Last year, an IT manager at a large manufacturing company went through the RFP process to find software to manage several hundred terabytes of mainframe and open systems storage. The winner was management software kingpin BMC.
The company's Patrol Storage Manager (PSM) had reaped praise for its innovative application-centric approach. Even after a tough negotiation where the price dropped by nearly a third, BMC walked away with a $2 million deal for PSM and related products. But in February 2003, BMC pulled the plug on PSM, leaving PSM customers with no roadmap for distributed storage management.
|When the partner stops dancing|
A storage manager at an unnamed, large manufacturing company was stunned to learn when browsing technology business headlines on the Web that BMC had suddenly killed its Patrol Storage Manager product. The manufacturing company had only purchased the product some months before and had been diligently trying to implement it. In fact, the effort required considerable development work on their part.
"We had been investing a lot of time and effort into this," he recalls. Their efforts also put them in pretty frequent contact with BMC technical people. No one had said a word about this--not even a hint that BMC might kill the product. Even their account manager didn't know what was going on.
Implementation efforts immediately stopped. After spending months to select the product and negotiate the deal and then spending months more trying to implement the product, the manager, his staff and the executives above him were furious. "We are all too busy to waste our time spinning our wheels for nothing."
Although there won't be any negative career ramifications at the manufacturing company as a result of what is now seen as a fiasco, everyone agrees that they were used, abused and deceived by BMC.
"We had been giving them a lot of valuable testing and feedback," the storage manager says.
Now they have to restart the tool selection process from what amounts to square one. And more importantly, critical management capabilities they needed yesterday won't be available for months--at the earliest.
From a financial standpoint, the situation is even murkier. The diversified manufacturer does a lot of business with BMC. In the end, corporate purchasing folded the deal for Patrol Storage Manager into a much larger package that provided a huge aggregate discount while blurring the price distinctions among various products. Whatever they paid, the storage manager assumes, will be applied to some other products in the overall mix.
The end of this story is not yet in sight. "Now we're wondering about all our other BMC products," he says.
Gary Pilafas, senior storage and systems architect at UAL Loyalty Services, a subsidiary of UAL Corp., recently needed to automate the management of 21TB of storage. He shopped aggressively and bypassed most of the household names in management software before settling on CreekPath, the Longmont, CO-based startup, for a sale that cost approximately $300,000.
Unfortunately, many storage managers are facing a similar dilemma: either buy a large, expensive product from an established player or buy a more focused, less expensive product from a startup. In either case, you better hope the product works, the company stays in the market and that it lives up to its value proposition.
It's not that vendors are getting fat off of you--most complain they're not making any money in storage management, sales take too long and development costs are too high. So what gives with storage management software? Is it too expensive? Is it too hard to buy? Or is it too complicated?
BMC's problems seem to have been a mix of their own private woes and ones afflicting a number of other storage software vendors. BMC acquired Mountain View, CA-based Remedy, a help desk software company, for more than $350 million last September. A bad economy flattened growth and reduced revenues in areas the company had recently entered and marked for investment, such as distributed storage management. But some of the reasons behind BMC's lack of sales were common afflictions among software vendors:
- PSM was a complex product that had a lengthy evaluation process.
- High sticker prices led to prolonged negotiations and dramatically lowered selling prices, but at the end of the day, it was still a lot of cash.
- PSM had a lot going for it, but it took a long time to deploy--particularly with recession-restrained staffs--and still, it was only a partial solution that didn't always work.
To make the price of storage management software more palatable, vendors are throwing out their list prices and adopting a variety of pricing models (see "Storage management automation pricing models"), which means that prices are all over the map. If your vendor rep says "that depends" when you ask for a price, they're probably telling the truth.
For example, when BMC was still in the open systems storage management business, it listed the price of managing a terabyte of storage at $40,000, but even when that price was discounted, it didn't reflect what the actual cost would be. First, you needed BMC Patrol as the system management foundation. Then you needed specific management functions--such as storage resource management (SRM)--which were bundled together at an additional price. And then you'd have to buy various knowledge management modules to manage the equipment of different vendors. So, you could drive down the initial list price only to see the price bounce way up when you added in everything you actually needed to do the job.
Similarly, Computer Associates (CA) recently introduced BrightStor Portal, which provides a single point of management control for the enterprise storage environment. The cost of the portal is $35,000 with a 50-seat license, but that doesn't begin to include the cost of the functional modules that enable you to actually do anything.
Nigel Turner, senior vice president at CA's BrightStor storage solutions group asks: "What's the value in ensuring your storage environment is always available and under control?" Well, unlike the stuff you buy with MasterCard, it's not priceless. "A large enterprise wanting to deploy the whole breadth of functionality is looking at a cost of millions of dollars," Turner says.
Like most software, storage management automation prices include high margins--70% or higher--according to a former vice president of marketing at a storage management service provider who wanted to remain nameless. Storage management vendors, therefore, are more than willing to cut prices, he explains, although they'll try to make up for it through the sale of accompanying professional services.
Young companies will cut prices even more, he adds, because they don't have a huge legacy code base to maintain and are desperate to build a client roster. The typical deal price for large enterprises--when he left the storage management service provider in mid-2002--ran about $500,000, but a few deals ranged as high as $2 million. Again, the extra money buys the management of more vendor platforms and more devices--not more or different management functionality.
Beyond a willingness to deal, vendors also have been experimenting with various software licensing schemes. Traditionally, management software is licensed based on the size of the server on which it's installed. Some storage management software vendors now offer pricing based on the number of managed switch ports or the managed storage capacity.
InterSAN, which focuses on automating storage area network (SAN) storage provisioning, prices its licenses based on capacity. As the number of terabytes of managed storage increases, so does the cost. "In the past, companies typically spent 10% to 14% of the hardware cost on management. We try to keep in line with that number," says Karen Dutch, InterSAN's vice president of marketing. The payback comes from the automation of the provisioning task. Using InterSAN's automation, it takes less than an hour to provision one volume to an application running on one server, she claims. InterSAN sells its products directly and through Hitachi Data Systems and its integrators and VARs.
BMC also followed the capacity model. "It makes no sense to tie storage management to the number of servers or seats," says Dan Hoffmann, BMC's director of marketing. With the capacity model, however, you need to read the fine print to understand how capacity is determined. BMC considered 2TB of mirror storage to be 4TB of available storage, and calculated the price on the larger figure.
CreekPath Systems Inc., bases its price on the number of switched ports in the networked storage fabric, with an additional fee for direct-attached devices. The basic price buys you the management platform, workflow and policy engines and the security model. Customers typically spend $300,000 to $400,000 initially, says Victor Walker, CreekPath's president. The payback comes from faster provisioning--minutes rather than hours--and better utilization (80% or higher).
CA follows conventional server-based pricing. "This is the same model we use for all Computer Associates software products," says Turner. In addition, most customers purchase deployment and integration services.
Fujitsu Softek is guaranteeing a 25% increase in existing capacity utilization after installing its Storage Manager SRM solution. If you don't see a 25% improvement, both the server and client licenses are free for one year.
Since the guarantee was announced last August, no one has come close to collecting, although customers have vowed to hold the vendor to it, says Scott Kennedy, Fujitsu Softek vice president. Only an exclusively mainframe storage environment, which often experiences 75% storage utilization, he concedes, has a chance of collecting on the guarantee. Once open systems storage is factored in, utilization typically plummets and recovering lost or wasted storage becomes easy with an automated SRM tool like Fujitsu's, he says.
Whether it's the new pricing models, a highly competitive market or a dismal economy that's driving vendors to scramble for any piece of business, storage management automation buyers are finding attractive deals. For example, United's Pilafas initially favored Veritas, but even with a 42% percent enterprise discount, the Veritas solution still proved too expensive.
CreekPath gave the company the automated provisioning and reporting it most wanted, and "it had a great roadmap--exactly where we want to go," Pilafas says.
Worth it at any price?
The $64,000 question for storage managers: If the point of storage management software is to reduce resource requirements, do expensive products make sense? Even at a fully loaded cost of $100,000 per admin, $1 million can buy you 10 people. And, if each admin handles a couple of terabytes of storage or 10TB or 20TB, you can manage a pretty sizeable storage environment manually for the price of comprehensive storage automation. And that appears to be what many storage managers are thinking, yet that line of thought may not fully reflect reality.
"If we had a million dollars, we still couldn't hire enough storage administrators. We can't find them or get them here," says the manager of a manufacturing company based in the Midwest.
And the amount of storage each administrator can handle manually turns out to be pretty small in comparison to enterprise needs. Administrators at the manufacturing company firm currently manage 2TB to 5TB of storage. "We'd need to get at least 20TB to 25TB per administrator," the manager adds.
To make matters worse, storage admins can barely keep up with the basic management chores. "The manual approach will work when you have tens of devices to manage, maybe even a few hundred, but as soon as you have thousands, there is no way in hell you can do it manually," says Bill North, research director of storage software at International Data Corp. (IDC), Framingham, MA.
For large enterprises, "you can't hire your way out of the storage management problem. If nothing else, the learning curve will kill you. The technology is changing frequently."
The situation, then, would appear to demand enterprise storage management automation. The products now on the market offer a diverse range of capabilities from storage resource discovery and mapping to automated provisioning to capacity planning.
Enterprise Storage Group, Milford, MA, identifies five functional areas of enterprise storage management: storage network management, storage resource management, virtualization, data management (backup) and policy management.
"Most of the players combine some or all of these elements," says Nancy Marrone, a senior analyst at ESG. But there's a problem: "You still need a lot of products to manage end to end. No one has everything," she says.
Fujitsu Softek's Kennedy, differentiates between "cardboard box" software device-specific software that comes with a purchase. There's straightforward SRM software which lets you report on your infrastructure, but provides few proactive management capabilities and application-centric storage management software, complete with policy-based management capabilities and automation. Unfortunately, building application-centric storage management software is neither cheap nor easy.
"Policies and automation are at the crux of getting to a mature management layer, but what it takes to get to this level is a lot of work," Kennedy says. "But it's work that's got to be done, because it's the applications that drive the business."
Meanwhile, most organizations aren't ready to automate storage end to end. Rather, they typically start small and "focus where they are hurting most," Marrone says. A focused approach lets companies implement some storage automation and get a fast return on their investment. "If you can reduce the cost of managing storage from eight times the acquisition cost to three times the cost, that's a huge savings," Marrone points out.
A fast ROI is critical, given the high price of storage automation. At least in terms of published prices, storage management automation on an enterprise scale is expensive by any yardstick. Even if an enterprise pays just $125 to put a management agent on a device, the costs can mount when it has thousands of devices to manage.
"I've seen prices of $250 per device and, yes, it is painful," says IDC's North. However, the price, he adds, is still less painful than trying to find, hire, train and retain people to do tasks that software can do better and faster. At some point, the sheer complexity of managing a growing multivendor, networked enterprise storage environment will overwhelm any amount of manual effort.
For small organizations and those with simple, generally static storage environments, storage administrators are probably cheaper, at least in the short term. For organizations facing rampant storage growth and highly complex storage environments, no team of administrators, however large, can keep up with the management. Storage management automation offers the most practical long-term option today. But you'll need to find a pricing model that works for your organization, and then negotiate hard. Alexandra Barrett and Mark Schlack contributed to this story.
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