Management Update: Storage Management TCO Considerations
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1 IGG C. Stanley Article 17 September 2003 Management Update: Storage Management TCO Considerations CIOs, asset managers, data center managers and business managers should be aware of the total cost of ownership (TCO) figures for their storage systems. Storage is a significant, and increasing, cost item in data centers and throughout enterprises. CIOs, asset managers, data center managers and business managers should be aware of the total cost of ownership (TCO) figures for their storage systems. Storage is a significant, and increasing, cost item in data centers and throughout enterprises. Storage Must Be Managed Gartner Measurement has collected research from more than 10,000 IT assessments during the past 26 years that evaluate data centers and their computing and storage needs. The research indicates that storage is becoming an ever-increasing portion of the data center s TCO. Recent research shows that storage and storage-related costs account for about 12 percent of data center TCO and more than 21 percent of total hardware expenditures. It is no longer less expensive to add storage instead of managing it, and an understanding of the cost and support structure of storage is imperative for the data center. Enterprises should develop a process for evaluating storage costs and usage, accurately predict their storage needs and be capable of determining which storage technologies are the best fit for them. With an understanding of the cost and staffing requirements for various storage technologies, the data center manager will be better able to make strategic purchasing and implementation decisions. Measuring Storage Costs Strategic Planning Assumption: Data centers will double their storage needs every 18 to 24 months (0.9 probability). Tactical Guideline: The average data center s unused storage capacity costs over $5.8 million per year. Storage is the fastest-growing capital cost within the data center and in many enterprises. Gartner Measurement research shows that storage is increasing, on average, by about 30 percent per year, with the average enterprise client having about 19.5 terabytes. Research also shows that only 62 percent of enterprise storage is effectively utilized. In the average environment, that unused capacity costs the data center more than $5.8 million per year. Gartner Entire contents 2003 Gartner, Inc. All rights reserved. Reproduction of this publication in any form without prior written permission is forbidden. The information contained herein has been obtained from sources believed to be reliable. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of such information. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof. The reader assumes sole responsibility for the selection of these materials to achieve its intended results. The opinions expressed herein are subject to change without notice.
2 Much of the unused capacity is due to technology and operating-system segmentation. Platformdedicated storage tends to have a high level of unutilized and isolated storage that cannot be used by other servers or applications. Centralized storage solutions (CSS) and the promise of true virtualization will enable enterprises to utilize more of their storage within the data center. Research indicates that the implementation of CSS is increasing within data centers. Another issue is the ability to segment active data from inactive data through policy or hierarchicalbased staging processes. Recent research indicates that only about 30 percent of utilized data is actually active and has been referenced within the last 90 days. Continually backing up the inactive data increases support costs and drives up storage requirements. The Importance of Storage Measurement To understand why measurement of storage is important, a starting point is to look at the reasons behind measurement in the traditional areas of the enterprise. All organizations produce financial reports documenting profit and loss, balance sheets, cash flows and more to quantify where the organization stands today, and to be capable of demonstrating what progress (or lack thereof) has been made since the last review. Aside from the legal requirements of producing such documents, the exercise enforces discipline in the business management process. The reports give the stakeholders insight into the financial and business health of the organization, illustrate performance over time and provide a basis for comparison to competition. In the same manner, measurement should take place in the IT sector of the enterprise as well. Measurement of IT investments such as storage may be used to evaluate the total costs of IT investments, and to determine which technologies are more cost-efficient in meeting the needs of the enterprise. Such measurement also enables the data center to report on continuous improvement initiatives and demonstrate the return on IT expenditures. In addition, measurement processes allow expenditures to be compared by industry sector and geographic region as well as with similar peers to evaluate the relative cost structures, and to determine whether the data center is underperforming or outperforming similar organizations. Measuring storage costs enables the enterprise to: Illustrate cost-to-utilization improvements over time Use cost behavior as a predictor of performance efficiency Measure performance against industry competition Determine if business needs are being met by the service being provided Determine whether the enterprise is investing in the right technologies to effectively grow the business and support future business needs Assessing True TCO Historically, enterprise storage managers have focused on traditional metrics that gauge efficiencies in cost and operations and not on whether the services delivered met the requirements of the business consuming these resources. True TCO should not only measure cost efficiencies, but also the ability to deliver services that, at a minimum, meet the needs of the enterprise.
3 Of what use is it to provide services at the lowest cost if you are not delivering to the needs of the business? Business managers often reward IT groups for developing low-cost solutions, but the cost benefits are soon forgotten if the solution fails to deliver the expected level of service. Enterprise storage performance assessments should be based on a careful collection of the following components: Cost Staffing Storage analysis Storage services performance By measuring the levels of services being delivered by the data center and comparing them with the total cost to deliver that service, placement in one of four quadrants can be determined (see Figure 1). Data centers should strive for placement within Quadrant II, which illustrates better-than-average cost efficiencies while meeting or exceeding service requirements. Figure 1 Balancing Cost Efficiency With Service Delivery Over- Delivery Service Effectiveness I III Costs are high, but requirements are being met or exceeded Reduce Costs Costs are high and requirements are not being met II Costs are low and requirements are being met or exceeded Maintain Costs and Efficiency IV Costs are low, but requirements are not being met Lower Cost Often Means a Lower Level of Service Delivery Under- Delivery Reduce Costs and Reduce Requirements High Cost per Unit of Service Increase Costs or Reduce Requirements Low Target Quadrant for Best-in-Class Performers Source: Gartner Cost Elements of Storage TCO Strategic Planning Assumption: Storage technology integration and manageability improvements will cause the per-gigabyte labor cost to decline 1.4 times faster than the reduction in the pergigabyte hardware cost (0.7 probability). The costs included in a storage management model must be consistently defined and captured for comparative purposes. In TCO model development, Gartner Measurement has broken costs into three categories:
4 Capital costs consist of elements such as hardware, software, infrastructure, facilities and high-availability costs. Generally, those costs represent fixed, leased or depreciated assets. In an enterprise storage management model, hardware might consist of hosts, storage devices, near-line and offline storage, management software and utilities, storage infrastructure (hubs, switches, routers, storage directors and more), facility and occupancy costs, and other costs related to high availability. Labor costs represent the costs associated with the installation, operation, management, performance, security, capacity planning, evaluation and support of storage technologies. In addition, finance and administrative costs associated with procurement, budgeting, asset tracking and outsourcing contract management should be considered. Services costs include costs for disaster recovery contracts and expenditures, as well as outsourcing services. Together, those costs make up the range of storage expenditures from the media level, to the data server, to the transport layer and to the archival mechanism. Storage Technologies Within a TCO Framework Tactical Guideline: While network-attached storage (NAS) and storage area networks (SANs) will likely merge into a single storage technology in the future, investments in NAS or SANs, for now, should be dictated by application and functionality. An enterprise storage model should consider all available storage technologies and solutions and evaluate the costs and labor requirements of each. Various storage technologies have very different cost and staffing profiles, and it is important to know what each employed type contributes to the total cost of storage ownership. For example, it is generally accepted that direct-attached storage (DAS), which refers to internal and single host-attached storage as well as direct-attached drive arrays, is the least expensive way to add and install storage; however, DAS support, management, disruption and utilization costs are much higher than for other storage technologies. Other storage technologies include: Shared DAS storage arrays that are directly attached to a host but shared through a communication protocol NAS file-level network-connected storage arrays SANs block-level network-connected storage arrays Storage service providers storage outsourcers that provide or manage storage environments, regardless of the location Labor Components Tactical Guideline: On average, labor costs make up 39 percent of overall storage costs. Acquisition of storage hardware is only one part of the TCO. Gartner Measurement research shows that 39 percent of storage costs are labor-related. Labor is a cost category that will continue to grow as a percentage of TCO over time (unlike hardware, which tends to decline).
5 A storage TCO model should consider the cost of providing operations, storage services, and financial and administrative support for the storage environment: Operational roles should include backup and media handling, console management, operations support and second-line management. Storage services support should include storage network support; backup/restore management; capacity planning; storage design and implementation; vendor selection and product evaluation; change management; and storage performance/tuning. Financial and administrative roles should include budgeting/chargeback, asset procurement, administrative support, IT management, service-level agreement administration and outsourcing contract administration. Labor costs and full-time-equivalent counts should be allocated by storage technology type to compare the support costs of each. Measuring Storage and Capacity Tactical Guideline: The average data center utilizes only 62 percent of multiplatform storage. Within each of the major classes of storage, it is important to determine how much storage is installed, how much of that storage is usable and how much is actually in use (see Figure 2). In nearly every storage environment, some implementation of RAID (redundant arrays of independent disks) is in use. The RAID level employed determines how much capacity is lost as overhead. The rates vary by RAID implementation RAID-1 carries a 50 percent overhead, while RAID-5 averages about a 20 percent overhead level. Figure 2 Storage Capacity Architecture Extra Capacity Total Capacity Online Capacity Available Capacity Extra-frame Expansion Capacity Intraframe Expansion Capacity High Availability Hot Spares, COD and More RAID Overhead (-) Compression (+) Source: Gartner Utilized Unused Unreferenced COD RAID capacity on demand redundant array of independent disks
6 Storage compression, whether provided by hardware or software, should also be taken into consideration, as this increases the amount of usable space. In some well-tuned storage environments, compression benefits can completely offset the overhead consumed by RAID implementations. Disk space reserved for hot spares and capacity on demand should also be computed in the total online capacity results. A storage model should compute the available expansion space within established storage frames, or intraframe expansion capacity. The ability to add storage within the established footprint has direct implications on facilities, environmental factors (such as power and cooling) and support costs. The trade-off is the impact of increasing storage activity over existing data paths and channels. Extra-frame storage is defined as adding storage through installation of new storage frames. Conclusions Storage and its associated costs are growing rapidly and will continue to grow. Proactive enterprises will develop or acquire the tools necessary to manage these critical resources. Storage technology decisions should be based on the ability to deliver against business requirements. The TCO and support of those decisions should be included in the decision process. Enterprises should understand the long-term costs associated with various storage decisions, and avoid becoming locked in to situations where industry economies work only to the vendor s benefit. Written by Edward Younker, Research Products Analytical source: Craig Stanley, Gartner Research This article is an excerpt of a chapter from a new report, Winning Asset Management Strategies. The report is an offering of the Gartner Executive Report Series, a new business venture of Gartner Press that provides buyers with comprehensive guides to today s hottest IT topics. For information about buying the report or others in the Executive Report Series, go to For related Inside Gartner articles, see: Management Update: IT Asset Management Is Mandatory, Not Optional, (IGG ) Management Update: Asset Managers Should Assess How Their IT Spending Stacks Up, (IGG ) CIO Update: To Control TCO, It Must Be Measured and Managed, (IGG ) Management Update: Five Sure Ways to Reduce IT Asset Costs, (IGG )
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