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The Storage Economist

Triangulating budget, appetite and unit cost

by David Merrill on Dec 13, 2010

I met with several architects from GTSI, an HDS federal systems partner, while in Washington, DC this week. Our discussion focused on how storage architects can use ‘storage economic’ principles to influence or work within funding parameters (that are often out of their control). I thought I would share this discussion, and some suggestions that I have seen work.

First, a few key principles to setup the discussion:

  • For the most part, IT budgets are flat
  • Storage demand, server demand and application demand is rising (lets say 30% per year)
  • In order to reconcile flat budgets and increased capacity, IT planners have to drive down unit cost ($/TB/Year, $/VM, etc.)

My observations related to architects in general are as follows:

  • Most good architects can show you their 3- or 5-year plan for technology (virtualization, IaaS, SaaS, public cloud etc.)
  • Architects tend to be reactive to funding pressures
  • Architects tend to speak like architects and don’t get too involved with finances and all the costs
  • Storage/IT economics usually include the architects, but tend to be a financial exercise

In my conversations this week, we discussed how the architects should/could take a proactive approach to ‘owning’ unit cost reduction plans and absorbing these plans into the multi-year technology roadmap. Imagine a roadmap that laid-  out schedules and plans for VM expansion, storage virtualization, thin provisioning, VDI, advanced DR capabilities etc. and at the same time showed how each of these initiatives drove down the unit cost of storage, servers etc.

When the architect can own the tech roadmap and the cost reduction roadmap, then a compounding impact to the organization can occur. Architects can now leverage their unit cost plans to fund investment projects. Each project can have an ROI as well as contribution to the unit cost reduction.

With this approach, the architects can then –

  • Push appetite and demand discussions to the lines of business. Architects should not throttle demand, but can push this to others to resolve
  • Demand generators then work with budget owners
  • Architects provide enabling of budget and growth demands with superior architectures
  • Architects become one of the ‘economic heroes’ within IT, providing and aligning solutions to reduced total cost
  • Investment projects are seen as cost containers, not technology-chasers

In organizations where finding or grooming an economic hero can be challenging, there are tremendous opportunities for architects to expand into IT economics and provide thought leadership (beyond technology) to the organization.

As 2010 comes to a close, I’ve thoroughly enjoyed sharing my thoughts on the economics of storage this year with you all. I look forward to a new year, and engaging with you more on these topics.

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