IBM Edge 2012 - Storage Financing -Final

7/31/2019 IBM Edge 2012 - Storage Financing -Final

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#IBMEDGE 2012 IBM Corporation

Storage Economics

and Financing 101

Cal Braunstein, CEO and

Executive Director of Research


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Robert Frances Group About Us

Robert Frances Group provides advisory, consulting

and research services to senior executives in IT andLOB management as well as for marketing/salesmanagement for companies that provide IT andcommunications services and products.

RFGs core competency is aligning business with IT.

One component of RFG research focuses onanalyzing the business and financial impacts of ITinfrastructure investments.

Business Advisors to IT Executives

SPORT Model

Strategies, SLAs, Sustainability

Processes, Procedures, Policies, Best Practices, Procurement and Politics

Organizational, Operational Issues

Resources, Regulations, ROI/ROV, Risk, and Requirements

Technology, TCO, and Ts & Cs


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IT Exec / Financial Executive Challenges and Gaps

Storage Cost Myths / Trends and Directions

Economics of Storage

TCO Story

Lease vs Purchase Considerations

TCO Analysis

Summary

Q&A


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Financial and IT executives frequently do not understandeach others objectives and concerns

IT executives make assumptions about financial motivations

Financial executives worry about IT executive asset andfinancial management skills

IT and financial executives typically do not talk aboutpayment options until the end of the decision makingprocess

IT and financial executives must jointly work together ontechnology purchasing as both have responsibilities and astake in the outcome

A holistic, repeatable TCO process allows for informed andproper decision making

Vendors focus on hard dollar cost, not the business problem
http://www.everystockphoto.com/photo.php?photo_id=236423


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Keeping storage longer allows forinvestments to be better utilized (delayedacquisition)obsolete 3-4 yrs

Hardware is the largest component ofstorage TCOtypically < 25 percent

Operational costs decrease over time

Extending storage life cycles increased

maintenance or self-support break/fix costs

Non-shared storage is less expensive

General myth: leasing is alwaysmoreexpensive than purchasing

Downtime or integrity are not a factor

Tape is dead

Storage is storage

Stor

Tape Capacity Forecast (PB) 20


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SSD


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data data data data data data data dataRaid 10 Raid 10

Growthsnapshots

dataRaid 10Growthsnapshots

Backup

Archive

Test

Test

Test

Test

Test

Source: Chalfant Consulting & SNIA

Raid 10Growthsnapshots


Backup

Archive



Backup




Raid 10Growth

Appdata

Raid 10overhead

Over-provision

Snap-shots

DRmirror

Diskbackup

Compliancearchive

Test/Devcopies

Wasted Storage Structured DataReality 1: 1 TB of initial storage

has < 40% valuable databut is expanded to 10 TB and

is duplicated for multiple distributed apps

1 TB 70 - 500 TBReality 2: 70% of data not accessed

in 90 days or moreReality 3: unnecessary copies increase OpEx

power, cooling, floor space, disk drives


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Wasted Storage Unstructured Data

Reality:According to IDC, 80 percent of enterprise data today isunstructured data, and that is growing at the exponential annualrate of60 percent. On average only 1 to 5 percent of that data is

actively used on a regular basis. Today, this vast and growingamount of unused data consumes the majority of complex andexpensive Tier 1 storage capacity within the enterprise.


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Hardware

Deployment

Provisioning

Administrator Training

Disposal Costs and/orSalvage Value

Administrator Sa

Automation, Proc

Power and Cool

Warranty/Maint

Software Licens

Floor Space

+

+downtime (optional)


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Break/fix problems : first 90 days or after thirdyear of operation

Warranty/Maint: cost of 5 year package muchgreater than 3 year warranty

Administrator costs # TB/admin

Legacy storage proportional

Next gen storage not proportional

Tiering, SSDs, & auto-tools can greatly cut costs

Reduce the volume of data stored

Increase the volume density

Move data to the right place

Salvage value optimized at year three 15percent on a lease (FMV), less on a purchase


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RFG findings prove TCO costs optimized at three years

3 year refresh cycle is less expensive than 5 year refresh

TCO demonstration alone will not change purchasing beha Collaborative support from IT and Financial execs required

Change is constant

Cost motives change (financial)

Executives change

TCO model can be quickly forgotten

Old habits die hard even if TCO is understood, a 3 year purchase isdespite best intentions. 3 year lease or 5 year purchase tend to beused methods.


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Budget limitations

Down payment

Credit line or Capital preservation

Cost of Capital

Bundling and deferrals

Pay per use vs full pay model

Fixed or flexible payments 0% financing, FPO/FMV

Technical currency / refresh cycles

Failures and outages increase w/ age

Licensing and maintenance fees End-of-Life worries

Financial management

Asset ownership

Potential to be self-funding


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Storwize V7000 Lease vs Purchase3

5 y

230

26%dep

29%ava


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Storage Analysis Legacy vs Next Gen

Source: Hitachi

80% of dataon SATA tier

40% lowerStorage costs

40% lowerTCO

2x

Utilization


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Financial and IT executives need to be on the samepage

3 year refresh is better than a 5 year purchase orfinancing

Leasing will provide financial, operational, support,and disposal benefits

Leasing forces asset management and controls

3 year acquisition cycle offers greater agility andflexibility

Executives will need help doing a true completecost/benefit analysis


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Q&A

Cal BraunsteinCEO/Executive Director of Research

Robert Frances GroupBusiness Advisors to IT Executives

www.rfgonline.com

phone: 203-429-8951 (US Eastern Time)

[email protected]

Documents

IBM Edge 2012 - Storage Financing -Final