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The Storage Economist

Observations from a Decade’s Worth of Econ Assessments

by David Merrill on May 30, 2012

We recently acquired a summer intern to compile, clean, index and organize assessment reports/models from economic work done at HDS since 2002. I hope to have an internal library of around 200 case studies, with the focus on more recent (last 2-3 years) assessments. As I have compiled and reviewed my own work during these past 10 years, I have noticed that a large majority of these cases related to the business cases around virtualization (starting with HDS 9900, USP, USPV, and now VSP) enterprise arrays, but there were many that dealt with modular systems, file/content, NAS, backup, disaster recovery, Hadoop (big data) and outsourcing/MSS/capacity-on-demand.

Although the cases that we are compiling are the more recent projects, I got sucked-into reviewing some cases that were 10+ years old. Some of the cost parameters from 2001/2002, and TCO results from that era are quite a bit different from what we see with storage economics today. Perhaps I can summarize some of these findings in bullet form:

  • CAPEX or acquisition cost, as a % of TCO has dropped from around 30-40% to less than 15% today
  • Labor was a very large part of all storage TCO 8-10 years ago. Some clients’ data suggested that labor was 25% (and more) of the total costs. We see much smaller cost ratios and higher TB-per-person rates today
  • Risk costs related to outage (planned and unplanned) have really dropped. Years ago we always sold solutions on five-nines availability (99.999%). Storage array outages and failures were much more common then compared to what we see today
  • Migration costs were not well understood or measured back then. Today, these costs are front-and-center and usually the cornerstone to justify a new architecture
  • Tiering came on its own, but usually resulted in tiered islands. Tiers were presented as a cost reduction tactic, but many implementations resulted in stove-pipe solutions that did not decrease costs
  • Managers 10 years ago used the same line they often do today, ”I can go down to XYZ store and buy a 36GB disk that costs a whole lot less than your big storage array proposal…”
  • Backups were problematic years ago, and I tend to see less and less emphasis in more recent engagements. Perhaps the problems were fixed, or we fundamentally shifted from traditional tape backup to local snaps, replications and data movers
  • For most parts of the world, power/cooling and floorspace have become very high priorities in the datacenters. Emphasis has been directed to reducing power costs and avoiding datacenter storage sprawl
  • Many assessments from the early 2000s involved compliance issues, and the data management emphasis around compliance risk. Back then there was news and real effort to improve processes in the wake ofaccounting scandals at  Enron, Worldcom etc.
  • Naturally there was a spike in DR protection in the post 9/11 era. Several medium to large environments analyzed their risk exposure due to catastrophic events, and made the investments to reduce these risks
  • Data explosion has been incredible during this time. Back then I ran workshops for 35-50TB environments, and that was common. Now we see 15-30PB analysis without being too alarmed at the size of these environments.
  • In that expansion explosion, I notice a lot of utilization decline, in part to holding capacity reserve, but  also due to allocated and written physical allocation

In a follow-up blog, I will review the evolution of recommendations that I have seen during the past decade. Not surprising but these cost reduction recommendations have been as evolutionary as the environments that we assessed.

I cannot claim the analysis and compilation complexity that one could get from Gartner or Compass, but our sample size is reasonably large (>1,000 case studies), from around the globe, in most every market segment that has medium to large scale IT. So not quite scientific and complete enough for a thesis, but the results are interesting none-the-less. I hope you find some value in these as well.

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