Users not quite ready to drink their storage by the glass

When you want a hamburger, you don't go out and buy a cow. Similarly, when IT managers need more storage, they increasingly want to acquire it in a way that's affordable, manageable and digestible. That's why the idea of paying for storage on-demand or by the gigabyte rather than one array at a time might sound to storage consumers like the best thing since the Quarter-Pounder.

Recent pitches from Hewlett-Packard (see story) and EMC (see story) have served to bring new attention to this idea, also called "metered" or "utility-based" storage procurement. According to this procurement model, customers buy or lease the amount of storage they need but in a box that holds additional capacity. The extra storage is turned on only as customers need it, and they pay for the additional capacity only as it is used. The total capacity is measured automatically and sent over the network to the vendor's billing and invoicing system.

"Let's say you have 100 terabytes of capacity and you currently utilize 50," says Randy Kerns, senior partner at the Evaluator Group, an independent storage analysis firm in Greenwood Village, Colo. "When you need more, rather than having the vendor come in, you just start using 60 terabytes. The system reports that you're using 60 of the 100 and sends a bill for the extra 10 that you utilized."

The concept appeals to Steve Rubinow, CTO for Archipelago, an online stock exchange in Chicago, who says, "If we knew we needed 100 terabytes for a project we were planning to start in the next six months, it would be nicer to pay for that as we go along rather than months before we needed it. It brings you to a greater level of granularity and better control and possibly lower costs."

As a CIO recently put it to Jamie Gruener, a senior analyst with The Yankee Group in Boston, "We want to buy computing power capacity by the glass, not the tanker truck."

Not ready for prime time

Even after the recent HP and EMC announcements, most users are still not ready to adopt this model of storage procurement, even if it does seem like an idea that - given time to mature - could be quite appealing. Issues such as the lack of multi-vendor support, the inability to accurately forecast future needs, and the general uncertainty about whether this new financing structure is beneficial will hold back mass appeal for the time being.

The utility-based storage idea is not new. Past offerings have been based on cruder models, wherein the user acquires fully equipped hardware that's ready to turn on when needed. However, with these schemes, it was necessary to involve a third party in activating the hardware. Also, measuring used capacity was a manual process.

The storage service provider model was another utility-based offering that fizzled because it asked customers to trust little-known vendors to store their precious data off-site.

Today's systems from HP and EMC, on the other hand, allow users to have name-brand equipment on site, and they can begin using new levels of storage without vendor intervention. The system reports this new usage automatically to back-end billing and invoicing systems.

The newer systems are also more granular. Rather than adding storage an array at a time, customers can turn on smaller increments of storage, down to a gigabyte, according to EMC.

Metered benefits

Proponents of the pay-as-you-go model tout its convenience and flexibility, as well as the potential improvements to budget management and cost control.

For example, suggests John Webster, senior analyst and founder of the Data Mobility Group, this model could be of value to mail-order retailers or textbook publishers that experience seasonal peak loads that diminish the rest of the year. "Rather than keeping capacity around that goes idle after these peak periods, these purchasing structures make sense," Webster says.

Customers with long procurement cycles or large infrastructures with frequent upgrades would also benefit. "We've had some accounts that needed 12 to 15 people to sign off on the purchase requisition," says Bill Raftery, vice president of Global Financial Services at EMC. "The time between requisition and deployment was six to nine months. And when you think about the operational inefficiencies of different hardware showing up, additional channels, additional fabric - it's disruptive to the infrastructure."

With today's economic conditions, pay-as-you-go can also add a new level of cost control. "There's been tremendous growth in storage capacity, but a lot of people don't have the cash on hand to do upfront investments," says Gary Wright, vice president of network storage services at HP. "We can bring in a storage solution that is very flexible, where they pay only for what they're using."

The HP program

Here's how HP's plan works: Customers sign a three-year contract to lease enough HP Storageworks XP disk arrays to cover the amount of storage they currently need, plus additional projected capacity for future growth.

They pay a base price that is 75% of what they would pay to lease that equipment in a more traditional lease. Automated metering technology keeps track of average daily usage, and at the end of the month, the customer is billed the base price as well as a variable cost based on any extra storage they use.

In this scenario, an HP ProLiant server running the OpenView storage-area management suite gathers information on current allocations and reports back to HP's back-end systems, which triggers the billing cycle and also displays this information on a Web site accessible by the customer.

The program is designed so that over a three-year period, customers will never pay more than if they had leased the equipment outright. If they reach 100% of the lease cost in less than three years, a new contract is drawn up. And if they grow slower than originally planned, they never pay for all the storage placed on-site.

EMC's approach

With EMC's OpenScale, customers are not limited to a leasing structure - they can purchase or lease the equipment. Also, the capacity-on-demand and automated billing offering can be applied to the entire EMC networked storage infrastructure, including Symmetrix, CLARiiON, Connectrix and Celerra systems, as well as EMC TimeFinder and SRDF software.

EMC assesses the customer's infrastructure and establishes that fixed capacity as a baseline. "Then we look at any new applications they're bringing on board and estimate how much those applications will grow," says Raftery. "We put that buffer capacity into the infrastructure and bill them as they turn it on, by the gigabyte."

Key to OpenScale's success, according to EMC, is the automated billing capability. "It's very cumbersome from a human capital perspective for customers or us to try to measure exactly what the customer used every week," Raftery says. That's part of the reason that OpenScale, which has been used since 1999 for select EMC customers, was not announced to the entire marketplace at that time.

Now, OpenScale's automated billing leverages the same underlying "collector" technologies found within the EMC ControlCenter family, such as AutoAdvice. The collector automatically detects when pre-positioned storage capacity, SAN switch ports, NAS servers and storage software are allocated by the business and provides that information to EMC's OpenScale billing application, which measures daily and bills monthly.

Brian Babineau, a research analyst for Enterprise Storage Group in Milford, Mass., is impressed with this aspect of EMC's offering. "If you look at how HP collects its information and ties it into the back-end system and the way EMC does it, that's a differentiator. When you have integration with the accounting system, there's less manual overhead," he comments.

EMC also says it plans to apply OpenScale and automated billing to multi-vendor systems in the future.

Lingering doubts

But even with all the benefits of the current metered storage offerings, some users voice doubts about how soon they will buy into it. Those that are using it may not be employing it in the purest way.

For instance, Deloitte Consulting in Philadelphia began using OpenScale and the automated billing plan nine months ago on one of its six Symmetrix frames, in response to some of its clients' demands for real-time speed to supply their storage demands, says Eric Eriksen, chief technology officer at the consulting firm.

But rather than paying by the gigabyte, Deloitte is acquiring storage in tiers of 200G. "We bought the frame fully loaded but are only paying for a small portion of it," Eriksen explains. "We established tiers of 200GB, and when we exceed that, we get billed for the new level."

For example, when the company exceeds 200GB and begins using a second tier, it is not billed until it reaches 400GB, so, theoretically, for a short period of time, Deloitte could be using 250GB and paying for 200GB.

The reason the firm is paying by the tier rather than the gigabyte is because even though EMC is trying to establish a variable monthly cost based on usage, Deloitte wanted predictability in how it uses the disk. Just the same, OpenScale does give Deloitte the ability to not have to order incremental disk, configure it and deliver it to users, Eriksen says.

Just too new

Other users simply are not ready for embarking on a metered storage plan. "The utility model is too new to use yet," Rubinow explains. "We're looking at all the different algorithms, and some make sense, but sometimes you ask, 'Will this be more or less expensive?' "

Plus, he says, it's troubling that, despite EMC's plans to the contrary, most vendors' models currently work with their own particular brand of hardware. "We could end up having silos of utility-based computing," Rubinow says. "Plus, everyone will have their own metering algorithms - we have a lot of Compaq, and they'll measure it this way, and then Hitachi or Sun may measure it a different way."

A related drawback, according to Gruener, is that no vendor has rolled out a utility model of computing across their full product set. "Systems vendors will have to meld together a strategy that will weave together storage, compute resources and server infrastructures rather than having these as separate entities," he says. "There are also questions of how do you roll it out, how do you measure the unit, and what will make it appealing to customers?"

Coming at the multi-vendor conundrum from another angle is Veritas. "They seem to be agnostic as to what hardware vendors their software is connecting," Rubinow says. But so far, while Veritas offers automated storage provisioning, its offering is just a precursor to the utility model. "We've talked to Veritas about their utility model and their plans for the future, and as far as a concrete deliverable, they're not there yet," Rubinow says.

Fear, uncertainty and doubt

Gruener says customers are still skeptical about this pricing approach, because they have a hard time forecasting their capacity growth. He adds that they also have to know their current architecture, and that people have a hard time getting their arms around what they currently have.

People who purchase storage also tend to be a conservative lot. "The people who have to deal with storage are very risk-averse," Kerns says. "It's yet another thing they'd have to pay attention to, and either they don't have the time or they don't want to introduce any more variables into their domain.

"It's only for firms that can be creative on the financial side and only those with really good credit ratings and a history with the vendor," Babineau agrees, adding that in the leasing-type deals, "Vendors absorb a lot of paper themselves, and that's why they do it only with their best customers."

So, in the end, a limited audience currently exists for metered storage. EMC is targeting its high-end accounts and claims 50 to 100 current customers. HP's offering is offered on high-end enterprise-class arrays suited for large companies with mission-critical needs.

"Most of the customers using this are in the financial services industry," Babineau says. "In six to 12 months, as users can understand their capacity needs better, it will be attractive to all vertical markets."

Once the drawbacks are overcome, metered storage plans such as EMC's and HP's could eventually shape the future of storage procurement. But given current conditions, observers advise storage consumers to ask a lot of questions before signing on.

"One way to analyze these kinds of structures is by standing them up to leasing structures to see how they compare," Webster says. "What's the warranty? What are the payments? Before you understand the utility offering, you need to undergo a careful analysis."

Mary Brandel is a freelance writer in Grand Rapids, Mich.

Copyright © 2003 IDG Communications, Inc.

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