The Business Case for Storage Networks
Storage Strategies for Lowering TCO
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The Cost of Poor Quality
• Most companies waste more than half their storage.
• Between 1999 and 2002, an estimated $35 billion of
storage assets have gone unutilized.*
• Approximately one quarter of all annual computerrelated U.S. revenues.
*Worldwide OEM Revenues 1999-2002
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Summary
• Falling disk prices = Increased TCO
• Create value with STORAGE STRATEGIES.
• In order to take advantage we must:
Understand the problem
Visualize the impact
Use metrics and know TCO components
• Cisco has implemented a STORAGE VISION to
direct strategies for storage management
with significant impact.
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Agenda
• Storage Strategies for Lowering TCO
Definitions
Strategies
Measurement
Metrics
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STORAGE STRATEGIES
FOR LOWERING TCO
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DEFINING TCO TERMINOLOGY
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Definition—Total Cost of Ownership (TCO)
• The sum total of all costs associated with
implementing a storage solution including
acquisition and depreciation of raw storage,
labor, support, maintenance, and so on over the
lifetime of the solution.
• Provides for “apples-to-apples” comparisons
of different solutions.
• Measures impact on environment and on
bottom line—real world costs.
• Cash basis or depreciation?
Cash basis—Present value of all acquisition costs**
Depex—Matches budget structures
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Cash Versus Depreciation
Year 1
Year 2
Total
Cash Basis
Year 0
HW
$ 1.00
Maint
$ 0.20
Labor
$ 0.10
$ 0.09
$ 0.08
Total
$ 1.30
$ 0.09
$ 0.08
$1.47
Depex
Year 0
Year 1
Year 2
Total
HW
$ 0.33
$ 0.33
$ 0.33
Maint
$ 0.20
Labor
$ 0.10
$ 0.10
$ 0.10
Total
$ 0.63
$ 0.43
$ 0.43
$1.50
• Year 1 labor costs = $0.1*(0.9^1)
• Year 2 labor costs = $0.1*(0.9^2)
**Cash Basis—Present Value of Future Costs at 10% Discount Rate
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STORAGE STRATEGIES
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Strategies
Utility-Like Storage Service
Storage
Demand
• Service-Level Management
• Appropriate Hardware Tiers
Storage Recovery Program
• Best Practices and Processes
• Special Tools and Metrics
Storage
Management
Storage Resource Management
Virtualization
Storage
Supply
Framework
Information Lifecycle Management
Data Integrity and Resiliency
Management and Consolidation
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Strategies
• Migration to storage networks
Increases allocation efficiency
Decreases management costs
• Storage consolidation
Fewer hosts and fewer frames
Reduce points of management
Reduce maintenance costs
• Storage recovery
Increases utilization efficiency
Reclaim unused storage
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MEASUREMENT
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Measurement
• Data collection
Asset reports
Accounts payable
Storage inventory
SRM
Spreadsheets
• Need measurement of “before” picture
• Key values
Allocation efficiency
Utilization efficiency
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Utilization
Allocation
Efficiency
Utilization
Efficiency
PROD
60%
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40%
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Allocation Efficiency
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Storage Type
Industry Average
Allocation Efficiency
DAS
30%–40%
SAN
50%–60%
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Measurement Example: (DAS)
• Sample DAS TCO
Seven storage frames
7 x external RAID arrays (total 24,192 GB)
$350K purchase price
$2.45M total
One storage manager
$150K per year
Seven datacenter tiles
$10K per tile
$5K for cabling
$75K total
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Measurement DAS (Cont.)
• Backups
Per GB
Plus tape costs per GB
Total per GB
Total
$0.086
$0.868
$0.954
$63,698
• Maintenance
$6K per frame per month
$42K per month
$504K total
• Utilization
Allocation efficiency factor (60%)
Utilization efficiency (40%)
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Sample DAS TCO
Sample TCO
Cash Basis
Seven Storage Frames
7 x External RAID Arrays (Total 24,192 GB)
$350K Purchase Price
$1.75M Total
$
2,450,000.00
Depex—Year 0
$
816,666.67
One Storage Manager
$150K per Year
$
398,160.00
$
150,000.00
$10K per Tile
$5K for Cabling
$
199,080.00
$
75,000.00
Seven Datacenter Tiles
Backups
Per GB
Plus Tape Costs per GB
Total per GB
Total
$0.086
$0.868
$0.954
$
63,698.51
$
23,079.17
$6K per Frame per Month
$42K per Month
$504000K Total
$
1,337,817.60
$
504,000.00
Maintenance
Utilization Rates
Allocation Efficiency Factor (60%)
Utilization Efficiency (40%)
Total Storage
Utilization Efficiencies
Total Cost
TCO Per MB
0.6
0.4
$
$
24,192,000
5,806,080
4,448,756.11
0.77
24,192,000
5,806,080
$ 1,568,745.83
$
0.27
*Expenses not depreciated, but totaled over 3 years
**Discount rate needed for present value—years 2 and 3 discounted at 12 precent
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Measurement Example:
SAN Migration Strategy
• Sample SAN TCO
Seven storage frames
7 external RAID Arrays
(36 GB drives)
(total 24,192 GB)
$350K purchase price
$2.45M total
One storage manager
$150K per year
$15K for training
$165K total
Seven datacenter tiles
$10K per tile
$5K for cabling
$75K total
Maintenance
$6K per frame
$42K per month
$504K total
Backups*
Total
$63,698.51
*Significant savings in backups possible—not analyzed here
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Measurement SAN (Cont.)
• FC switches
$500K total including maintenance
• Utilization
Allocation efficiency factor (75%*)
Utilization efficiency (40%)
*Assumes 15% Increase
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Sample SAN TCO
Sample TCO
Depex—Year 0
Cash Basis
Seven Storage Frames
7 x External RAID Arrays (Total 24,192 GB)
$350K Purchase Price
$2.45M Total
$2,450,000
$816,667
One Storage Manager
$150K per Year
$15K for SAN Training
$165K Total
$437,976
$165,000
$10K per Tile
$5K for Cabling
$75K Total
$199,080
$75,000
Facilities - Seven Tiles
Backups
Per GB
Plus Tape Costs per GB
Total per GB
Total
$0.086
$0.868
$0.954
$61,261
$23,079
Maintenance
$6K per Frame per Month
$42K per Month
$504K Total
$1,337,818
$504,000
Switches
4 Director Class Switches (Inc. Maint.)
$500,000
$166,667
Utilization Rates
Allocation Efficiency Factor (75%)
Utilization Efficiency (40%)
Total Storage
Utilization Efficiencies
Total Cost
TCO per MB
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0.75
0.4
24,192,000
7,257,600
$4,986,134
$0.69
35,040,000
10,512,000
$1,750,412
$0.17
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Consolidation Impact
Sample TCO
Depex—Year 0
Cash Basis
Two Storage Frames
2 x External RAID Arrays (42,048 GB)
$750K Purchase Price
$1.5M Total
$1,500,000
$500,000
$437,976
$165,000
One Storage Manager
$150K per Year
$15K for Training
$165K Total
Three Tiles
$10K per Tile
$5K for Cabling
$35K Total
Facilities
3
$92,904
$35,000
Backups
Per GB
Plus Tape Costs per GB
Total per GB
Total
$0.086
$0.868
$0.954
$61,261
$23,079
$0
$0
$500,000
$166,667
Maintenance
No Maintenance for 3 Years
Switches
4 x 32 Port Switches
Utilization Rates
Allocation Efficiency Factor (80%)
Utilization Efficiency (40%)
Total Storage
Utilization Efficiencies
Total Cost
TCO per MB
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0.8
0.4
42,048,000
13,455,360
$2,592,141
$0.19
42,048,000
13,455,360
$889,746
$0.07
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Recovery Impact
Sample TCO
Depex—Year 0
Cash Basis
Two Storage Frames
2 x External RAID Arrays (42,048 GB)
$750K Purchase Price
$1.5M Total
$1,500,000
$500,000
$437,976
$165,000
One Storage Manager
$150K per Year
$15K for Training
$165K Total
Three Tiles
$10K per Tile
$5K for Cabling
$35K Total
Facilities
3
$92,904
$35,000
Backups
Per GB
Plus Tape Costs per GB
Total per GB
Total
$0.086
$0.868
$0.954
$61,261
$23,079
$0
$0
$500,000
$166,667
Maintenance
No Maintenance for 3 Years
Switches
4 Direct Class Switches
Utilization Rates
Allocation Efficiency Factor (80%)
Utilization Efficiency (60%)
Total Storage
Utilization Efficiencies
Total Cost
TCO per MB
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0.8
0.6
42,048,000
20,183,040
$2,592,141
$0.13
42,048,000
20,183,040
$889,746
$0.04
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Solution/Cost Comparison
Effect of Storage Program on TCO
$0.90
Cash
Basis
$0.80
Depex
$0.70
TCO/MB
$0.60
$0.50
$0.40
$0.30
$0.20
$0.10
$0.00
TCO per MB DAS
TCO per MB SAN
Solution
TCO per MB DAS
TCO per MB SAN
TCO per MB Consolidation
TCO per MB Recovery
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TCO per MB
Consolidation
TCO per MB
Recovery
Cash Basis
Depex
$0.77
$0.69
$0.19
$0.13
$0.27
$0.17
$0.07
$0.04
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METRICS
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Metrics
• Project metrics
Payback method
ROI
NPV
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Metrics Examples: Payback
• Pros
• Cons
“Napkin math”
Suitable for small
capital investments
Measures time to
recoup investment
Doesn’t work well for
large investments
Doesn’t work well for long
time horizons (>1 year)
Payback period = initial
investment/annual income
Example: $5000 for new disk infrastructure to
increase performance for online transactional
system that increases revenue by $2500 over
two quarters.
Payback period is one year
$5000/$2500 = 4 Quarters = One Year
Reasonable payback—Do the upgrade
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Metrics Examples: ROI
• Pros
• Cons
“Napkin math”
Easy to manipulate
Suitable for large
capital investments
Maligned as a marketing tool
Well known
Does not account for
cost of capital
Does not account for
time value of money
Example: $5000 for new disk infrastructure to increase
performance for online transactional system that
increases revenue by $2500 over two quarters.
ROI = (All Returns-All Investments)/(All Investments)
ROI = ($2500-$5000)/$5000 = -%50
ROI is negative—Don’t do the upgrade
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Metrics Examples: NPV
• Pros
• Cons
Accurate measurement
Definitely not “napkin math”
Suitable for large
capital investments
Accounts for cost of capital
and time value of money
Example: $5000 for new disk infrastructure to increase
performance for online transactional system that increases
revenue by $2500 over three years; cost of capital is 12%.
NPV = -$5000 + (833.33*(1.12^1)) + (833.33*(1.12^2))
(833.33*(1.12^3))
Excel = NPV (Rate, Value1, Value2...)
+
NPV = -$2998.47
NPV is negative—Don’t do the upgrade
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Summary
• DAS-to-SAN migrations: significant cost savers.
• Coupled with consolidation and storage recovery,
programs greater reductions in TCO possible.
• Use FC and IP networks as enabling technologies
for lower TCO.
• Use strategies to adjust storage TCO FUNCTION.
• Uptime and availability are part of TCO.
• Use FC and IP storage networks to increase business
continuance, uptime, and availability; in turn, further
decrease TCO.
• Play WHAT-IF scenarios with uptime, availability,
backups, and retention.
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Recommended Reading
• The Business Case for Storage Networks [1-58720118-6] Available October 2004
• Cisco Storage Networking Architectures Poster
[158720102X]
• Internetworking Technologies Handbook, Fourth
Edition [1-58705-119-2]"
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Online References
• Business Ready Datacenter
http://www.cisco.com/go/datacenter
• Cisco Storage Networking Solutions
http://business.cisco.com (click “Storage”)
• Search Storage http://www.searchstorage.com
• Byte and Switch http://www.byteandswitch.com
• Storage Networking World Online
http://www.snwonline.com
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