In the on-demand, always on the go, mobile and global world we live in, the benefits of cloud applications and software as a service are obvious. It’s easier than ever to get an application up, running and available to customers. What is less obvious are the unforeseen costs a company faces when bringing these applications to market — in particular, when it comes to the database.
Arguably the most expensive component of your application service, the operational database is also the most difficult to manage at scale and often at the root of many customer problems and grievances. However, most companies only think about their database choice when they review how much they’re spending on licensing costs. After all, it’s the area most directly and obviously impacted by the 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.
License Cost Sticker Shock
For a SaaS company, database license costs can make up 40-70 percent of 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.
Beyond the obvious licensing line item, there are a number of hidden costs that correlate to the database.
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.”
Customer Onboarding / Retention – Successful SaaS companies make quick customer onboarding and high retention rates a priority. But adding new customers often means adding database capacity, which typically requires additional development and operational configuration time, slowing your customer responsiveness.
Application Development – For software development organizations, application development is a primary business activity, and expense. The more efficient your software development process is, the lower your total costs will be. But many modern database options require specialized skills and longer development times because they force data management logic into the application rather than keeping it in the database.
Capitalizing on Opportunity
Understanding the connection between your database choice and the opportunity for growth is rarely readily apparent. But even though it may not be obvious, the 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. An elastic SQL database – designed to elastically scale out and in, on demand – 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 customers demand – is critical to growing your business. Whether by minimizing the effort it takes to migrate an on-premises application to the cloud or build a brand new one, a database that marries transactional consistency and durability with scale-out simplicity and elasticity can effectively help 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. Don’t let the database hold you back. There are database options on the market today purpose built for cloud applications, 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.
Conclusion
Ultimately, providing software as a service or a cloud application is a strategic and cost effective business decision. What isn’t immediately apparent are the costs associated with choosing the right database to support this decision – a critical component to successfully bringing your application to market. A modern database that natively incorporates cloud advantages will enable you to:
# Reduce infrastructure costs
# Speed time to market
# Maintain service level agreements
# Maximize existing resources
Consider your database options carefully as you migrate, modernize, or build new applications for the cloud. This choice can make all the difference to your wallet and in your long-term success among a fickle and demanding consumer market.
By Jeff Boehm, chief marketing officer at NuoDB
About Jeff Boehm: As chief marketing officer at NuoDB, Jeff defines and executes NuoDB’s go-to-market approach and drives all aspects of corporate and product marketing to create and capitalize on market demand.
Image source: Gartner Inc
