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SD2002: Charging internal users for storage gains momentum

SD2002: Charging internal users for storage gains momentum

CHICAGO -- Under increasing pressure to morph from cost centers into profit centers, storage IT departments are considering charging internal customers for the use of their services. Known as a charge-back system, the concept isn't new, but it's just now catching on with storage administrators and other IT professionals.

The subject of charging internal users for the amount of storage they use and services that tap IT, such as data recovery, created a buzz here at the Storage Decisions 2002 user conference. While there are currently only a handful of storage departments actually billing customers, a number of storage administrators here said they are giving serious consideration to the idea.

The reason is simple: survival.

"IT has to become a profit center," said storage analyst Steve Dupliesse, Enterprise Storage Group, Milford, Mass. "It's about being strategic as opposed to being tactical. Turn IT into a profit center; it instantly becomes strategic."

Dupliesse contends that as a strategic player, IT will be better positioned within an organization.

Dupliesse, a proponent of the storage-as-a-utility model, which encompasses the charge-back way of doing business, said that while charging customers is not a common business practice in the storage industry, in three to five years, it will become the norm.

Barbara Bennett, a storage systems analyst with Seattle-based Boeing Co. and a speaker at one of the conference's user roundtable sessions, is further along with the process than most. The incentive to begin billing internal customers came from the top and was a tactical decision, she said. Her department is currently considering the most suitable cost model, but she doesn't expect any of her customers to squawk about being charged. In fact, Bennett said that once users understand that they're only paying specifically for what they use and that they can monitor their usage, their "appetite" for a charge-back system "is very great."

William Crosby, senior vice president for the Bank of New York, said his department began to move toward a charge-back model about six months ago in an attempt to make it easier to deploy and manage storage. He also said that a great deal of storage space at his company has been wasted because of inefficiencies in how the space was allotted. Crosby said he hoped that a charge-back system would eliminate some of those inefficiencies by making both IT and the user more accountable for usage.

"If the customer understands there are charges associated with storage, they're likely to be less inclined to demand it or waste it," Crosby said.

Currently, Crosby, like Bennett, is in the middle of developing a cost model.

One of the things that's different about traditional charge-back models and the models currently being developed is how users are charged, Dupliesse said. It's one of the things that makes moving to a charge-back model so complex.

It used to be that users were charged for capacity only. Now, businesses are charging according to a number of variables, such as the nature of the data, and how critical it is. Crosby, for example, said he's developing a tier model in which users are classified by tier, tiers are determined by the need, and each tier has its own specific pricing.

Both Bennett's and Crosby's move over to a charge-back system coincided with the implementation of a centralized storage area network.

Dupliesse said that it's absolutely vital for storage administrators to know their costs before beginning a charge-back policy. But, he added, this change has nothing to do with technology. "The biggest deal is changing mindset," he said

For more information

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