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The Storage Economist

Economic Cliff Diving

by David Merrill on Nov 12, 2012

There’s a lot in the news about countries around the world heading towards some type of fiscal cliff. As we approach the end of the calendar year, many governments are struggling with debt, spending limits, tax increases, austerity programs, etc. Fiscal desperation may not be the same in the private sector, but we are approaching a very real storage economics cliff. Let me explain.

Around the world, IT spending is projected to be flat or down. I see Gartner and other reports that predict a slight Y/Y rise in 2013, but many of the customers that I meet face to face indicate that storage and infrastructure budgets will be down next year.

Next, we have a data tsunami coming, or already building with unstructured and semi-structured data (sometimes referred to as big data). Lots of new projects are on the drawing board to extract and refine this data for various commercial benefits. I have seen estimates range from 30-80% growth in this type of data, but in face-to-face conversations, people tend to describe growth at around 40-50%. This is still huge growth.

So how can you reconcile flat/declining budgets with 40% growth in data? The answer is to attack unit costs. I posted a blog a few weeks ago about a 4-phase (11-step) view of unit cost reduction. In the blog there are 4 phases or families of ideas to reduce unit costs. Depending on the rate that you are running to the edge of your storage economic cliff, there are some short-term areas that you should focus on. Two areas really stand-out

  1. Virtualization
  2. Pay-as-you-grow consumption

Storage virtualization (enterprise-class, heterogeneous, and controller-based) can have positive near-term impact with major cost reductions in migration, re-mastering and capacity reclamation. If you could reclaim 30-50% of usable capacity from your existing infrastructure, you could obtain a temporary pause on the way to the cliff’s edge.

The pay-as-you-grow approach is very compelling, especially for your lower tiers of storage capacity (archive, backup, lower performance disk, etc.). I strongly suggest that you understand all of your current costs and calculate a baseline cost per TB before you start shopping for these offerings. Sometimes we get hoodwinked by a low price, and will be surprised to learn that our costs go higher. Here are some articles to this effect:

A Penny for your Gig

Comparing All the Costs in a 1-cent Cloud Offering

TCO Baselines

So Let’s Do a TCO

Here is an interesting book on these new consumption models that are coming to IT.

With conflicting futures in data growth and diminishing IT budgets, an economic cliff is most likely in your future. Simply hoping to avoid the cliff is not a strategy. Tactical plans, architecture alternatives, new behavior models and challenging some accounting or ownership traditions will be required. Otherwise, you may want to start practicing some cliff diving moves of your own.

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