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SM2003: Expert opines on avoiding the 'ROI trap'

One Meta Group analyst says that relying on TCO and ROI estimates is a mistake when it comes to measuring how storage management impacts the bottom line of your business.

CHICAGO -- No two abbreviations are feared more in the IT industry than TCO (total cost of ownership) and ROI (return on investment), but according to Phil Goodwin, research director for the Meta Group Inc., Stamford, Conn., it doesn't have to be that way.

Goodwin kicked off the Storage Management 2003 conference Wednesday by telling the hundreds of storage users in attendance that there's a better way to prove your case when making a storage purchase.

"Today the vast majority of organizations focus on ROI and TCO. It's a fallacy to use these metrics when evaluating storage purchases," Goodwin said.

It's not corporate America's fault. Goodwin said that senior management doesn't have a better way of measuring effectiveness. "[TCO and ROI] have become the default metrics," he said.

"You need to measure the effectiveness of storage management by finding meaningful metrics. If you can't measure it, you can't manage it," he said.

Two-thirds of the end users in attendance said that they need to show an ROI or TCO report to justify a storage purchase, but the vast majority also said that they rarely verify those reports after the fact.

There are better ways to evaluate the impact of a storage management implementation. Goodwin said that the amount of storage managed per administrator, the mean time to data recovery, and data availability are better indicators of how to get more bang for the IT buck.

"What you want to know is if you are managing more storage per person this year over last," Goodwin said. "If you can show management that you are improving storage year-over-year, it will get you out of the TCO-ROI trap."

Another must for making sense of who's consuming storage resources is a chargeback system, that is, a tool that tracks how much storage is being used by different parts of the business.

"Those who have no chargeback system will have greater difficulty relating cost of storage back to the end user," Goodwin said.

He said that a sophisticated chargeback system isn't necessary. "You simply need to provide the linkage," Goodwin said. "The business managers are dying for this. It takes the politics out of it. Otherwise it's the squeaky wheel that gets the grease."


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Let us know what you think of this story. E-mail Kevin Komiega, News Writer

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