Document #US45976520 © 2020 IDC. www.idc.com | Page 16
IDC White Paper | Amazon Relational Database Service Delivers Enhanced Database Performance at Lower Total Cost
APPENDIX
Methodology
IDC's standard ROI methodology was utilized for this study. This methodology is based
on gathering data from current users of the Amazon Relational Database Service as the
foundation for the model. Based on interviews with organizations using the solution, IDC
performed a three-step process to calculate the ROI and payback period:
1. Gathered quantitative benefit information during the interviews using a before-
and-after assessment of the impact of Amazon RDS. In this study, the benefits
included staff time savings and productivity benefits as well as database-related cost
reductions.
2. Created a complete investment (three-year total cost analysis) profile based on the
interviews. Investments go beyond the initial and annual costs of using Amazon RDS
and can include additional costs related to migrations, planning, consulting, and staff or
user training.
3. Calculated the ROI and payback period. IDC conducted a depreciated cash flow
analysis of the benefits and investments for the organizations' use of Amazon RDS over
a three-year period. ROI is the ratio of the net present value (NPV) and the discounted
investment. The payback period is the point at which cumulative benefits equal the initial
investment.
IDC bases the payback period and ROI calculations on a number of assumptions, which are
summarized as follows:
• Time values are multiplied by burdened salary (salary + 28% for benefits and overhead)
to quantify time savings and productivity gains. IDC has used assumptions of an average
fully loaded salary of $100,000 per year for IT staff members and an average fully loaded
salary of $70,000 for non-IT staff members. IDC assumes that employees work 1,880 hours
per year (47 weeks x 40 hours).
• The net present value of the three-year savings is calculated by subtracting the amount
that would have been realized by investing the original sum in an instrument yielding a
12% return to allow for the missed opportunity cost. This accounts for both the assumed
cost of money and the assumed rate of return.
• Because IT solutions require a deployment period, the full benefits of the solution are
not available during deployment. To capture this reality, IDC prorates the benefits on a
monthly basis and then subtracts the deployment time from the first-year savings.
2.
3.
1.
