The Storage Economist

I am not much a movie buff. Most of the films I watch are on a 7” screen on the back of a seat at 35,000 feet, and usually without headphones plugged-in. I do recall a football movie (don’t recall the title or actor) where an overconfident wide receiver repeatedly demands the team owner “shows him the money” in order to keep playing football.

I often talk about, write about, or consult about saving money. OPEX reduction is a hot topic and needs addressing, but there is another side of storage economics that can address increasing and generating new types of revenue from the right storage architecture. Granted, not all IT departments are revenue generating, but there are some basic concepts that can be applied from the list below even if you are a cost-center (as opposed to a profit center). Your boss may or may not ask you to “show them the money”, but there are architecture alterations that can increase or add to storage revenue for billable services.

Working with large SI and outsourcing customers in Asia and the Nordic countries this year, we have actively demonstrated architecture changes that can create new sources of billing revenue in the storage space. A partial list is shown below. I would like additional ideas to be submitted, if you have seen and measured the change in storage revenue.

1. With dynamic (non-disruptive) tiered storage, different levels of $/GB can be offered, each with a varied level of margin. Incentives can be given for consumers to move to lower tiers, while dis-incentives for higher tiers.
2. Again with the tiered option, a charge can be levied for data movement between tiers (a one time charge of $/GB moved) just like a brokerage service charges for buying or selling.
3. Providing an option to sell allocated volumes or ‘actual-use’ volumes to the end user (different rates and margin levels).
4. Offering an archive tier with different price/performance rate and different margins of profit for the service being offered.
5. In addition to a lower cost archive tier, you can offer Tier 0 capability for the customer. This may be small at first, but if tightly integrated with tiered allocation their tier 0 (solid state drives) can have a good profit margin and extends the levels of storage service you can offer clients.
6. Within the archive solution, offer discovery and index-search capabilities for faster discovery (important for legal and medical applications).
7. Different price points for buying thick volumes or thin volumes of disk capacity (provider has to cover the cost of the pool supplying the thin volumes, but that is covered in the overall margin calculation).
8. Using a virtual and consolidated storage architecture, management effort and tool costs decrease, changing the calculation rates for storage management tasks such as load balancing, snap copies, DR protection, etc.
9. Offering different target-tiers of storage for DR protection; again at different rates and margins.
10. Virtualization-driven lower migration services may appear to have a negative impact on future revenue (especially if you have a profitable migration business), but the endearing of your customer for lower costs in one area may entice them to purchase other services from you, such as DR or disk based backup.
11. Premium provisioning services – with thin volumes and virtualization it may be possible to present user-requested LUNs in hours or days, rather that weeks or months. A premium can be attached for rapid provisioning requests. Some customer would be willing to pay, others can wait if the delay is not worth the added cost.
12. Also on the fast provisioning service – if you can get a customer on your storage service faster, then you can start recognizing revenue for the capacity faster. This is simple cash flow planning, and if you do the math you may find that you do not need to offer a premium price for faster provisioning since the increased revenue stream will make up for the added service and processes to allow for fast provisioning.
13. Capacity on demand, or policy-driven provisioning. Capabilities exist to have applications or hosts now make the request (keeping the humans out of the loop) for new capacity. The consumption levels are measured and the consumer is charged for what was allocated/consumed during that period. Some upward and downward fluctuations are possible, but with a captive client the business growth is impacting your storage revenue.
14. De-duplication services to help your customer use less space. You charge for the de-dupe function, which can impact (negatively) your future capacity revenue stream to an extend.
15. Offering block and file services on the same pool of (tiered) disk, thus diluting the management costs and effort typically associated with SAN or NAS or iSCSI storage pools.
16. Disk backup options vs. traditional tape options. Different prices (and margin) for faster RTO and RPO to meet the users requirements.

More flexible storage service catalog, incorporating fast provisioning, multiple tiers, archive tiers, different DR and backup options. In total these added features and functions can enhance your storage portfolio offering, thereby attracting new clients. We often call this ‘storage as a service’ and gets away from selling dumb capacity to new vending models that allows targeting of the need to the price that warrants the particular service. Storage as a service can apply business intelligence and value to the storage infrastructure, and that provided better alignment of the value one sells to the price one receives.

If you purchase your storage from a service provider, the above list may be a clue to you that your vendor is adopting new architectures and solutions in order to increase there share of your wallet. Consider yourself warned…