Economic Best Practices
by David Merrill on Aug 2, 2012
I had a colleague call and talk about an economics analysis (cost reduction strategy) that he was starting with a large client in Asia next week. The customer wanted to know our “best practices” around cost, cost measurement and cost reduction. After doing this type of work for the better part of 13 years I had to pause, since our entire methodology and framework is a collection of best practices. Let me summarize these best practice areas:
Best Practice #1, one of our key principles is that the price of disk is not the same as the total cost to own storage. The price of the initial storage investment is only 12-15% (and declining) of the total cost of storage ownership. Therefore we have to look beyond the price of disk to measure all the costs of ownership. This paper outlines the 34 costs (best practice) that make up storage TCO.
Best Practice #2, after identifying the costs that are important, a simple storage TCO, baseline measurement is essential to start a cost reduction road map. I have posted several blogs on this topic. You can see them here and here.
Best Practice #3, there are correlations or mapping that can be done between costs and investment options (to reduce these costs). HDS has built a mapping tool to assist in this correlation of costs and solutions. Cost reduction plans can be deterministic.
Best Practice #4, don’t confuse price and cost. Don’t be seduced by a low price and expect to see similarly low costs of ownership. As we embark on new technologies like hypervisors, cloud, big data, we seem to keep making the same low-price-DAS-storage-mistakes each time.
Best practice #5, the right storage architecture can have an impact on the total costs of adjacent IT infrastructure. For example, there are key storage architectures that can reduce (impact) the total cost of a VM or VDI. We have a good whitepaper on Hypervisor Economics that describes some of these best practices in terms of technology, operations, and metrics. A best practice is to seek after and implement a storage architecture that is economically superior based on the costs that are important to you.
Best Practice #6, try to not get too comparative with other IT organizations and their cost structures. Since there are 34 different kinds of costs, another company in your same vertical market may not chose the same costs as you do. Therefore, any comparative effort will be irrelevant. Rather, use economic metrics, baselines and annual reviews to measure yourself. Take a look at this recorded session with the CTO of Adobe, and how they performed annual review and measurement of their storage unit costs.
Best Practice #7, you need to find the economic hero (or heroes) in your organization. Rarely is there just 1 person who cares about all the costs. Many departments and organizations own fractional elements of storage TCO. Get them involved in your economics baseline. Some costs will be direct, and some will be indirect. There is no right or wrong way to include direct and indirect costs in a TCO baseline.
These are some of the high level, or foundational, best practices. There are many more as you dive deeper in our content.
• Cost of migration can range from $7-15K per TB, and storage virtualization is a key technology to drop this cost to near-zero
• In a 4-tiered storage environment, the total cost ratio between tiers should be around 11:7:3:1
• It is no longer cheaper to waste a disk than it is to manage it
• Asset utilization (waste reduction) improvement through reclamation can be a powerful alternative to purchasing new assets, especially in tight capital markets
• Backup costs continue to be a large % of the storage TCO. Many are looking to snap copies, replication and an intelligent archive to reduce or eliminate backup all together
• For countries with high power costs, new architectures and processes are needed to reduce frame count, optimize capacity and fundamentally reduce power, cooling and space requirements
Our list could go on and on. Luckily we have published a book on storage economics (for dummies) and all of these ideas or best practices are well documented in this book. You can download a PDF version here.
The HDS cost efficiency page is also rich in content on best practices around reducing the costs of migration, waste, management labor, power/cooling etc.
HDS has done thousands of economic workshops and assessments over the past 11 years. We are moving closer to having roughly 100 of these case studies cleansed and indexed so that you can see by industry, location, size and growth rates the kinds of savings available by applying these best practices.