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Per-TB licensing changes behavior, impacts efficiency

Once again I’ve run into an information technology director faced with acquiring software for storage that was licensed on a per-terabyte basis. Like others I’ve talked to in that situation, he made his decision based on that charge and not by taking into full consideration what he needed. The cos-per-terabyte charge can be so large that it has an impact on efficient storage operations.

The cost-per-terabyte charge applied in storage varies depending on the product and the vendor. Vendors are not even consistent from product to product on the charges. A few of the different ways they are represented to their customers illustrate this frustrating point:

Per terabyte of managed capacity is a common charge for storage management software. Unfortunately, vendors definite managed capacity differently.

  • Terabytes presented to the host is another measure that requires reading the fine print to understand. It usually means the capacity that that the operating system can see from the storage system. That method of measuring does not reduce the license cost for data reduced with deduplication or compression by the storage system.
  • “Terabytes used” is a broad brush charge specific to the application. It usually means the amount of actual data being stored.
  • Total capacity is the amount of raw terabytes of the storage system, regardless of the efficiency of utilization.
  • Replicated terabytes is a common measure for remote replication software that charges by the amount of data moved to the replicated storage system. Usually this is raw terabytes, and is charged if the data is compressed or not.

Charging by the terabyte often causes unnatural behavior by IT. There can be big efforts to move data around to isolate it from the per terabyte charge of software. Another behavioral change is that IT makes a decision to not use the best management software based on evaluations but go with one that has a more favorable (in their terminology, “a less ridiculous”) pricing model. These actions mean that the best features of the storage software are not used, and the best product does not always win out.

Vendors have reasons for charging by the terabyte. It produces a continuing revenue stream for them, and they argue that customers continue to get value from their product so they should continue to pay. They usually add a maintenance charge to pay for support and updated versions.

There is a stark contrast in the way the storage system is priced compared to the software. The storage system is purchased with a single price in most cases, and there is a warranty period for several years. The charge per terabyte software licensing appears to be gold mine compared to the payback from the storage hardware.

Maybe the charge per terabyte is not really equitable for customers, and their dislike of the practice (much stronger terminology would be appropriate) is justified.  It certainly gives validation to the open source movement.

Licensing charges do affect product and management decisions, and lead to less than optimal solutions. They also lead to a product not being as pervasive (number of accounts using) as would be expected from the product’s value. Making the customers change their behavior because of the pricing model is an example of vendors not listening to the customers and inviting competition.

(Randy Kerns is Senior Strategist at Evaluator Group, an IT analyst firm).

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