Companies seeking to reduce costs should take a close look at storage, according to Hitachi Data Systems chief economist David Merrill.
Storage infrastructure on average represents about 40 per cent of a company’s IT spend, says Merrill, who consults with customers for Hitachi about how to reduce storage costs in their business. One recent Australian client was the Holmesglen TAFE in Victoria.
“Companies are hoarding cash,” in part due to uncertainty created by local government austerity programs and tax increases, Merrill tells Computerworld Australia.
“The budgets are relatively flat, but the rate of growth and the rate of new technology development is nowhere flat. That means we’re doing a lot more with a lot less.”
“Having tighter IT budgets is causing people to look at the economics of their IT architecture much differently.”
Merrill gave several tips on how to get storage costs under control:
- Don’t get distracted by price
Businesses tend to focus on storage price rather than costs over the long term, says Merrill. “In reality, if they want better cost, then we need to help them understand [and] measure their cost.”
Many businesses “don’t know what their costs are and they’re confused and often seduced by low price,” especially from Web and cloud services, he says.
However, in some cases, spending 10 per cent more upfront can result in a 30 per cent reduction in total cost of ownership, he says.
- Implement the “technology trifecta”
Virtualisation, overprovisioning and dynamic tiering “tend to be a trifecta of technology recommendations that for most industries in most data types will help reduce costs,” says Merrill.
On average, companies that do these see about a 25 per cent reduction in total cost of ownership in the first year, he says. “And quite often even more.”
“They’re linked to very specific kinds of costs, but things that most people appreciate, like reducing waste, reducing management overhead, reducing the number of management tools, reducing migration, [and] putting the right data in the right tier over the life of that data set,” he adds.
- Cloud comes last
“Storage in the cloud is certainly a move to reduce total cost,” says Merrill. However due to compliance, latency, performance and security issues, “people are not going to put all their storage on the cloud.”
“From a cost reduction perspective, it is sort of the high-hanging fruit,” he says. “It’s one of the later things you should be doing after you’ve exhausted all the other things internally.”
Cloud is a good place for “low-end storage,” including backup, archives and “enterprise Dropbox,” he says.
“There absolutely is a huge opportunity for moving net new function, especially big data,” which may not be affordable to store in the data centre, adds Merrill.
- Change the culture
“We see especially in western countries this project base mentality,” Merrill says. “A project gets approved, they come to the IT group with a bucketload of money” to buy servers and other IT gear, “and then they walk away.”
“That one-time funding has to last for years and then the project never pays for ongoing maintenance.”
Companies should instead embrace a consumption-based model, where companies own less infrastructure and pay for what they use, he says. This approach can reduce costs over the long term, he says.
Growth in big data will make a consumption-based approach critical, he says. “We just can’t continue buying and acquiring IT assets.”
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