Negotiating the Storage Deal

A consultant stresses that buyers do their homework to get what they need, not what the vendor wants to sell.

NEW YORK—If youre an IT manager considering a major storage buy, there are a few things you should be sure to take into consideration.

According to Bill Peldzus, director of storage architecture at the Glasshouse Technologies consultancy in Framingham, Mass., there is a list of important items you must include in the overall company strategy and request for proposal before you decide on a purchase. Peldzus was a featured speaker at Storage Decisions here Sept. 28.

The financial stakes are high. Gartner recently reported that the difference between subsystem bids can be as much as 300 percent for comparable products. Storage purchases represented about 26 percent of the data center TCO (total cost of ownership) and about 48 percent of the hardware budget in 2006, Gartner reported. Those numbers are expected to rise.

Playing multiple vendors against each other can bring immediate pricing advantages of 20 percent to 30 percent, Peldzus said.

"What is negotiable here? Everything," he said. "But you must negotiate from a position of knowledge."

Peldzus said the strategy for a storage purchase should include: a RFI (request for information), a RFP (request for proposals), a detailed definition of the current state of your companys storage system, a storage reference architecture, an internal rating method for the RFP responses, careful analysis of all the details, some specific negotiation techniques, and detailed criteria for success.


Click here to read more about five steps to a scalable data center.

"Above all, you need to take charge of your storage purchase—dont buy a storage vision that the vendor wants you to buy," Peldzus said.

For example, a data center manager at Storage Decisions told Toigo Partners analyst Jon Toigo that his company had spent about $1 million a year ago on arrays supplied by a major storage vendor. His CIO predecessor was told that they would scale up to 1 terabyte in capacity. However, when each array got to about 250 gigabytes, the I/O performance took a serious nosedive. The company was unable to even get close to the 1TB limit.

The vendor reassured his predecessor that the storage was scalable and that it would be the last he would need to buy for a few years.

"Sure," the CIO told Toigo, "it will scale to 1.1 PB with big lumbering 500 GB drives. But the performance takes a nose dive. In fact, we cant build the capacity of one of these arrays to more than 250 TBs without bringing it to its knees."

Toigo wrote that the CIO is "playing a few tricks" to try to ensure that he doesnt need to go back to senior management with his hand out for more money for more arrays. "If I do, they will probably fire me."

This is not an uncommon story, Peldzus said.

"If youre not sure exactly what kind of hardware and software you need, definitely do an RFI," he said. "Base it on your requirements and your business drivers and also on your storage reference architecture."

A large storage purchase is considered more than $1 million, Peldzus said.

"Doing RFIs and RFPs always result in better purchasing decisions," he said. "Dont use them for buying expansion disks in an existing array setup, just for new purchases."

The RFP should include details on the current state of the system, on what the proposed new state should be—including information on servers, storage, HBAs (host bus adaptors), software/OS versions, I/O speeds—on current RTOs (recovery time objectives) and RPOs (recovery point objectives), and on data recovery, he said.

It also should include current service-level agreements and service-level objectives, as well as a description of key internal standard operating procedures, he said. Include an outline of key compliance objectives, such as Sarbanes-Oxley, and spell out important restrictors.

"Make sure to get in writing that if something doesnt work, the vendor must fix it on his own dime," Peldzus said. "Youd be surprised at how basic that item is, and how often it is left out of a contract. And make sure some of those fun folks in legal weigh in on this, too."

Get a consensus on the project from the database administrators, the systems administrators, the CEO, the board of directors—everybody who needs to know about the purchase, he said. "This is to avoid the salesman who just went golfing with a vendor sales rep and is putting pressure on the IT department to go with his guy," Peldzus said.

Doing a vendor pre-meeting is often a good idea, he said.

"Get two or three vendors—no more than that—into a room together and show them the RFP at the same time. I guarantee you that youll get 80 percent of all the questions answered ahead of time, and the vendors will know firsthand who theyre competing against," he said.

Be sure you ask for line-item pricing in the RFP, and for the vendor to be specific about features, such as mirroring vs. snapshots or block-level deduplication vs. single-instance data storage, Peldzus said.

"Be sure your priorities are clear in the RFP. If you have a lot of large files, then clustering for high availability might be top of the list. If a good disaster recovery product is what youre most in need of, say so. If a lower power/cooling requirement is what youre after, go for it," he said. "Tell the vendors up front."

Last, ask each vendor for a legend of the cost of all components. "This is something that I, as a consultant, make sure of each time. There wont be any mistake in the pricing if you do this," Peldzus said.

At least half the time and effort in the negotiation is not the price, but simply making your own life easier, he said.


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Chris Preimesberger

Chris J. Preimesberger

Chris J. Preimesberger is Editor-in-Chief of eWEEK and responsible for all the publication's coverage. In his 13 years and more than 4,000 articles at eWEEK, he has distinguished himself in reporting...