TIP interviewed 250 IT professionals at Fortune 1000 and midsized enterprises in its Wave 12 Storage Study – the first of two studies planned for 2009. Capacity planning and forecasting, storage performance monitoring and storage resource management (SRM) ranked high on TIP's Fortune 1000 Heat Index, which measures organizations' spending and implementation plans.
Robert Stevenson, managing director of storage research at TheInfoPro, said the latest survey shows higher allocation and effective utilization of data storage in large enterprises. He attributes that to more consolidation and tiered storage projects as companies seek to avoid purchasing new storage. He said storage and application teams are working together on these initiatives.
Stevenson said he's noticed increased collaboration between storage and networking teams in Fortune 1000 data centers. "Organizations are increasingly pooling resources between storage and networking teams," he said. "The skill set required of a storage professional is now much broader, encompassing storage, servers, server virtualization and replication. As FCoE [Fibre Channel over Ethernet] starts to be deployed, there will probably be further consolidation between storage and networking groups."
Allocation utilization rates indicate fewer new storage purchases
Stevenson said organizations usually purchase new storage when allocation utilization hits approximately 75%. Allocation utilization rates in large enterprises have gone up to 55%, so new purchases will likely be stalled.
Half of the Fortune 1000 firms surveyed by TheInfoPro said they're cutting spending, with budgets estimated to decrease an average of 25%. Enterprise customers in particular are cutting funding of projects they consider "overly complex" or "overly long" – more than eight months – such as rolling out new storage virtualization or disaster recovery (DR) plans.
Midsized enterprises are more likely to buy new storage this year. They're at approximately 80% allocation and aren't finding enough excess capacity to delay purchases. Here, budgets are flat, according to TIP.
Hot technologies suggest uptick in storage resource management
Capacity planning jumped from 10th on the previous Heat Index to first in TheInfoPro Wave 12 Storage Study. The attention to resource planning and management is interesting, considering storage resource management software has never been a big seller.
However, organizations' stated priorities don't necessarily match real-world outcomes, points out Andrew Reichman, senior analyst at Cambridge, Mass.-based Forrester Research Inc. "It makes all the sense in the world when organizations are squeezed to do reclamation, and that requires visibility you simply don't have enough of without SRM tools," he said. "The question is whether enterprises will really adopt it."
TIP's Stevenson said enterprises are allocating less storage on top-tier data storage systems. Three years ago, tier 1 represented 70% of Fortune 1000 companies' capacity. That number is now 46%. Meanwhile, the number of tiers within the enterprise has decreased from an average of 3.7 to 3.2.
Pricing concessions vs. lock-in
TheInfoPro Wave 12 Storage Study also shows that while organizations gained pricing concessions from large vendors late last year, they often traded lower prices for giving their business to fewer vendors.
The number of storage vendors that organizations maintain relationships with dropped from an average of 12 to 11 in large enterprises. Stevenson said that means enterprises are "talking less to the smaller guys."
As the economy collapsed late last year, big vendors such as EMC Corp. began negotiating sales to match declining budgets, Stevenson said. The percentage of EMC customers who said they were considering switching from the vendor fell from 14% last fall to 8% in the most recent survey. Stevenson attributed that drop to discounting, and expects other large vendors to follow EMC's lead.
However, customers may exchange lock-in for a better deal. "EMC may cut a deal for big-ticket items like SRDF, for example, but the user might give them more replication business by hooking up their Hitachi array through [EMC] RecoverPoint," Stevenson said. The vendors "lose money on some deals, but gain market share in replication."
Forrester Research's Reichman warned that customers should carefully consider the long-term consequences of this approach. "Storage always has very high switching costs, and a company setting itself up to be locked-in is dangerous," he said "The vendor might give you a really good deal, but, in reality, it's predatory."