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The Storage Economist

Alternative Acquisition Methods

by David Merrill on Nov 30, 2012

I received a comment on a recent posting—Comparing all the costs in a 1-cent-a-GB cloud offering—and chose to make this a topic of a new blog. Our reader, Javed asks “How will HDS compete financially with latest EMC storage array offerings which are based on the lease model instead of total ownership model ?”

As I mentioned in a previous entry, I believe that capitalization of storage assets will become less common over the next 4-5 years. The reasons for moving away from the purchase/depreciate model that we have been using in the IT industry for 50 years include:

  • Continued pressure on CAPEX budgets
  • Strategically taking some assets off the balance sheet
  • Providing greater flexibility to adopt new technology options without an artificial length of time that we have to keep older assets
  • Better total cost predictability
  • Faster and cheaper migration and transformations into new architectures
  • The flexibility to scale up and down without having to hold reserve capacity on-hand
  • Changes in the behaviors of IT consumers in the organization to pay for what is used (or allocated) and better managed storage and data protection costs

So if traditional CAPEX is diminishing, does that mean we have to move to a cloud?

NO.

The cloud is a type of infrastructure that can be local, remote or a hybrid mix. The replacement of CAPEX with pay-as-you go models will introduce new varieties of options to use and consume storage resources. The move away from CAPEX does not always mean that we go to a lease instead. My next blog entry will include a simple table of some options that exist now (from most vendors) that allows you to consider alternative ownership models when you want the data and storage to be local, secured and under physical control.

HDS does offer pay-as-you go and managed service offerings, in fact there was a good write-up a few weeks ago on this subject. We have to remember that the underlying technical and operational architecture will play a significant role in the economic value of these new types of acquisition models.

Residency Services

Remote Operational Services Portfolio

More on this topic and the comparison table coming soon.

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David Merrill - The Storage Economist

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