The Real Cost of Storage

Sri Donthi had a big surprise waiting for him when, just over two years ago, he showed up at Motorola Inc.s Personal Communication business unit to get started on a major systems consolidation and standardization project. Namely, nobody could tell him how many storage devices the business had, how many people were assigned to keep storage devices running, or even utilization levels of the units disk subsystems and other storage devices.

Talk about operating in the dark.

"It was bad, but thats the way it was," said Donthi, who today is director of global computer operations at Motorola, in Schaumburg, Ill. "The first thing we needed to do was to figure out what was out there, utilization levels, resources applied to managing everything, and backup and business risk levels."

So Donthi brought in consultants to help him conduct an audit of the business units storage environment. Not surprisingly, what they found wasnt pretty. On the 96 storage devices deployed from five vendors, only about 30 percent of available capacity was used, on average. Support staff was more than double what it needed to be.

From that information, Donthi and his team put together a plan to consolidate the sectors storage onto two Symmetrics disk subsystems from EMC Corp., of Hopkinton, Mass. The project more than doubled usage rates while significantly cutting support overhead, Donthi said.

Unfortunately, Donthi isnt the only cost-conscious IT manager who will have an ugly surprise in store when he or she finally gets serious about controlling escalating enterprise data storage costs. Experts estimate that only about 10 percent of enterprises in the United States have detailed, up-to-date information on how many storage devices they have and where theyre located, storage growth trends, usage rates, support costs, availability, and other performance metrics. Without such base-line information, its difficult, if not impossible, to put together a serious storage cost containment program. So, like Motorola, many organizations—with the help of service providers—are beginning to conduct TCO (total-cost-of-ownership) audits of their storage environments in much the same way that they conducted TCO studies in the late 1990s to understand and get a handle on runaway desktop support costs.

Theres a right way and a wrong way to conduct such audits, however. First, experts say, be sure to establish the objectivity of the service providers you call on to help. Second, be sure storage TCO audits tote up not just hardware and software costs but also support spending—which, in many organizations, represents by far the fastest-growing component of storage costs. Third, experts say, be sure you look at the business impacts of the current storage environment and anything that might replace it.

So why are enterprises getting serious now about cutting storage TCO, and why dont they have good information on storage costs to start with? The answer to the first question is easy. Even though storage hardware costs continue to decline on a per-gigabyte basis 25 percent to 35 percent per year, overall spending on storage is still accelerating. Gartner Inc. estimates that, by 2004, buying and managing storage will represent the majority of total server-oriented costs for the average enterprise.

Driving those rising costs are the sheer volume of data being generated by e-business and transaction-oriented applications, plus increasing support personnel costs. Evaluator Group Inc., an Englewood, Colo., storage consultancy, estimates storage support costs on average are rising 5 percent to 10 percent per year. In light of the ongoing economic slowdown, experts say, most enterprises are pushing to understand and cut storage costs.

"Storage is now the pain point for many organizations, and theyre casting about for relief," said Nick Allen, an analyst at Gartner, in Stamford, Conn. "For many, a place to start is a storage audit." Gartner, Allen said, came up with a storage TCO methodology and tool kit four years ago but shelved it when enterprise acceptance was lukewarm. The company has now revived the idea, however, and is about to publish a new storage TCO methodology.

The reason so many enterprises seem to know so little about their storage-related costs, experts say, has a lot to do with how storage has historically been purchased: in an ad hoc manner, usually to support individual applications and rarely with a view to improving enterprisewide use or cutting support costs. Rare is the IT organization that has designated anyone to be responsible for companywide storage planning, use and procurement.

"Very often, the CIO will be busy writing a check to purchase more storage for one system while, down the hall, another group has enough unused capacity to satisfy his needs for the next 12 months," said Tom Sweeney, president and CEO of ManagedStorage International Inc., a storage services provider in Broomfield, Colo., that is conducting TCO audits.

While tools do exist to help IT managers track storage subsystem performance and use levels, many are too platform-specific and too expensive, experts say. One organization using such tools is VW Credit Inc., a subsidiary of Volkswagen of America Inc., in Libertyville, Ill. Since the company began using Sun Microsystems Inc.s HighGround Storage Resource Manager software four years ago, it has been able to recover the equivalent of 30GB of storage space, mainly by improving usage and capping individual user file sizes on its Microsoft Corp. Exchange and SQL Server applications running on Windows NT servers. The company, however, must also continue to use tools, such as Hewlett-Packard Co.s OpenView and EcoTools from Compuware Corp., to monitor storage resources on other platforms, said Windows server systems team leader Bill Wheeler.

To help IT managers establish base-line storage cost and performance information, storage hardware, software, service and consulting providers have begun to roll out storage TCO auditing methodologies and services. However, given the level of manual processes involved in simply tracking existing storage resources, usage levels and sometimes hidden support personnel, such auditing services are neither quick nor inexpensive. Storage hardware vendor EMC, which has been conducting storage TCO audits for enterprise customers for the past 18 months, spends three to four weeks on each audit and charges an average of $60,000.