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OpenStorage Procurement: Enterprises Pay for Storage 5 Times

JohnMacBy John McLaughlin, Principal Field Engineer, OpenStorage Consultant

Over the course of the 5-year lifetime of a typical enterprise storage system, organizations will pay for that storage about five times.

The first time, the time that gets the most attention, is the initial acquisition. That’s where sales people makes their commissions and procurement departments justify their existence. End-of-month, end-of-quarter, and other special incentives can help sales people persuade customers to “act now.”

Procurement specialists who know the inside secrets of deal-registrations leverage competition between resellers and between manufacturers. They think that they are getting the best deal because they got a big discount, but did they minimize the total lifetime cost of the new storage system for their organization? Don’t expect that to happen by accident!

What are the other 4 times that organizations pay for storage over its lifetime and how should IT Management work to lower those costs? As the lifetime costs will be significantly higher than the acquisition costs, more effort should be taken to lower those lifetime costs than were expended during the initial purchase, yet for too many organizations they are ignored.

Enterprises also pay for storage via their electricity bills. Over the life of a modern  storage system, enterprises will spend as much on electricity to power the system as they spent on the initial purchase.

At best, energy efficiency shows up as a feature of the new system, but more often, that cost is ignored by procurement and by the IT department.

It’s not too hard to figure it out power costs.  Find out the power rating of the proposed solution and look up your power costs (e.g. 10c per kilowatt/hour), then multiply:

Storage system power rating (kilowatts) *  cents per kilowatt hour * 24 hours * 365 days * 5 years = estimated 5 year power bill for that storage

The next cost enterprises pay,  cooling in the data center, is, in the minds of most IT managers, somebody else’s problem. Yes, they know that their organization pays those costs, but those costs don’t hit their budget, so they don’t get factored into their decisions.  Few procurement departments are aware of those costs and how to factor them into business decisions.

Very efficient data centers have a PUE (power usage efficiency) rating of about 2.5.  i.e. for each watt of power delivered to a server, or storage system, 2.5 watts has to be delivered to  the data center. So, to factor power consumption and cooling, multiply the estimated power consumption costs by 2.5 to obtain the total cost of powering and cooling a new storage system.

Enterprises also pay for storage via their support model with the vendor. Most organizations who put enterprise storage systems into production will only do so with a software/hardware support contract. Add up those costs for the 5 useful years of production and it’s close to the acquisition price.  As a rule of thumb, budget 10% to 20% of the equipment’s list price per year and add 5% per annum.

Some very successful enterprise storage vendors will encourage new customers to buy enough capacity to handle three years of growth (at 30%  to 40% per year) to drive up the initial purchase price and future maintenance costs.  It does make life easier for procurement and the IT staff, but at a cost.

Three strategies to lower support costs: pay less for the initial system, buy capacity just-in-time, use the same equipment as compute and storage servers to get better volume discounts.  

The fifth time you pay for storage is for the cost of administration. The more complex and less flexible a system is, the more time it will take to manage.

 Look to these storage system features to lower admin costs:

  • Unified storage - one storage system for NAS and SAN to manage

  • Pooled storage – just add disks to the pool and assign storage as needed

  • Scalability – just add JBODs for capacity, from 10’s of TB’s to 100’s of TBs; replace old disks with newer higher capacity disks every 3-5 years

  • Clustered heads – with two “heads”, admins can do maintenance and upgrades on-line during normal business hours

  • Performance – leverage hardware for performance issues – e.g. use DRAM and SSDs for automatic caching – they get less expensive every year

A new cost that you may have to consider is  disposal – what do you when the gear gets decommissioned ? Do you have to pay someone to dispose of the old gear in compliance with the law? Can the hardware be repurposed? If the storage system is built from industry standard hardware, it is easy to repurpose.

Talking of recycling, can you reuse the software license from your old storage system on a new system? That can take a chunk out of the cost of the replacement system, which you might as well plan for as no storage system lasts forever.


  1. During Acquisition, leverage commodity products and competition to get the best deal. Buy just the capacity that you need and add more as you grow.

  2. During Operation, reduce  Power, Space and Cooling costs by leveraging SSD for IOPs and power-efficient, 7200 RPM disks for capacity

  3. Lower Support costs by lowering the acquisition cost  as support costs are usually a percentage of acquisition price.

    Use the same kind of servers in your storage farm as your server farm to get better volume discounts

  4. Select a storage system that is easy to manage and easy to grow to lower your administration costs

  5. Plan to repurpose hardware and software licenses when it’s time to replace the storage system in 5 years

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Bill Roth is a Silicon Valley veteran with over 20 years in the industry. He has played numerous product marketing, product management and engineering roles at companies like BEA, Sun, Morgan Stanley, and EBay Enterprise. He was recently named one of the World's 30 Most Influential Cloud Bloggers.