Uncovering the total cost of ownership of storage management

Computer Technology Review, Jan, 2002 by Mark Buczynski

Traditionally, negotiating an attractive storage acquisition price and anticipating storage needs down the road were the best ways to save money and get a handle on the budget a few years out. Not so anymore. The total cost of ownership (TCO) comprises much more than the obvious capital costs. And while the concept of TCO is not new, management costs alone can outweigh the capital expense of storage by a factor of 7 to 1 (Forrester Research). Less tangible costs resulting from inadequate management tools, disruptive scalability, poor reliability and performance, and compromised efficiency can make the initial cost of purchase seem trivial. Because storage plays an increasingly strategic role in today's business infrastructures, it is essential to understand its TCO and uncover ways to optimize its value. The harsh reality is that storage TCO will continue to increase over time unless costs related to hidden factors are addressed in the design and implementation of the solutions.

How does an organization even begin to get its arms around storage TCO? Does this exercise really result in meaningful and useful information? To answer these questions, we need to start at the basics: the definition of TCO. the key components of a TCO evaluation, the most effective use of TCO information, and the features that will have the greatest impact on the final TCO.

Storage TCO Defined

Storage TCO includes both direct and indirect costs and benefits related to the purchase of a storage component. Unfortunately, there is no magic template to fill in or one approved methodology to follow; the TCO for the same solution varies from organization to organization. Just as each business is unique, so is its cost structure. There are, however, some ubiquitous TCO factors that can be used as part of a general model and, perhaps more importantly, as part of the process for your next storage acquisition.

Components of a HAS TCO Evaluation

Beginning the TCO evaluation is best approached by first defining the scope and granularity. If your organization is not experienced with calculating TCO, a wise approach is to start with a project-specific TCO exercise such as NAS and expand the scope after becoming familiar with the process and effort involved. In terms of granularity, a more general or high-level exercise will prove to be less overwhelming, particularly if the costs of less tangible factors such as diminished performance require a good deal of research. Whether you elect to complete a general analysis or proceed with a more thorough evaluation, make sure your TCO project is well defined in scope and stick to it. Otherwise, it can grow unbounded and produce results that are less meaningful and more controvertible. This article will focus on the fully burdened cost of implementing a NAS solution.

Let's start by defining the five key areas comprising the fully burdened cost of NAS. Product/Acquisition: These costs are the most easily discernible and can be broken down into separate categories for hardware and software. They include direct product costs; procurement costs, such as legal fees: and upgrade and maintenance charges. Other administrative tools and third party software packages also need to be considered.

Personnel/Operations: Determining the price tag for this area is a bit more involved in terms of tracking and calculation. Even if tasks required of two individuals are similar, the cost can vary greatly due to skill level and salary. To get a good sense of the contribution to overall TCO, this difference must be accounted for in necessary areas. One must also include the costs of personnel from other IT areas who are needed occasionally in addition to the NAS-dedicated headcount.

Availability: This area can be one of the most crippling to NAS TCO. Downtime costs thousands of dollars each minute end users are denied access to information necessary to perform their jobs. Whether scheduled or unscheduled, there is almost always a significant cost associated with downtime. With high availability hardware systems, the scheduled downtime for backups and maintenance is becoming an increasingly large percentage of downtime. Outages can result from the failure of any component of the storage solution, but the measure of availability is based on data availability, pure and simple. The costs to consider are both technology and business related.

Performance: The costs in this area are related to performance issues that impede response time. Product architecture, applications, and number of end users can affect response time and ultimately productivity. A slow system response can be perceived as downtime by your customers, resulting in costs similar to downtime costs. The challenge lies in understanding the specific response rates at which various user groups are no longer able to do their jobs (e.g., design engineering vs. customer service).

Backup and Recovery: These costs comprise the expenses of backing up storage and restoring from an outage back to the failure point.