For a product or service to be cost effective, it must be considered to be good value, where the benefits are worth at least what is paid for them. But how do we measure this, to prove the case? Given that value can be intangible, it can be hard to quantify and may have little relationship to cost. Added to this, the open source nature of Apache Kafka means that many companies skip the requirement to build a business case for it, until it has become mission critical and demands financial and human resources. In this presentation, Lyndon Hedderly, Team Lead of Business Value Consulting at Confluent, will cover how Confluent works with customers to measure the business value of data streaming.

1. Building Value
- Understanding the TCO and ROI of
Apache Kafka & Confluent
Lyndon Hedderly, Customer Solutions Director
June 2020

2. Agenda
2
01
What do we mean by business
value & why measure it?
02
How to measure business value
An example - Why Kafka / Why Event
Streaming?
03
How to measure the value of
Confluent
- Confluent Platform
- Confluent Cloud
04
Lessons learned & common
questions
05
Discussion / Q&A

4. What do we mean by
business value?

5. Operational
Efficiencies
(cost savings /
Risk Mitigation)
Increasing
Revenue
(e.g. improving
customer Experience)
New Business Models
(new revenue)
5
The Main Business Value Categories

6. Why measure business
value?

7. ...Is the Investment the right one? Will it deliver
the best return? How do we prioritise
initiatives?
...Most importantly, organizations want to know
value measurements in order to ensure they are
delivered.
● Everest Group - 73%of enterprises digital transformation efforts
failed to provide any business value.
● McKinsey - 70%of digital transformation initiatives fail to reach
their stated goals, equating to over $900 billion worth of enterprise
spend.
● IDC - $256 billion spent on digital initiatives across Europe, only
26%delivered an ROI.
7

8. How to measure business
value?
- Apache Kafka® / event streaming

9. $21 M in 2018 $80 M in 2007
Andy Wharhol - Liz (1963) Turquoise Marilyn (1964)

10. Confluents Approach to Measuring Business
Value
10
5-steps - assessing both financial (quantifiable) and non-financial
(soft / intangible) benefits
As-Is (Current) State
+ Negative
Consequences
(3 yr costs)
Desired Solution
3 yr costs
+ Project Costs
- Top-line business
Benefits
- Bottom-line Savings
= Net Benefit
Non-Financial Impact &
Analysis: Incl. Scenarios,
Sensitivities & Risks
Proof-Points /
Case Studies
Metrics
(definition of success)
5. Proof-Points
4. Soft Benefits
3. $ Benefits
2. Target State
1. Baseline
Confluents Value Assessment Process
...the focus here is on the Business Use Case - e.g. Mainframe
offload - operational efficiency (↓ costs) / CX initiative (↑revenue) /
Fraud detection system (↓ risk)...

11. Example - ROI for major Bank
3 yr Net benefit: > $13M
As-Is (Current) State
+ Negative
Consequences
(3 yr costs)
Desired Solution
3 yr costs
+ Project Costs
- Top-line business
Benefits
- Bottom-line Savings
= Net Benefit
Non-Financial Impact &
Analysis: Incl. Scenarios,
Sensitivities & Risks
Proof-Points /
Case Studies
Metrics
(definition of success)
5. Proof-Points
4. Soft Benefits
3. $ Benefits
2. Target State
1. Baseline

12. Current State Summary
Mainframe
API Calls
API Calls on Mainframe - costs.
$10.32M / yr
Mainframe Costs
+ Failure Costs
$1.56M / yr
Cost of Failures
● Additional considerations with current state - Risk:
○ platform instability,
○ additional processing loads,
○ capacity issues,
○ security controls.
API Call Type Details $ Cost / pcm $ Cost / per year
Type 0 link $95,000 $1,140,000
Type 1 link $455,000 $5,460,000
Type 2 link $125,000 $1,500,000
Type 3 link $185,000 $2,220,000
Totals $860,000 $10,320,000
API failures pcm: No. $ Cost / pcm $ Cost / per year
Cost = $50-$80 per failure $130,000 $1,560,000
1. Baseline

13. Current State Summary
1. Baseline

14. Current State Cost Summary API Mainframe Calls & API Failure rates: 3 Years.
1. Baseline

15. Event-streaming platform for Mainframe
off-load / augmentation (Legacy modernization)
Mainframe
APACHE KAFKA
● Assume we can Off-load 50% of the
Current API Calls - MIPS from the (DB2)
Mainframe to read from a cache. So,
reducing MIPS costs by 50%
○ Reducing mainframe reads /
events (MIPS)
○ Reducing Annual Mainframe /
MIPS costs by approx. $5.16M / yr
(rough estimate to be ratified)
● Also assume failures decrease by 50%
Reducing failure costs by $780K / yr
○ Also reducing risk: platform
stability, processing loads,
capacity issues, security controls.
Off-load client
e.g. Java
Run API transactions through CDC to the
Kafka Streaming Platform - reducing
50% of MIPS on mainframe; starting with
Auth use case, then moving to Low, then
Medium, then High volatility API calls.
Target State
Simpler API environment - reduced
DevOps loads on APIs and reduced
failures.
2. Target State

16. From Current State to Target State
● Modelled a reduction in
each API Type (Mainframe
MIPS cost) - of 50%
● Modelled a reduction in API
Failure rates of 50%
● Spreadsheet attached to
model variations
3. $ Benefits

17. From Current State to Target State
Potential to save $17.82M
over 3 years
- API MIPS reduction +
reduction in API
Failure rates
3. $ Benefits

18. Target State - Investment Costs
Investment Cost Categories Set-up Ops: Yr 1 Yr 2 Yr 3 Totals
Set-up: Human Effort (Capex) $1,000,000 $1,000,000
Set-up: Human Effort - Partner / SI (Capex) $200,000 $200,000
Ops: Human Effort (Opex) $250,000 $250,000 $250,000 $750,000
Ops: Hardware & Software Costs (Opex) $250,000 $250,000 $250,000 $750,000
Confluent Subscription Investment $500,000 $500,000 $500,000 $1,500,000
Confluent Professional Services $50,000 $50,000 $100,000
Totals $1,750,000 $550,000 $1,000,000 $1,000,000 $4,300,000
2. Target State

19. Investment Costs
2. Target State

20. Net Benefit (benefits minus investment costs)
Total 3 Year:
Net benefit = $13.52M
Project Costs = $4.3M
Gross benefit = $17.82M
3. $ Benefits

21. Business Value - 3 Yrs...
3. $ Benefits
Operational
Efficiencies
(cost savings /
Risk Mitigation)
Increasing
Revenue
(e.g. improving
customer Experience)
New Business Models
(new revenue)
= $13.52M

22. Not quantified...
● Increased developer velocity → faster time to market
● Being more agile → greater business responsiveness
● Improvement on the business use-cases etc...
And what is the cost of doing nothing?
Further [intangible] Business Benefits
4. Soft Benefits

23. The many different use cases for event
streaming...
Improve
Customer
Experience (CX)
Increase
Revenue
(make money)
Business
Value
Decrease
Costs
(save money)
Core Business
Platform
Increase
Operational
Efficiency
Migrate to
Cloud
Mitigate Risk
(protect money)
Key Drivers
Strategic
Objectives
Fraud
Detection
IoT sensor
ingestion
Digital replatforming/
Mainframe Offload
Customer 360
Faster transactional processing /
analysis incl. Machine Learning / AI
Microservices
Architecture
Online Fraud Detection
Online Security (syslog, log
aggregation, Splunk replacement)
Middleware
replacement
Regulatory
Website / Core Operations
(Central Nervous System)
Real-time app
updates
Example Use Cases
$↑
$↓
$↔

24. How to Measure Business
Value?
- Confluent

25. What is the
value of the
iWatch?
1. Cost to Make $83 / Price $350
2. Value - with fitness information?
3. Value - with a medically accurate
electrocardiogram?
The Subjective
Element of
valuing a
(contextual)
piece of
technology

26. Confluent Products: Software and SaaS
26
26
SELF-MANAGED SOFTWARE
Confluent Platform
The Enterprise Distribution of Apache Kafka
In the datacenter
VM
FULLY-MANAGED SOFTWARE
Confluent Cloud
Apache Kafka Re-Engineered for the Cloud
In the cloud
Both: Subscription products where price scales with usage

27. Confluent Platform completes Apache Kafka
with a full set of enterprise features and services
Dynamic Performance & Elasticity
Flexible DevOps Automation
GUI-driven Mgmt & Monitoring
Event Streaming Database
Rich Pre-built Ecosystem
Multi-language Development
Global Resilience
Data Compatibility
Enterprise-grade Security
TCO / ROI
Revenue / Cost / Risk Impact
Complete Engagement Model
Efficient
Operations at Scale
Unrestricted
Developer Productivity
Production-stage
Prerequisites
Partnership for
Business Success
ARCHITECT
OPERATOR
DEVELOPER EXECUTIVE
Apache Kafka
Committer-driven Expertise Training Partners
Enterprise
Support
Professional
Services

28. Confluent Platform impacts crucial cost & value
drivers to help your business achieve its goals
Reduced
Operations
Burden
Improved
Development
Efficiency
Lower Security Risk
Minimal Downtime
Lower TCO
Higher ROI
De-risked Investment
Efficient
Operations at Scale
Unrestricted
Developer Productivity
Production-stage
Prerequisites
Partnership for
Business Success
ARCHITECT
OPERATOR
DEVELOPER EXECUTIVE
Apache Kafka
Smaller Infrastructure Footprint
Productivity improvements “Intangible” benefits
Faster Time to Value
Business outcomes
Infrastructure savings

29. Confluent Platform subscription could reduce
your 3 year TCO by up to ~40%
29
Cost Drivers for TCO
1. Infrastructure
2. Productivity
a. Platform Development
b. Platform Operations
3. Intangibles
a. Downtime
b. Security Risk
4. Confluent Subscription
~$3.6M overall
TCO reduction
(~40%)
Illustrative cluster using Tiered Storage, Self-Balancing, Operator, RBAC, and more
ILLUSTRATIVE

30. Confluent Platform subscription drives savings in
infrastructure, productivity, and intangible costs
30
Infrastructure and
Productivity savings
~$2.2M
“Intangibles”
~$2.0M
ILLUSTRATIVE

31. Infrastructure and
Productivity costs
~$2.2M
CP subscription pays for itself with savings in
infrastructure and productivity costs alone
31
ILLUSTRATIVE

32. Confluent Products: Software and SaaS
32
32
SELF-MANAGED SOFTWARE
Confluent Platform
The Enterprise Distribution of Apache Kafka
In the datacenter
VM
FULLY-MANAGED SOFTWARE
Confluent Cloud
Apache Kafka Re-Engineered for the Cloud
In the cloud
Both: Subscription products where price scales with usage

33. Cost of self-
managed vs
Confluent Cloud
~40-60% cost savings annually with Confluent Cloud
$1.5M+
(68%)

34. Annual costs
with self-
management
Maintaining a production-ready Kafka environment is complex and costly
1
2
3
$550K -
$750K
$800K -
$1.1M
$200K -
$300K
$1.6M -
$2.2M
The true cost of self-
managing Kafka extends
beyond the cost of software
itself

35. 3-year
cumulative TCO
savings
With Confluent Cloud, $10M+ (50%) in savings over three years
$10M+

36. TCO is only part of the story…
Accelerate & de-risk time-to-value, and maximize
your ROI with Confluent
Maximize return
on investment
Deliver higher returns with your
project by launching faster and
reducing operational burden
Reduce total cost
of ownership
Operate more efficiently with
lower infra cost, maintenance,
and downtime risk
Accelerate time-to-
value
Deploy Kafka at any scale with
massively reduced timelines with
Confluent

37. Lessons learned & some
common questions

38. When should we measure business
value?
How long does it take to complete a
business case?
38

39. What information is required?
How do we ensure credibility / get
estimates? - modeling a range
39

40. Using a narrative, with visuals and data
40

41. Value can be subjective
41

44. Summary
44
01
What do we mean by business
value & why measure it?
02
How to measure business value -
Why Kafka? What Event
Streaming?
03
How to measure the value of
Confluent / Why Confluent?
- Confluent Platform
- Confluent Cloud
04
Lessons learned & common
questions
05
Discussion

45. cnfl.io/meetups cnfl.io/slack
cnfl.io/blog
Thank you!
For a conversation contact Lyndon@confluent.io
Link to Project Metamorphosis
https://www.confluent.io/blog/cost-effective-kafka-for-lower-tco/
Get a free TCO assessment
https://www.confluent.io/project-metamorphosis/cost-effective/