The cost benefits of a SAN: an analysis of total cost of ownership of an iSCSI SAN, fibre channel SAN, and direct-attached storage

Computer Technology Review, July, 2004

The growth of business data continues to explode, along with the need to store it. According to a study by Merrill Lynch and McKinsey & Company, annual growth of data storage capacity will average a startling 76% over the next five years.

To squeeze the most data storage out of every IT dollar, managers must start by assessing all data storage costs--those tied to initial equipment acquisition, as well as those for resource management, capacity use, and most importantly, system downtime.

For years, adding storage meant purchasing additional servers, tape libraries, and disk enclosures to attach to the server--a costly and inefficient approach that left large amounts of storage capacity and computing power unused. Today, storage area networks (SAN)--high-speed networks that connect multiple storage devices so that they may be accessed on all servers in a local area network (LAN) or wide area network (WAN)--have been proven to reduce management costs as a percentage of overall storage costs.

And there are many other benefits of SANs as well, including:

* Increased disk utilization

* Reduced data center/rack floor space

* Improved data availability

* Improved LAN/WAN performance

* Reduced storage maintenance costs

* Improved protection of critical data

With SANs, expanding storage to keep pace with data growth is as simple and economical as purchasing a disk array or adding drives to an existing disk array.

But, how can an IT manager gauge return on investment of a SAN? One way is to determine total cost of ownership (TCO) for three alternatives: an iSCSI SAN, a fibre channel SAN or traditional direct-attached storage (DAS). This paper illustrates how a SAN is a cost-effective way for IT managers to scale storage to meet the demands of their burgeoning data growth.

iSCSI SAN vs. FC SAN vs. DAS: An Analysis of TCO

There are two types of costs associated with purchasing new storage. The first and most easily recognizable are the hard--or direct--costs. These costs bear directly on the IT budget and include capital spending, labor, outsourcing, professional services, support contracts, and training. Hard costs are usually out-of-pocket expenses at the time of purchase of new storage.

The second type of costs--soft, or indirect--are less tangible, and often hidden. They typically result from reduced staff productivity or lost business revenue when a system goes offline, such as for an upgrade, for repairs, or to accommodate large backup windows. Both hard and soft costs must be considered when calculating TCO for any storage investment.

What follows is an analysis of what a typical company would go through in planning to expand its storage capacity by 2TB over the next 12 months, including how the company would calculate TCO for their various storage options. The types of storage the company is evaluating are:

* SCSI-based DAS

* SAN using high-performance fibre channel

* SAN using low-cost iSCSI

The costs that are of most interest are:

Hard Costs

* Total acquisition cost

* Total annual administration cost

* Total capacity utilization

Soft Costs

* Storage availability

* Cost per downtime hour (based on estimated downtime)

Factors most relevant to the IT team's evaluation include:

Hardware

* Installation

* Support

* Scalability

Software

* Administrative (discovery & configuration)

* Data management

* Reporting (usage & failures)

Following, is an itemized list of the hardware and software costs to deploy an iSCSI SAN, a fibre channel SAN, and a traditional SCSI DAS solution. Once hardware and software costs have been estimated, the TCO and ROI for each technology can be calculated.

Determining Costs

Administrative Costs

The storage management ratio between DAS and SAN is 5:1--meaning it takes five times as many administrators to manage DAS storage as the same amount of SAN storage. Additionally, one administrator can manage a maximum of 4800GB of SAN storage. Using the 5:1 DAS to SAN ratio, one administrator can manage 960GB of DAS storage.

Capacity Utilization Costs

Based on the finding of a Merrill Lynch/McKinsey study that a SAN is far more efficient than DAS in using available disk space--85 percent versus 50 percent disk utilization, respectively--a company doing a TCO analysis like this would calculate that a SAN provides 35% more storage available for future growth.

Soft Costs

The primary factor used to determine soft costs in an analysis such as this is unplanned downtime. To calculate downtime, a company would review the reliability of its DAS system over the past year. Such a review in this sample analysis reveals 70 hours of unplanned downtime (5.8 hours per month), for 97.8% availability (based on 12 hours a day, 5 days a week). Based on industry data on SAN availability, a company could reasonably estimate that a SAN would experience only one hour of unscheduled downtime per year, for an overall availability of 99.96%. Thus, a company doing this analysis would base its soft-cost calculations on 97.8% uptime for a DAS and 99.96% uptime for SAN.

To determine the cost of downtime, a company doing this analysis could use the industry downtime cost estimates in "IT Performance Engineering & Measurement Strategies: Quantifying Performance Loss," an October 2000 report by the Meta Group. This study showed the average revenue lost per employee-hour for a 2,000-employee company was $248.65, and the loss totaled $497,300 if all systems went down during peak work hours. A company doing this calculation could assume that unplanned downtime would affect only 5% of its work force (a conservative estimate) and thus cost it $24,865 per hour.