The Storage Economist

You may have heard news about the devastating floods in Thailand, and now the ripple effect of increased HDD prices due to mfg and supply shortages. HDS, EMC, NetApp, and IBM have all stated temporary price increases of 5-15% for the next few months. It is at these times that we need to step back and differentiate price and costs, and to look at storage architectures (not arrays or HDD) that produce the lower total cost of ownership.

For years, HDS economic consultants have modeled total costs for customers, thousands of customers, in vertical markets in all parts of the world. We know that price of the hardware and software is just two of the 34 elements that can constitute the total cost. And although most organizations are sensitive to the purchase price, we have seen empirical data that suggests that price (lease or depreciation expense) is just 17-20% of the multi-year total cost of storage ownership. Many other costs (such as labor, power/cooling or migration) can often eclipse the purchase price when looking at four year costs.

So a 5-15% increase in the price of arrays/HDD then translates to a potential 1-3% net increase in total cost:

• At the low end, a 5% rise in HDD price impacting a TCO model where price is 17% of the TCO produces <1% increase in Total Cost (.05 x 17%)
• At the higher end, a 15% rise in price for an environment where HW is 20% of the TCO creates a 3% rise in TCO (.15 x 20%)

This 1-3% increase in cost is not as devastating a number compared to the bad news of a catastrophe-driven price increase.

With the right storage architectures though, total costs can be driven down by reducing the storage footprint, total power consumption, faster (or no) migration time and effort, and reduced wasted capacity. Economically superior storage architectures tend to have some common ingredients to produce these kinds of results:

• Storage Virtualization can significantly reduce migration time, reclaim white space, provide better/unified management and reduce license and maintenance costs for the subordinate (heterogeneous) storage arrays
• Thin provisioning can reduce wasted, allocated capacity and provide improved performance with wide stripping
• Data de-duplication can reduce total disk space requirements
• Dynamic tiering and auto-tiering can put data in the right cost of tier, based on rules setup around access, retention or QoS
• Intelligent archive solutions can cut down backup costs, and move stale data to a lower cost tier for retention or immutability requirements
• Control user behavior or appetites with service catalogs, charge-back/show-back reports and basic consumption metrics

So the price of HDD and arrays may be out of your control due to natural or un-natural events, but you can take better control of your total costs by considering and implementing the right storage architecture that meets your cost sensitivities. 2012-13 may produce other problems that impact price and some of the cost factors, and all of these events cannot be predicted. Therefore the burden of implementing economically superior (and price-fluctuation-tolerant) architectures should be high on your 2012 to-do list.

Also, take a look at Hu Yoshida’s recent post on storage efficiencies.