TCO analysis: does it work for storage?


This article can also be found in the Premium Editorial Download "Storage magazine: Optimizing your enterprise database storage."

Download it now to read this article plus other related content.

Comparing vendors
The Gartner model likely will make vendor comparisons although the model in its current version deliberately doesn't lend itself to such comparison. This proved somewhat contentious in the Gartner-led sessions where the details of the model were hammered out. "We wanted to do a comparative tool, but the big vendors pushed back," says Gabe Gotthard, vice president of 3PARdata.

Requires Free Membership to View

Gartner TCO cost factors
Capital costs (fixed, leased or depreciated assets): hardware, software, infrastructure (hubs, switches, routers, directors, etc.), facilities and high-availability costs
Labor costs installation, operation, management, performance, security, capacity planning, evaluation and support of storage technologies; and finance and administrative costs associated with procurement, budgeting, asset tracking and outsourcing contract management
Services costs disaster recovery contracts and expenditures, outsourcing services

The problem with vendor comparisons, says Roger Schwanhausser, IBM Global Services' director of the data and storage infrastructure practice, "is the difficulty of holding all the factors constant so you can make apples-to-apples comparisons." In addition, he says, TCO should be only one of many factors in a purchase decision.

With that at least IT managers and the vendors agree. "TCO is one of many factors we use in making storage decisions," says Michael LaPorta, senior project manager, TXU Energy, Dallas. The biggest factor at TXU is how well a given storage technology meets the company's needs. "Neither acquisition cost nor TCO is a primary factor if the product does what we need."

Similarly, at the Parker-Hannifin Control Systems Division, Ogden, UT, an aerospace manufacturer, storage is such a critical part of the company's IT infrastructure that need-not TCO-drives purchase decisions. "When it comes to things like backup, TCO isn't pertinent. At best TCO is most helpful when making budget projections," says Jack Norton, systems analyst.

So many TCO factors are open to interpretation that vendor comparison indeed can be difficult. "How you allocate management costs is important. A slight change in the management cost makes a big difference in the final result," says Russell Fellows, strategic marketing manager at Sun Microsystems. "We claim a low TCO due to our efficiencies of management," he adds. 3PAR, too, claims low management costs, less than one-quarter those of big enterprise storage vendors.

Vendor modifications
Gartner bills the model as vendor-agnostic, but most IT managers won't likely ever see a truly vendor-neutral version. "We're releasing a version for vendors. They can put in their own costs," says Gartner's Stanley.

That certainly opens the model to the potential for vendor manipulation although Stanley says the model cannot be readily tampered with. "Vendors could downplay some features or show 99.999 uptime that users aren't likely to achieve, but this model is not easily subject to this kind of thing," he says. (See "Manipulating TCO models") To guard against egregious vendor manipulation, the model uses Gartner's own data, which can't be altered by a vendor, as the baseline. If a vendor's permitted changes go too far, the model would reject them, Stanley says.

CIOs focus on hardware costs when thinking about TCO
1.Upfront cost of storage devices
2.Cost to scale storage
3.Cost to switch architecture
4.Cost of storage software
5.Cost of people to administer storage
6.Cost of implementation
Upfront costs are the most visible during rapid data growth
Despite being the largest cost, people costs are less visible because they are hidden with cost of administering servers
Source: Merrill Lynch Reality Check Survey, 2/2001.

"We will adopt [the Gartner model] without abandoning our regular approach," says IBM's Schwanhausser. He doesn't expect to modify the model other than to change how it summarizes and presents the results.

StorageTek, Louisville, CO, expects to modify the model only as its pricing and environmental factors change, reports Pete Koliopoulos, director of product marketing. "We wanted the flexibility that things could change over time," he says.

3PAR also expects to make modifications. "We will add in things based on our capabilities," says Gotthard. Thin provisioning could be a huge factor, reducing the amount of storage initially required by a factor of two or three, but it is not in the model," he says. But you can bet it will be in 3PAR's version.

The model mainly gives vendors their say in the qualitative sections, particularly the gap analysis part, says Kristen Newton, senior manager/analyst relations at Network Appliance Inc. "Each vendor will be able to make their own case," she says.

Beyond TCO
Storage managers may find the new Gartner storage TCO model with its emphasis on aligning storage with business requirements more useful than straight TCO. The new Gartner model is still intended to reveal the cost of running the storage environment, but in the context of "the ability to deliver services that, at a minimum, meet the needs of the enterprise," says Stanley. Only by measuring the levels of services being delivered by the data center and comparing them with the total cost to deliver that service level, Stanley contends, can organizations balance cost efficiency with service delivery.

To do this, the Gartner models calls for identifying and segmenting service levels by class of service (COS), since not all applications require the same levels of storage. Gartner defines a COS as a common set of storage services that are delivered to meet a corresponding set of storage requirements. "Once COS' are determined, the level of business requirements and the level of services delivered must be evaluated," Stanley says. The Gartner model then calls for gap analysis to identify differences between expectations and services actually delivered. For each COS, the manager must assess such factors as security, performance, connectivity, scalability, availability, recoverability and manageability. The Gartner TCO model also asks storage managers to forecast future storage needs and understand utilization and their storage-per-administrator ratio-key factors in lowering storage costs. Eventually, the model will direct managers to estimate future cash flows required to support the various solutions offered by vendors to finally arrive at the storage ROI, in effect merging TCO into ROI.

CIOs focus on hardware costs when thinking about TCO
These costs are often overlooked in TCO analysis:
Storage management
Capacity planning/allocation
Configuration changes
Performance evaluations
Data protection
Cost of planned/unplanned downtimes
Cost of data recovery
Costs of business damage

Clearly the model asks a lot of IT managers in terms of providing initial data-data not readily available in most cases. "It is even hard to get a basic inventory of the storage assets," says Schwanhausser, and the Gartner model asks for that and much, much more. Faced with a massive data collection effort, many managers will opt to accept the vendor defaults built into the model.

The Gartner model goes beyond the initial modest aim of TCO-how much will this piece of technology cost me to own and operate over some period of time-to provide a blueprint for managing an enterprise storage environment. It still, however, suffers from the ever-present danger of questionable data (garbage in, garbage out) and the potential for introducing vendor bias, no matter how well Gartner tries to guard the model from manipulation.

It's not clear if IT managers will flock to this new TCO model. The early reaction is less than enthusiastic. "Managers aren't really asking us for TCO," says Esposito. Whether they will once they get a whiff of the new Gartner model remains to be seen.

Web Bonus:
Online resources from SearchStorage.com: "Storage management hassles and headaches" by Giao Tran.

This was first published in November 2002

There are Comments. Add yours.

TIP: Want to include a code block in your comment? Use <pre> or <code> tags around the desired text. Ex: <code>insert code</code>

REGISTER or login:

Forgot Password?
By submitting you agree to receive email from TechTarget and its partners. If you reside outside of the United States, you consent to having your personal data transferred to and processed in the United States. Privacy
Sort by: OldestNewest

Forgot Password?

No problem! Submit your e-mail address below. We'll send you an email containing your password.

Your password has been sent to: