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If you survive the downturn, will you survive the recovery?

by Hu Yoshida on Feb 14, 2009

Businesses today are focused on surviving the current downturn in the economy. Everyone seems to be hedging their bets, hoarding their cash, trimming the fat, and sweating their assets. Although governments have pumped massive amounts of cash into the banking systems, credit is still tight. Banks are reporting increases in deposits as people reduce spending and cash out of stocks or other investments to preserve what they have left.

Most data centers are sitting on a gold mine of under utilized storage capacity. With utilization around 30%, data centers can defer purchase of storage capacity by increasing the utilization of existing storage to meet increasing data demands. Technologies like storage virtualization to consolidate IT assets, dynamic provisioning to increase utilizaton and reduce operational costs, de-duplication and other technologies to reduce data storage requirements, and active archives to remove stale data from the working set, will help companies survive during this down turn. 

At some point there will be a recovery from this current down turn. My guess is that this recovery will be as rapid as the fall and there will be a sudden demand for capacity. The money that has been sitting on the sidelines will be rapidly converted into goods and services to meet the pent up demand of consumers, once confidence has been restored.

This can be a double whammy if IT has not prepared for this type of sudden recovery. After paring down their staff and squeezing the most out of their aging IT assets, they may not have the capability to meet this surge in demand and be competitive. If they have not implemented tools like virtualization, dynamic provisioning, de-duplication, and active archives, the same tools that are required to survive the down turn, they will not have the agility to respond and be competitive.

When the recovery comes, the playing field will have changed. Storage assets will have aged and capacity utilization will be reaching its limit. IT will no longer have the luxury of taking 6 months to a year to implement a new storage frame with 100′s of TB of new capacity. Migrating applications to new technology platforms will have to be done without any down time. Experienced operations, applications, systems, and development people who can ramp up quickly will be in high demand. Costs will be inflated and time to market will determine who will be the winners and the losers.

Some will survive this down turn only to be left behind in the recovery. Now is the time to plan for the recovery while demand is low. Don’t be trapped into buying the lowest price capacity and ignore the operational benefits of virtualization and dynamic provisioning. Do an assessment of where you are in terms of operational as well as capital costs and set a strategy for where you need to be, not only to survive but to prosper with the recovery. Do a storage economics assessment and set a benchmark that you can use to show the value of improvements and get credit for it. So many times we add value but we are not able to quantify it to the financial people because we never set a bench mark in the beginning. If you have the right tools and strategy in place to survive the downturn, you will be ready to survive the recovery.

If this makes sense, check out David Merrill’s blog on storage economics.

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Comments (1)

[...] Hu Yoshida’s blog post from last week suggests that the recovery bounce-back may be as dramatic as the downturn, especially from the IT and storage demand side. My own observations from attending an IDC conference last week and working with large clients in NY, Toronto and London over the past 3 weeks leads me to also conclude: [...]

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Hu Yoshida
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