Oracle IT is using its best practices in operational excellence and will be setting benchmarks for years to come. The following is a summary of practices that facilitate a smooth integration:

consolidate datacenters and address the unique challenges of closing leased facilities.•

Integrate employees and partners in the appropriate processes such as hire-to-retire •

and procure-to-pay as established by the global single instance.

Reduce redundant infrastructure and enforce standard hardware configurations, •

resulting in lower capital expenses.

capitalize on unique capabilities that support Oracle’s long-term IT standards. •

For example, by using the facility offered by Oracle Solaris containers, Oracle IT can rapidly consolidate older Solaris instances in a virtualized Oracle Solaris 10 environment. as a result, a total of US$3 million in savings has already been achieved.

Reduce applications footprint by rapidly integrating Oracle’s Sun resources. also, •

stop patching noncritical applications that are on the retire list. More than 1,500 applications with 6,000 instances will be decommissioned and consolidated in the existing single global instance.

Implement storage optimization by switching to Sun open storage and replace •

blade servers with Sun Blade Servers.

Minimize new capital purchases through further optimization of existing •

Oracle infrastructure. Use space optimization as the key principle to drive infrastructure decisions.

execute the plan in place to achieve targeted cost savings through the Sun IT integration.•

Before the acquisition, Sun had accomplished significant changes in the way it managed its datacenter infrastructure through the use of consolidation and virtualization. Oracle IT will benefit greatly from the experiences gained by the Sun integration in its drive toward datacenter excellence.

2007 CHaLLENGES 2009 aCCOMPLISHMENTS

IT demand growing exponentiallyNew products, reorganizations, acquisitions•

Global expansions•

Potential impact was significantMultibillion dollar IT and R&D technical infrastructure•

Globally, 1.3 million square feet of •

engineering and IT space1,533 individual rooms•

Sun’s second largest expense was facilitiesReal estate, utilities, taxes, and support costs•

88 percent space compression•

61 percent utility reduction•

US$9 million cost avoidance•

2.2 megawatt to 500 kilowatts•

450 percent compute increase•

3,227-ton reduction in CO2•

Consolidated 8 datacenters into 4•

Figure 9. Sun IT accomplishments in datacenter management prior to acquisition.

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Benefits

Realizing the Benefits of an Oracle Solution

Oracle realized immediate benefits from the plan to transform Oracle IT to a services delivery organization. as soon as the first phase (consolidation) was complete, Oracle IT was able to measure impressive savings in operational efficiencies. With the completion of each of the following phases (standardization and then virtualization), Oracle IT reported significant results from the simplification and the increased utilization of resources.

Figure 10. Before and after the plan for transforming Oracle IT.

More Efficient Operations

By consolidating its overall infrastructure, Oracle IT experienced the benefits of more efficient operations.

Reduced infrastructure costs.• By consolidating operations, Oracle IT reduced IT costs as a percentage of overall revenue from 2.63 percent in 2006 to 1.85 percent at the end of 2009. This reduction contributed significantly to an overall decrease in Oracle’s G&a expenses.

THEN (2006) NOW (2010)

50,000+ Oracle Employees 106,000+ Oracle Employees

IT Cost 2.63% of Revenue IT Cost 1.85% of Revenue

40+ Datacenters 2 Datacenters

Average PUE 2+ Average PUE 1.5

111% Utility Growth (compounded average over 5 years)

4% Utility Average Growth

1,400 IT FTE Resources 1,600 IT FTE Resources

20+ Platforms 7 Platforms

No Services Defined 70+ Services

Point-to-Point Integration 1 Standard Integration

5,000 DB Instances 18,000 DB Instances

300 DBAs 233 DBAs

7% Server Utilization 70% Server Utilization (Oracle University Grid)

6 Hours MTTR < 1 Hr MTTR

Compression 0% Compression 40%

DC Server Image Cost $5,000 DC Server Image Cost $1,500

Provisioning Time: Months Provisioning Time: Minutes

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Decreased Expenses

$25

$20

$15

$10

$5

$

6.00%

5.00%

4.00%

3.00%

2.00%

1.00%

0.00% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

+8 Acquisitions

Revenue in Billions

G&A as Percentage of Revenue

+11 Acquisitions

+11 Acquisitions

+15 Acquisitions

+13 Acquisitions

Billi

ons

Figure 11. Oracle general and administrative (G&a) expenses have decreased with the consolidation of datacenters.

Faster integration of acquired companies.• The consolidated infrastructure allowed newly acquired companies to be integrated more quickly, translating into savings both in economies of scale and also in fewer disruptions to the operations of the acquired companies.

Reduced facility costs.• By consolidating the number of datacenters, basic facility costs were phased out or eliminated. The company also benefitted from obvious savings due to fewer facilities to operate and less duplication of datacenter personnel and responsibilities.

Reduced use of utilities.• as Oracle datacenters expanded to handle more and more customers and requirements, the annual growth rate for the usage of electricity at the datacenters was growing at a rate of more than 100 percent compounded annually. If this trend continued, existing datacenters would soon be running out of available power and new datacenters would be needed to handle the huge increase in demand for computing and storage. By consolidating datacenters and implementing the other planned phases of standardization and virtualization of resources, Oracle IT was able to reduce the annual utility growth rate for datacenters to less than 4 percent.

Figure 12. The growth rate for electricity used by Oracle datacenters has decreased dramatically.

Reduced CO2 emissions. Oracle is committed to developing practices and products that help protect the environment. By slowing its overall growth rate for the use of electricity, Oracle also reduced cO2 emissions.

Keeping It Simple

Through standardization and virtualization in its datacenters, Oracle IT created a physical environment with a high level of abstraction for platforms, servers, storage, and applications. Skill sets for maintaining datacenter operations became more generic, so any available staff could be deployed to troubleshoot and support the set of tasks that followed the standardized processes. even better, in many cases the tasks were completely automated.

Taking advantage of Oracle technology.• By standardizing on Oracle Database 11g, Oracle IT was able to exploit the advanced features of the database. For example, Oracle IT used virtualization features in Oracle Database 11g to create a shared database services environment. as a result, server utilization increased from 7 percent to almost 70 percent for the Oracle University grid. Disaster recovery offered another example of taking advantage of Oracle technology. With Oracle Database 11g, specific options—including Oracle active Data Guard and Oracle Flashback—were implemented, taking the mean time to recovery from more than six hours to less than one hour.

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Decreased Electricity Rates

9

8

7

6

5

4

3

2

1

0

0.12

0.11

0.10

0.09

0.08

2002 2003 2004 2005 2006 2007 2008 2009

kWh

111% Growth

4% Growth

Mill

ions

Aver

age

KWH

pric

e in

US$

18

Reduced training costs. • With standardized platforms and fewer configurations to support and maintain, Oracle IT support engineers could focus on learning a more-specific set of skills. In addition, each configuration was captured and kept up to date in a configuration management database that became an invaluable tool in reducing support requirements. The decrease in the number of configurations that needed to be maintained and supported led to a direct reduction in datacenter costs.

Greater resource allocation.• The combination of standardized platforms and uniform processes had the added benefit of reducing the number of skill sets required to support the environment—much fewer than the number required in a more heterogeneous environment. Because of the common skill set for supporting the standard platforms, Oracle IT managers now have greater flexibility in assigning resources.

Increased agility in acquisitions. • The agility of Oracle IT in managing the integration of acquisitions has made a huge impact on the success of the acquisitions and has made Oracle IT a major contributor to the acquisition integration plan. By offering acquisition integration as part of their service delivery, Oracle IT is able to “flip the switch” once ownership of the acquisition is transferred to Oracle.

Getting More from Less

The virtualization of storage and server resources has made a tremendous impact on the cost of IT infrastructure.

Increased storage utilization. • Because of consolidation, Oracle IT can provide more-efficient management of storage pools. Datacenters now have only a few storage pools, but those storage pools are addressable by all servers with a need for storage capacity. as a result, datacenters can run storage media at a higher threshold before having to add capacity.

Increased capacity, same space.• By upgrading to more efficient or higher capacity hardware, Oracle IT was able to support many more clients (and external customers) while using only 20 percent of the hardware footprint of the past. In 2009 alone, Oracle IT achieved more than US$10 million in cost avoidance as a direct result of applying data storage optimization technologies such as Oracle advanced compression and Oracle Partitioning.

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“We will take the best practices from Sun, combined with the great work that has been done at Oracle to create a high degree of flexibility and efficiency in delivering services through our datacenters.”

Kristin Russell, VP Service Operations, Oracle

CHaLLENGES, SOLUTIONS, aND BENEFITS

Aggressive Growth Through Multiple Acquisitions

Solutions Benefits

Consolidate, standardize, and virtualize datacenters.•

Provide IT services and provisioning for newly •

acquired companies, using a utility service model.

Faster integration of acquired companies means •

acquisitions are absorbed faster, maximizing their prospects for success and minimizing disruptions to existing customers.Integration of newly acquired companies follows a set •

path of smooth integration.

Understanding and Satisfying Customer Requirements

Engage clients (Oracle On Demand, Oracle •

University, and internal Oracle product development groups) and use their input to decide what platforms, applications, and services to support.Deliver effective and cost-efficient services to •

customers by adopting ITSM and ITIL processes to focus on real customer needs.Standardize on platforms to reduce the number •

of configurations.

Buy-in at all levels of the company for •

transformation plan.First-hand information about which platforms and •

applications are critical to customers.

Employing Technology to Reduce Costs and Increase Efficiencies

Scalable solutions for now and in the future.•

Standardizing on Oracle products and technology.•

Clustering with Oracle RAC.•

Consolidate hardware and use new technology •

within datacenter to reduce physical footprint.

Smooth, timely integration of acquired companies.•

Increased server utilization from 7 percent to 70 •

percent (for Oracle University Grid).Faster backup and recovery. Reduced mean time to •

recovery (MTTR) went from more than 6 hours to less than 1 hour.Increased storage compression from 0 to 40 percent.•

Redefining a Datacenter That Can Scale to Support Oracle’s Aggressive Growth Now and in the Future

Consolidate datacenters from more than 40 •

centers to 2 centers. (A third datacenter is currently being built in Utah, using state-of-the-art technologies.)Adopt standardized processes using ITSM and ITIL.•

Decrease facility costs (real estate, utility usage, •

hardware, and so on). Increase storage capacity with new hardware •

technology that provides more density in the same space.Eliminate duplication of jobs and resources.•

Standardize on applications and platforms.•

Consolidate all enterprise applications that are •

supporting key operational processes (for example, procure-to-pay and hire-to-retire programs) into one environment supported on one platform.

Reduced cost of IT as a percentage of overall •

revenue from 2.63 percent in 2006 to 1.85 percent at the end of 2009.Reduced number of supported platforms from more •

than 20 to 3.Reduced skyrocketing annual growth of electricity use •

from 100+ percent to 4 percent. (Reduced power use effectiveness [PUE] metric from more than 2 to 1.5.)Reduced or eliminated facility costs (including real •

estate, utilities, administrative overhead).Contributed significantly to the decrease in general •

and accounting (G&A). Reduced number of database administrators (DBAs) •

needed from 300 to 233.Standardized skill set for maintaining datacenters •

decreases training and support costs.Reduced provisioning time from months to minutes •

for Oracle On Demand customers.Reduced number of application production instances •

from 51 to 1.

FaCT: Fewer IT resources are supporting many more internal and external clients and using only 20 percent of the hardware footprint of the past.

Figure 13. Oracle IT has achieved many benefits by using innovative solutions to address challenges.

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conclusionWith the completion of the four phases of the transformation plan, and with a major integration effort in process with the acquisition and integration of Sun, Oracle has implemented a solid foundation for utility computing through the adoption of the ITSM and the ITIl framework. By consolidating, standardizing, and virtualizing the technology stack, Oracle IT has provided the automation needed to be cost-efficient and effective at providing IT services and has achieved significant improvement in efficiencies by doing more with less.

Oracle IT went from a siloed, function-oriented organization to become a key entity in the support of Oracle’s aggressive acquisition strategy. The scalability of IT processes—once seen as a real bottleneck for integrating companies—is now an example of IT excellence.

CONTaCT US

For more information, please visit oracle.com/insight or send an e-mail to insight_ww@oracle.com

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authorsMark Sunday, Senior Vice President and Chief Information Officer, Oracle Kristin Russell, Vice President of Service Operations, Oracle Venki Rajah, Senior Director, Oracle Industry Strategy and Insight nardo Van Der Rijst, Director, Oracle Industry Strategy and Insight

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