Planning for IT Comfort and Cost Control

In tough economic times, pressure on budgets across all areas of enterprises is demanding hard choices in IT investment, made even more problematic by the exciting possibilities-and potential problems-of new storage architectures. In spite of the economic climate, there are 4 key, timeless strategic principles that will hold true through any macro crisis or technological leap forward, allowing enterprises to identify and measure costs, reduce capital expenditure, rein in operating expenses, and grow sustainably.

Virtualization is the catchword for the new era of outsourced IT services. New storage architectures are coming online at an increasingly rapid rate. Cloud computing, virtual machine (VM) sprawl, capacity-on-demand architectures, and other architectures demand a review of existing storage infrastructures, prices, costs, and operational methods. Cloud storage, with its promise of lower costs, and businesses freed to focus on their own core capabilities and priorities, is one of the prime contenders. However enterprises still need to plan and account for their entire IT architecture costs, including virtualized and cloud based components, in order to achieve true efficiencies and real RoI. Treating IT services or cloud as just another utility alongside water and electricity has to take account of the fact that a company's IT infrastructure is not a fixed cost for a fixed supply, like the gas or electricity mains: It is a dynamic, constantly changing expression of the company's business processes and information flow.

The 4 Principles of Storage Economics

Cloud computing and virtualization can be a huge business benefit, but IT management needs to realize just what it can-and cannot-virtualize, and heads of companies need to abandon the mentality that identifies cost just with capex, otherwise they will come to a cloud based strategy with wrong expectations about what it can achieve for the bottomline. They also need to be wary, if they are already using third-party service or infrastructure providers, of whose costs are being saved-their own or the provider's. IT management should first identify the costs of the existing storage architecture, measure the costs, decide what levers would impact these costs, and then pinpoint who exactly will benefit from the cost savings. Just transferring costs instead of actually reducing them obviously brings little benefit, and this is one reason why you need to look at all the cost savings and other benefits that could accrue, before taking a leap into the clouds. You need to think like an economist, talk like an accountant, and act like a technologist when driving these changes.

The following 4 principles provide a timeless framework which can help you make strategic and tactical investments to gain business benefits and successfully control the costs of your storage infrastructure in the long run. Applying these 4 principles when any new architecture is considered will help separate the price hype and the long-term operational costs associated with every new architecture.

Cost of Ownership Includes More Than Price: Remember that price does not equal cost. Capex on IT infrastructure has steadily diminished as a share of the total cost of ownership (TCO) of a data storage system over the past few years, from 50-60% to about 20% today. The other 80% is mostly operating expenditure (opex), including labor, maintenance, and power. In fact, the unit cost of disc space can be seen as approaching zero, but recurrent running costs of a system are becoming the largest and most critical item of IT TCO.

There are 34 Types of Costs: On the principle that 'you can't improve what you can't measure,' the management needs to identify and quantify the actual costs that make up its TCO. Collectively, 34 types of costs have been identified that make up storage TCO-some hard or direct, some soft or indirect, some capex, others opex.

Not all apply equally to every business, and a cloud based strategy may reduce only some-it could increase others. Out of the 34 costs, hardware depreciation, maintenance and warranty, storage management, power consumption, monitoring, and data center floor space should be directly reduced by a cloud based solution; software purchase/depreciation and software maintenance could also be potentially reduced. One should note however, all the other costs could be increased under a cloud based strategy, if not implemented correctly.

Equally, some of the most important cost savings and advantages can be missed through old-fashioned reflection and thought. The cost of growth is one item where a good cloud based strategy can truly reap rewards, enabling businesses to scale quickly and expand their IT establishment at a fraction of the traditional outlay.

IT planners need to take a full 360-degree look at all these 34 costs, decide which are most critical for their business processes-present and future-and use cloud based and in-house resources accordingly. Costs need to be categorized by costs kept internal after the cloud transformation, and the costs that get transferred to the cloud provider.

Economically Superior Storage Architecture Creates Value: The best-value storage architecture is the one that saves most, not the one that costs least. Moving costs off the internal or capex balance sheet may simply load them onto other areas, if a cloud based system is not implemented correctly. Storage TCO has to be calculated for the long term, as high operating costs will soon start to indicate. This architecture may not be the cheapest to buy, but it should be cheaper to own, and IT planners need to carefully consider how cloud components will actually affect TCO. Some of the key ingredients include:

Virtualization of volumes, file systems, storage systems

Dynamically tiered storage

Intermix storage

Thin provisioning

Power down disk, MAID

Multiprotocol SAN storage

De-duplication, data compression

Integrated archive

Management, policy-based provisioning

Storage virtualization, together with tiered storage and dynamic (or thin) provisioning, has been repeatedly demonstrated to reduce TCO by 20-35% over older in-house or tiered-island storage architectures. Out of the 34 types of cost, the ones which are most affected are waste, migration, copies, and labor.

Econometrics Will Show You the Way: Econometrics-an economic measuring system to quantify costs and track progress in reducing them-has to be put in place alongside good storage architecture, to map storage initiatives or investments to areas of measurable costs, and use this information to design, prioritize, and roadmap activities, based on their projected potential to reduce costs and support business needs.

Obviously, there is a risk of getting lost in the cloud-losing not only data, but also money. A short-sighted focus on slashing capex may only increase this risk, as technological change is clearly pushing IT towards longer-term time horizons in calculating TCO. As IT departments find themselves caught between the two imperatives of technological advances and cost pressures, managers need to decide the basis for handling and balancing these imperatives.