The Storage Economist

Hu Yoshida’s blog post from last week suggests that the recovery bounce-back may be as dramatic as the downturn, especially from the IT and storage demand side. My own observations from attending an IDC conference last week and working with large clients in NY, Toronto and London over the past 3 weeks leads me to also conclude:

• The economic and/or business recession will likely linger into early 2011
• IT spend will be impacted, some large clients are hearing about budget cuts, but have yet to see the direct impacts to their CAPEX spend
• Human behavior (not always corporate behavior) is causing some of the CAPEX slow-down for the time being
• Data growth and storage capacity demand is not yielding to some of these economic pressures (we are not talking about repealing SOX just yet)
• Storage architects and planners are investigating (some very rapidly) options to reduce CAPEX and OPEX this year
• Virtualization (servers, desktop, network and storage) is core to new, economically better IT environments

As part of the IDC conference on virtualization, the natural operational benefits of server and storage virtualization were key topics to reduce costs and improve management efficiencies. As Hu mentions, these technologies can be effective in helping to trip or defer costs right now, they are also essential technologies when the bounce-back occurs. IDC analysts explained that storage and server virtualization capabilities were leaders, stable and providing the benefits advertised (Desktop virtualization perhaps is lagging).

As mentioned in previous blogs, virtualization can make a tactical cost impact now, with faster migration times, simplified management, reduced SW licenses and maintenance and the reclamation benefit. Making due with sunk investments by virtualizing and reclaiming is a good tactic. But these new storage architectures have a long and prosperous future to continue to reduce OPEX and CAPEX costs. This is one area where investments can have a short ROI with the savings in the short-term (6-18 month) and in a multi-year long term perspective. Having a virtual, agile storage architecture is essential now, and will be a strategic advantage when the economy turns.

Case in point is Wells Fargo. This article explains their strategic actions as they assimilate Wachovia Bank, and you can see their thought leadership and investments years ago (HDS Virtualization) is paying off now, and will likely accelerate their cost efficiencies when the economy does bounce back.