The Storage Economist

I had a client recently tell me that an analyst firm has directed him not to make any changes in their storage (platform, vendor, architecture) unless it can deliver a 20% TCO improvement. The argument is that the extra effort involved in training, re-tooling costs etc. are so high that they won’t see this kind of difference.

That seems very strange to me.

I do not understand the context of the comment, and that is part of the problem –
• Are we talking 20% in one year, 3 years, overnight?
• What type of costs does the analyst assume?

HDS has defined some 33 different types of data storage costs . The number of hard costs and soft costs can dramatically shift with incremental and radical changes to storage infrastructure. If we are talking total cost of acquisition, that is a very short sighted view since price is only about 20% of cost. Every time you tech refresh part of the infrastructure, there is new training and re-tooling. In building a cost improvement business case, you have to include all the investments in re-training and re-purposing anyway.

This chart shows the future trend of budgets, growth and costs. In order to sustain the high growth with flat budgets, significant and continuous plans are needed to address the total costs (not price) of storage.

This comment is like a doctor telling a 400lb man that it is not worth changing his lifestyle, diet and exercise-pattern unless he can lose 80 lbs. Otherwise, just keep what you are doing. The effort is not worth any outcome improvement. Stay fat, dumb and happy.

This is absurd and flies in the face of business demanding continuous improvement.

1. Budgets are flat or down for IT spending in most parts of the world.
2. Demand for data growth and storage is not flat or declining like the budget. Indeed we are seeing sustained, high growth rates.
3. Flat budgets and increasing storage demand requires a continuous search and implementation of improvement processes to reduce costs.
4. Before you can reduce costs, you need to know what your costs are. Take a look at the 33 types of cost. Pick out those that apply to you. Stop and measure the costs. Segregate between hard and soft costs. Measure, and measure again (carpenter’s rule: measure twice and cut once)/
5. Attack the high cost elements first. Get the easy hits. Popular costs to identify and measure today are:

- Cost of wasted capacity
- Cost of migration
- High cost of copies (and having copies in the wrong tier at the wrong price)
- Power, cooling costs
-  Labor, management costs

6. Some of these efforts above can be accomplished with incremental investments, change or process change. Some require evolutionary transformation. Some IT departments may require a revolutionary transformation.

Don’t be lulled into passive impression that “all is well at home. Improvements to costs are not practical unless……”

Costs can be reduced. They have to be reduced at the unit level to be competitive.