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2012 Trend: Cloud Acquisition

by Hu Yoshida on Dec 22, 2011

By now it is clear that cloud is a reality with many successful implementations of cloud services. One of the most valuable benefits is the way that cloud services can be acquired—namely on demand, pay as you go, and self-service.

This acquisition model will be extended back into the data center to reduce the traditional costs of acquiring storage infrastructure.

The traditional way that storage is acquired is through the purchase of assets, which are capitalized over three to five years. Three years is often used in the case of feature rich, enterprise storage, and five years in the case of commodity modular storage. With the traditional price erosion of storage due to increasing disk capacity per spindle, it is cheaper to buy new than to extend the life of storage systems after three to five years.

Most data centers will buy all their storage for the next three to five years at today’s price, even though the cost may be eroding at 25% to 30% per year. The reason they do this is because it is too disruptive to add incremental upgrades once the system is in production, and they lose the capital life of assets that they install toward the end of the cycle. When they install the replacement technology, they rip and replace all their previous technologies, even if some of it has only been capitalized for a portion of the full three to five year cap rate.

When they install the new technology, they will need to overlap it with the current technology to allow for migration of the data, and this could take six months or more if they do not virtualize the migration. By the time they finish the current migration, they only have a short time before they must prepare for the next.

The chart below illustrates the waste associated with this type of acquisition. All the capacity above the demand line is capacity that is paid for but not utilized, while it still is consuming power, cooling, and space. The overlap areas represent the waste associated with non-virtualized migration.

hut1

The following chart illustrates how this waste could be eliminated with a cloud acquisition model, based on pay per use, on demand.

hut2

Aside from using a cloud provider, how can you change your current acquisition model to a cloud acquisition model? Two things have to happen.

First, you need to use storage virtualization so that you can separate the intelligent controller from the media, so that you can add media on demand without disrupting the applications, and you can realize the full capitalization of that asset since the functionality will be kept current in the storage virtualization engine. Virtualization with thin provisioning will enable you to leverage the resources across many users and normalize peak demand. Virtualization will also reduce the overlap associated with data migration.

Second you have to find some way to cover the capital cost either through leveraging the cost across many users— like a cloud provider would or through leasing, managed services, or other financial services.

The key to realizing on demand, pay as you go acquisition will depend on a foundation of storage virtualization. Many data centers will see the advantage of this and will begin to replace their traditional acquisition model with a cloud acquisition model.

For Hu’s other 2012 trends, visit this bit.ly bundle: http://bitly.com/vXGP2T

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Hu Yoshida
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