Viewpoints

Why Teradata

 Busting the Pricing Myth

Think you can’t afford Teradata? Think again.

Myth: Noun. An unproved or false collective belief that is used to justify a social institution.

Teradata has long been the gold standard in the data warehouse industry. Because of this, prospective (and even existing) customers might be led to believe the myth that only the largest, most profitable organizations can afford Teradata products. But like so many myths, this one can be definitively dispelled through critical analysis and solid facts.

Show Me the True Cost

To find the truth, start with the price tags on the Teradata family of products. Whether you are evaluating total cost of ownership (TCO), time to value, return on investment (ROI), purpose-built solution features or all of the above, Teradata systems are priced to be highly price-competitive with their primary competitors in each market segment, including:

  • Hardware
  • Storage
  • Database
  • Maintenance and support
  • Software subscription
  • Consulting services

Over the past three major platform generations, on an equivalent performance basis, the price of a Teradata Active Enterprise Data Warehouse has dropped from $1 million to less than $300,000—a price decrease of more than 70%. At the same time, database functionality and performance have increased.

”I never thought we’d be able to afford Teradata.”

—Kevin Baartman,
Vice President of Information Services at Lund Food Holdings, Inc., a 21-store, upscale grocery chain

Additionally, the product line has grown to include data warehouse appliances that meet the needs and budgets of small companies as well as large enterprises. These appliances all run the same Teradata Database analytical engine that made an enterprise data warehouse (EDW) from Teradata the industry leader, so it’s no wonder that prospective buyers are often surprised at how low the prices are:

  • Organizations that already have an Intel server can start with Teradata Data Mart Edition for $40,000 (US list price for a dual-core Teradata Data Mart Edition software license based on Accelerate Program discount).
  • The Teradata Extreme Data Warehouse Appliance costs $16,500 per terabyte (US list price).
  • A complete, scalable 6TB data warehouse solution is available for less than $1 million, including Teradata Data Warehouse Appliance, implementation services, and your choice of either a leading extract, transform and load (ETL) tool or business intelligence (BI) application.

Clearly, Teradata’s premium reputation stands on merits other than cost.

Apples to Oranges

When comparing the Teradata Active Enterprise Data Warehouse with the Teradata Data Warehouse Appliance, you see a variance in price per terabyte, because their capabilities are not the same. Specifically, the Teradata Active Enterprise Data Warehouse scores high in all of the dimensions, while the Teradata Data Warehouse Appliance has a different capability profile. These aren’t evident in the price per terabyte but are crucial to determining the best platform for a particular purpose and business objective.

The ‘Price per Terabyte’ Fallacy

The fallacy of “price per terabyte” has been a major culprit in fueling misperceptions about cost. Much of the industry has adopted price per terabyte as the de facto metric, probably because it’s easy to calculate and understand. On the other hand, it’s also very easy to misunderstand.

”With an increased focus on offering price-competitive EDW offerings for all customer segments, Teradata positions its mature, widely adopted EDW appliances to push the industry envelope in affordability.”

—James Kobielus,
Senior Analyst at Forrester

Just as it would be unwise to buy a house based solely on cost per square foot without evaluating amenities, location and other factors, it is equally unwise to buy a data warehouse based only on price per terabyte without evaluating the other aspects as well. Once you factor in TCO, ROI, performance, manageability, scalability and other decision factors, it becomes readily apparent that Teradata offerings are not only best in class but also extremely price-competitive.

Price per terabyte after compression is another method of comparison. Although it is common to see compression claims of 10X, rarely is a vendor proposal based on high compression rates because such a system would fall far short on performance. That’s because tenfold compression could result in a system one-tenth the size of what they intended to sell. So when evaluating data information systems, evaluate each prospective system against your organization’s unique performance requirements and don’t rely solely on misleading price per terabyte and compression rates.

Right-Sized for Every Size

Another factor propagating the expense myth is that Teradata’s most visible customers are its largest. Of course, many of its most widely known reference customers are among the largest and most successful companies in the world. Naturally, they—and their Teradata systems—get a lot of attention in the data warehouse market.

Figure: Annual Revenue of Teradata Customers

Click to enlarge

What’s less widely visible is that companies of all sizes run data warehouses on a Teradata system. In fact, 35% of Teradata customers have annual revenues of less than $1 billion. (See figure.) For every Bank of America, Teradata has myriad smaller financial industry customers such as St.George Bank. For each SuperValu, it counts Haggen Foods and many other regional retailers as customers. The pattern continues across virtually all industries, worldwide.

Myth Busted

More companies than ever before want to leverage BI and analytics. An essential element of Teradata’s strategy is its family of platforms, which are not just for large corporations, nor only for large-scale enterprise data warehousing. They are designed to meet any price point and any analytical requirement, including small data marts, exploratory sandboxes and many other special-purpose analytical systems as well as traditional EDWs.

Numerous factors have converged to propagate the myth that Teradata’s products are more expensive than the competition and out of reach for all but the largest corporations with the most complex data warehouse needs. But when you drill down to the concrete facts, it’s clear that Teradata offers affordable choices for businesses of all sizes for a wide range of needs.


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Comments
 
What Teradata Active EDW platform has dropped from $1 million to $300,000?

2/17/2011 10:47:19 AM
— Anonymous
EMC Q3-2014