Storage budgets shrink as capacity grows

Market research shows data keeps growing while budgets shrink in tough economic times, leading storage administrators to look at new technologies to cope.

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Storage capacity buying decisions these days are influenced by two indisputable trends that have storage admins at the center of a tug-of-war: IT budgets are being slashed or remain flat while data continues to grow.

Data from market research firms and interviews with storage admins underscore how those two factors are influencing buying decisions as the economy continues to struggle.

"We're predicting data growth rates at roughly 25% to 30%, and storage budgets up 3% in 2009," said Brian Babineau, senior analyst at Milford, Mass.-based Enterprise Strategy Group (ESG). "People will have to buy smarter, use data-reduction technologies and manage retention wisely to improve utilization."

A survey of Fortune 1000 companies by New York City-based TheInfoPro Inc. late last year found only 32% of respondents expect their 2009 budget to be the same or more than last year. That number was 81% in a similar survey last year. However, TheInfoPro's most recent survey found 32% spent less than their original budget in 2008.

Rob Stevenson, TheInfoPro's managing director of storage research, said organizations will have to make do with large increases of storage capacity purchased in recent years.

"There's a hurricane hitting now," Stevenson said. "You're seeing a lot of people cut by at least 25%. In 2008, they bought in volume, using previous years' growth rates to guide their purchases.

"This year, people have more storage than they need because they overpurchased in 2008," he added. "There was also a strong product refresh rate in 2008 -- people thought things would get tougher, so they refreshed legacy gear more aggressively."

Purchasing surveys by Storage magazine and SearchStorage.com last year show a similar trend. Respondents said they expected to purchase an average of 47 TB over the next year when asked last March, but that number dropped to 39 TB in the September survey. The 47 TB average was the highest in the five years the survey has been conducted, but buying expectations returned to recent historical numbers in the fall.

IDC, Framingham, Mass., predicts IT spending will fall from 5.1% growth in 2008 to 2.6% this year, with all of the growth coming in Asia-Pacific before it will begin rebounding next year. IDC's forecast calls for flat spending on external storage this year.

"When we look at capacity being deployed, we look at it continuing to grow," said Rick Villars, IDC's VP, storage systems. "Information creation is increasing as we move to a digital economy. Companies are looking at growing and storing information against economic and business pressures. Technologies that bolster storage efficiency and boost capacity utilization are going to have growth opportunities."

Eric Burgener, senior analyst and consultant at Taneja Group in Hopkinton, Mass., agrees that storage administrators will turn to better storage management to cope. He sees data deduplication and compression as popular technologies this year.

"I think the economy will push people to consider storage capacity optimization," he said. "A lot of people have data that is growing 50% to 60% a year. That data tsunami is really causing a lot of problems."

Storage budgets shrink as capacity grows

Stevenson said research from TheInfoPro shows tight budgets have more organizations willing to switch storage vendors to get better pricing. "They're saying, 'If you can take 20% out of the budget, I'll let you take over the environment,'" he said. "It's becoming far more of a commodity-based market than we've seen in a long time."

When acquisitions doubled healthcare records provider MultiPlan Inc.'s storage capacity needs and tripled the claims it processes in a year, Keith Bush said he turned to a Copan Systems Inc. deduplication and archiving platform to make more efficient use of his storage tiers.

Bush, who is senior vice president of information technology at New York City-based MultiPlan, estimates his company's savings at $1 million over three years by installing two Copan disk systems with dedupe and disk spin down. He said the savings were "based on offsite storage costs, recouping more expensive DMX disk as we would grow. We could recover that more expensive disk and use it for our transaction systems."

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