Storage as utility

One of the hallmarks of the new data center is flexibility, moving away from the confines of dedicated, paid-for, but nearly always unused, resources. When it comes to storage, that flexibility means tapping into capacity on an automated, on-demand, pay-as-you-go basis.

While enterprise users have long entered into creative licensing agreements with vendors to reduce their capital outlay for storage, these latest pay-as-you-go, or metered, plans are another breed altogether. For the first time, storage can be purchased as a utility.

Metered storage plans, introduced in the past year, have advantages over capacity-on-demand programs. Cost management is one, and easier capacity planning another.

With metered storage, a company buys software or a server that collects information on the storage capacity being consumed on the array. The software then automatically transmits this data to the vendor's financial services department for billing. In this model, storage arrays often come configured with the amount of capacity a company estimates it will need, plus extra idle capacity. A user can grab as little or as much capacity as needed and only pay for the amount used per instance.

With capacity-on-demand, users buy a storage array with the extra capacity, and access this capacity in pre-negotiated chunks of data. They pay for all this data whether they use it or not.

St. Vincent Hospital & Health Services, a health-care provider in Indianapolis, is using metered storage for its StorageTek L700e tape library. "We are buying tape slots only as we need them because they are heinously expensive," says Rich Banta, senior enterprise systems engineer at the company.

Banta says he only pays for the 40% capacity on the tape library being used, while getting an additional 60% to draw from when he needs it. Turning on the latent tape slots is simply a matter of getting a license key from Storage Technology Corp. (StorageTek), Banta says.

Like StorageTek, EMC Corp., Hewlett-Packard Co. and Sun Microsystems Inc. offer metered storage options. EMC's metered offering comes through its OpenScale automated billing feature, which was introduced in 1999 and revamped with automatic usage collection and billing last year. OpenScale is available on a range of EMC products -- the high-end Symmetrix, midrange Clariion, Centera nearline storage and for Connectrix Fibre Channel switches, and with value-added software products including the Symmetrix Remote Data Facility and TimeFinder.

Research firm Enterprise Storage Group Inc. estimates that 30% of customers use some sort of procurement program. One of those is Deloitte Consulting, which uses a Symmetrix 8830 loaded with 80TB of data. Storage-on-demand "takes some of the guessing out of our acquisition of storage," says Erik Ericksen, CTO for the Philadelphia firm.

From HP, metered storage is available on the high-end XP and midrange StorageWorks Enterprise Virtual Array (EVA). The program, called pay per use, is designed for volatile environments where demand spikes require considerable capacity, but only for limited time periods, HP says. A software-based utility meter tracks usage and lets customers pay only for actual consumption. The meter looks at how many gigabytes have been allocated in a week or month and averages usage on a monthly basis, letting retailers and other businesses with seasonal spikes, for example, adjust the amount of storage used.

A pay-per-forecast feature lets customers vary their payments up and down to align with planned demand and revenue, says Nick van der Zweep, director of virtualization and utility computing for HP.

On metered storage, Sun offers the Utility Computing Infrastructure Procurement Service. This combines Sun UltraSPARC III processors, StorEdge storage and the Solaris operating environment. In this model, a customer's storage is monitored using Sun NetConnect software, and billing is automatically generated.

Among major systems vendors, IBM Corp. is unconvinced that a metered option is necessary. "Once people write data, they don't know how to get rid of it," says John Power, program-marketing manager for enterprise disk at IBM. "There are requirements for these peaks in capacity, but customers aren't yet saying they want to buy it by the hour or buy it by the glass." Power notes, however, that IBM is fine-tuning buy-it-by-the-hour constructs and a pricing scheme should its customers start requesting a metered option.

Capacity on demand

While it has stayed away from a formal metered offering so far, IBM is no stranger to the concept of making storage capacity available to users on demand. It has been offering Standby Capacity On Demand for its Enterprise Storage Server (also called Shark) and FAStT arrays for two years.

Power describes how IBM's program works: A user orders a 10TB Shark, or FAStT, taking delivery of a system that has up to 20% extra capacity built-in. The user can activate the unused capacity at any time. While the user doesn't immediately have to notify IBM, it has agreed contractually that an invoice will be issued for that capacity based on a pre-set price.

Other vendors follow the same basic model, although each has a different way of administering its on-demand storage plan. Through HP's 5-year-old Instant Capacity on Demand (ICOD) program, for example, enterprise users can buy a high-end XP array or a StorageWorks EVA with a certain amount of storage in it. HP then builds additional storage capacity into the array that, when allocated, triggers billing.

"Instant Capacity on Demand started out as you turn it on, you bought it; turn it off, you bought it," van der Zweep says.

Although less flexible and automatic than metered offerings, capacity-on-demand programs are still attractive to enterprise users. "When you need that extra amount of storage or processing power, it literally takes a phone call and license key rather than waiting weeks to get the hardware in place," says David Bratt, manager of technology infrastructure at H. Lee Moffitt Cancer Center, in Tampa, Fla., speaking of IBM's capacity-on-demand plan.

The cancer center recently bought an IBM pSeries 670 server with a capacity-on-demand option that lets Bratt enable memory and CPUs with a license key. "With AIX 5.2, I can dynamically assign more processing power to a p670 partition during business hours, and after business hours I can have more processing go to another partition," he says.

Capacity-on-demand storage generally appeals to two camps of users, says Mark Lewis, executive vice president of open software at EMC. The first group comprises those who want to control their own storage but don't have the expertise in-house, while in the second camp are those who want to expense their assets rather than capitalize them. (When using capacity-on-demand, a user can capitalize or expense the capacity being used.)

The right approach?

The choice of metered or capacity-on-demand depends in large part on whether a company wants to buy or lease its storage, vendors say. That decision can vary within an IT shop.

At St. Vincent, for example, Banta uses a pay-as-you-go scheme for tape resources, but pays for disk storage outright. He sums up the company's disk-buying philosophy: "We capitalize expenses rather than expensing storage. When we need more storage, we just buy it. For disk, we think we take better advantage of Moore's Law by buying in bulk rather than incrementally."

HP's van der Zweep puts the money decision in context. "A customer has two different kinds of money: capital and expense. If it has capital dollars, it likes to buy things and capitalize them over three to five years," making capacity-on-demand plans such as HP's ICOD attractive. Capacity-on-demand doesn't work as well for a company that uses expense dollars because it would have to modify its equipment lease every time it turned capacity on, he explains.

As a storage buyer, Bratt says choosing between the two depends on price. "You have to decide if it makes business sense to defer that cost out or to go ahead and capitalize it," he says.

Brian Babineau, an analyst for Enterprise Storage Group, agrees. Users typically think of these licensing programs only for high-end storage, not for their midrange IBM FAStT, EMC Clariion or HP StorageWorks systems. That assertion is wrong, he says.

Because most leasing programs are priced based on capacity used, Babineau says that as disk drive sizes increase, midrange storage like the Clariion becomes a more likely candidate for capacity-on-demand, metered and even managed storage services.

While on-demand storage no doubt provides welcome flexibility, enterprise users need to be aware of the downsides. Randy Kerns, senior partner for research firm Evaluator Group, worries that such schemes could put users at a disadvantage on pricing and technology.

"The customer is paying the price of the storage at the initial purchase, whereas storage declines in price about 40% per year, so it isn't getting the right economies," he says. "Plus, [it could miss out on] advantages of technology as [arrays and drives] get faster and smaller."

No doubt, on-demand storage isn't yet perfect. But clearly, storage as a utility is the way of the future. As the Moffitt Cancer Center's Bratt says: "It just makes sense. All it takes to expand the capacity is a phone call, a license key or just using it."

This story, "Storage as utility" was originally published by Network World.

Copyright © 2004 IDG Communications, Inc.

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