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The Storage Economist

Reclaim vs. Buy: Part 1 (of 4)

Disk prices are rising. I hope I am not the bearer of bad news, but you have probably heard, or seen for yourself, that recent natural disaster and supply problems have caused some disk prices to rise. This is not good at a time when (for most) there is still pressure on CAPEX. Unless you can get capital budget relief, you will have to spend more to deliver the capacity levels needed for growth in the short-term.

What is interesting is that at the same time as we are experiencing price uncertainty and CAPEX pressure, we continue to see historically high under-utilization of available and allocated disk capacity. We are observing the ‘perfect storm’ conditions that make today a great time to consider a deeper understanding of capacity efficiency and comparative costs of reclamation vs. buying storage.  Another way to state this is ‘any capacity efficiency initiative should include a reclamation proposal’. Your IT budget and financial managers will appreciate some simple calculations or verifications to determine if it is cheaper for you to reclaim disk that you already have, as opposed to buying net-new.

This 4-part blog series will walk you through the logic, approach and rationalization of reclaim vs. buy.

Your CFO will love to know that you are considering reclamation as opposed to capital spending. Reclaiming existing capacity always sounds good, as it improves the return on asset. But there are points where reclamation yields diminishing results, and we need to bring a storage economic approach to measure those results. Even in times of limited capital spending (and/or higher disk prices), you have to look beyond the obvious price and cost factors to know what is best for your organization, IT budget and end-users at a particular point in time.

Virtualization and over provisioning of existing capacity is an effective, and very often, a cost effective approach that may present a lower price compared to buying net-new capacity. As in any economic analysis, your mileage may vary, so I will present the conditions and parameters that are essential to include in a ‘reclaim vs. buy’ analysis that you should do on your own. No matter what a vendor tells you, the effort and undertaking to reclaim does require investments. It is not free. There may be HW, SW, operational changes, processes to be established, etc. The task is to determine if the investments to reclaim capacity from existing assets can be done at a lower price (and also lower long-term cost) compared to buying new.

If you want to kick-start the process, you can contact a local HDS sales team or re-seller to get access to web and iPad apps that can help demonstrate these options and variables for you given your own infrastructure.

Now that I have set the stage, the next 3 blogs will hopefully setup a framework to help you with a reclaim vs. buy comparative analysis.

My second blog entry will give you a simple calculation approach to determine buying vs. reclaiming costs, and where you may stand relative to the crossover point. You can get out a paper and pencil to write down the methods, but I will also provide some simple spreadsheet math to help you develop your own pricing models.

The third entry on this series will show the sweet and sour spots, so that you can quickly determine if you are “in the zone” or not. Factors that need to be considered will be outlined (i.e. age of current assets) as well as the tiers and data types. You will also find minimum levels of reclaimable capacity that will determine your own crossover point. There are some natural factors related to average selling prices and virtualization/reclamation investments that you also need to consider.

Finally, the fourth and final installment will outline longer-term benefits, from a total cost perspective. One option may be better in terms of current-day price, but it may not yield the best TCO-per-TB-per-month for the longer term. The final entry will show you how to calculate the TCO variations of reclaiming vs. buying new disk. For example, through reclamation you can present more capacity to your users, without adding a single kilowatt of electricity or square meter of data center floor space. This will impact TCO measurements, as well as qualitative environmental benefits.

I hope this 4-part series can provide some insight and help with your capacity efficiency initiatives. These 4 posts will be completed by the end of April 2012.

 

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Comments (3 )

MosaicTec on 19 Apr 2012 at 3:12 pm

David, thanks for sharing this great insight into the industry.

Kaitlin
Mosaic Technology
http://www.mosaictec.com

[...] My previous blog entry discussed the opportunity of deciding if it is cheaper to reclaim (poorly utilized) disk compared to purchasing net new disk. This blog entry will setup how to calculate a simple reclaim vs. buy analysis. [...]

PPI Claims Made Simple on 14 Dec 2012 at 4:18 am

Nice post. Thanks for sharing this information.

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David Merrill - The Storage Economist

David Merrill
Chief Economist

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