• 07/24/2014
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3 Signs You're Overspending On Data Storage

If you think public cloud storage is the cheaper way to manage the massive growth in data, think again.

If you worry increasingly about escalating data storage costs, you’re not alone. As data grows exponentially, organizations are eager to find more cost-effective and efficient ways to store this avalanche of information.

It’s enough to keep storage managers awake at night. They must locate places to store mountains of data, ensure users can gain access to it, and make sure it’s secure, even in the case of unusual events.

Consider the sheer explosion of information happening today. IDC estimates that the volume of digital bits created, replicated, and consumed across the United States will hit 6.6 zettabytes -- the equivalent of 25 billion 4 TB drives -- by 2020. This represents a doubling of volume about every three years. As for cost, in InformationWeek's 2014 State of Enterprise Storage survey 25% of companies said they lacked the cash needed to even meet current demand for storage, much less future growth.

Of course, CIOs often don’t even know how much storage their companies really have because of the rogue growth into the public cloud. Unable to get the storage needed from corporate IT (which can’t handle that $500,000 capital request), departments will spend from their operating budgets to quickly and easily grab some public cloud storage. For example, they might manage $30,000 per month in operating expenses from Amazon Web Services.

These “off the books” storage buys create availability and security risks while very quickly adding up to greater expense. Use of public cloud storage also limits IT’s visibility into and control of the storage infrastructure, which could lead to problems enforcing data storage policies important to the organization. Most CIOs publicly deny this while privately conceding it’s actually becoming viral. 

In organizations where the primary response to increased data storage capacity requirements is just to buy more of the same storage that has been used for the past five years, significant savings opportunities associated with newer technologies, including object storage and erasure coding-based data protection, are not being realized. As a result, companies are in a quandary about how to balance convenience, capacity, and cost. Often, they’re having to restrict business innovation and velocity because their costs are rising faster than their budgets.

To help determine if they’re spending too much for data storage, organizations should look for these signs: 

Sign No. 1: You’re buying public cloud because it’s perceived as “cheaper.” If an analysis of a reasonable timeframe (two or more years) still shows that public cloud storage will save you money, you’re spending way too much. In reality, there are private cloud solutions for large storage needs (1 petabyte or more) that are dramatically less expensive, providing savings on the order of 65% in TCO compared to NAS and 30% or more net present value savings compared to the public cloud. So if public cloud looks like a saver to you, beware. 

Sign No. 2: You don’t have a plan for object storage. If you’re growing fast, it’s probably because of unstructured data, such as scanned images, photos, video, audio/music files, seismic data, and office documents. Legacy file system storage architectures were not designed with the scale of today’s unstructured data in mind and are far from optimal. They can be made to work, but just as you could move 200 people across the country in 100 small planes, it’s a lot less efficient than a modern jetliner.    

Object-based storage systems do a better job of storing unstructured data, and some even go one step further by eliminating the need for replication entirely. These systems use erasure coding to provide extreme levels of reliability without the overhead of even single copies. 

Sign No. 3: Departments suddenly stop growing their storage with IT. If traditional users of storage suddenly go silent, they’ve likely gone over to the dark side of the cloud. As mentioned above, getting storage from the public cloud is fast, easy, and breathtakingly expensive.

If you have any one of the signs, consider these steps:

  1. Find out how much you’re storing in the public cloud -- The answer might surprise you.
  2. Evaluate building a private cloud with object storage. There are several providers in this business who can help you do so in a matter of weeks in a way that looks as good as a public cloud to your users, but with the reliability, security, and cost characteristics you require.
  3. If you are storing fast-growing unstructured data in NAS, and relying on replication to provide reliability, compare your cost to that of an object-based storage system that protects data using erasure coding instead.


There are other hidden costs

I agree with the case for NAS and private cloud for large organizations. But for middle size companies there are more hidden costs having a private cloud than just the storage.

For starters keeping email in house is a nightmare, companies with less than 5,000 employees are better off using services such as Google apps.

Service and backup are another issue, something that public clouds do for you.

Power costs including cooling and UPSs are increasing, making more expensive to run server racks.

And the bandwidth necessary for serving multiple locations is still quite expensive.

Re: There are other hidden costs

Really good point Pablo. A private cloud also requires a lot of expertise that midsize companies may not necessarily have. They may not have the staff required to deploy and run a private cloud.

Re: There are other hidden costs

@Marcia, good point about specialization in staff. Financial institutions such as banks, are beginning to take an increased interest in things like Big-Data analysis, etc., these sectors might gain from the private Cloud due to their security needs -- with time, the first provider that manages to meet the security requirement for financial institutions will become a market leader. 

Until a market leader is created, the private Cloud can be utilized by financial institutions, however, since most of the IT budgets of financial institutions averages at 3.5 percent of revenue, this figure will have to grow a bit.

At roughly, $100 per 4TB hard disk, 25 billion hard drives will cost $2.5 trillion. Financial institutions can pay some of this cost with an increased IT budget.   

Re: There are other hidden costs

As I have always said only buy what you need today because tomorrow it will be cheaper.  Years ago Seagate Barracuda 9GB drive with SCSI interface $7,000 today 4 TB $300.00 sooooo

Re: There are other hidden costs

Jeff, I believe that storage is follwing the same economics as any other part of computer hardware, costs are going down continously.

But service is getting more expensive, and good network and storage administrators are scarce. You need to factor that into the cost equation.

Re: There are other hidden costs

Pablo - I agree with your comment that computer products and frankly almost all products have been made to commodities.  And certainly the cost of services and qualified employees is increasing, and partially to off set the lack of margin in hardware. 

I am curious about one part of your comment which is about the scarcity of qualified network engineers, what do you attribute that too?

Re: There are other hidden costs

Jeff, the number of network engineers has been increasing over the years in real numbers, but the demand has been growing exponentially.

Re: There are other hidden costs

Pablo - Aha that I understand.  Thank you for the clarification and so for those of us who have children preparing to go off to college would you recommend a career in networking? 

Re: There are other hidden costs

Jeff, networking will be always a good career, but math and data science are probably the best paid jobs now in technology.

I'd recommend network security, I'm sure those guys will have a lot more work in the future. 

Re: There are other hidden costs

Semi serious and semi joking I tell people the world will all be about servers and apps.  So software and networking are solid career choices.  The GoPRo IPO was one of the first hardware based IPO's in 25 years which indicates that it is difficult to create change via the hardware side.  There are possible exceptions on the horizon wrapped around 3D printing and emerging technologies and materials related to 3D printing so we will have to wait and see.

Re: There are other hidden costs
I agree 3D printing is one of them, but again next gen security is demanding more and more engineers with healthy skillset. As people migrate to cloud and Virtulization they will require attention on security.
Re: There are other hidden costs

Security and networking are both included in this top 10 list of IT skills for 2014; I'm trying to find a research forecast that looks a few years out, but I'm sure both would still be there. 

Re: There are other hidden costs

@ aditshar1 - Absolutely security is a huge upside oppertunity.  There is such extreme need for physical security and data security.  So many vulernabilities, so much time.

Re: There are other hidden costs

I agree to Pablo's point, SMB might not have the level of economies of scale required to gain the necessary level of specialization required for a private deployment. It is not all bad news for SMB as this does not mean that SMB might never gain the benefits of object-based storage and/or erasure coding. It is just a matter of time before large enterprises begin to find positive returns in object-based storage (considering the trade-offs, such as network costs) and a provider emerges that provides object-based storage -- utilized by both SMB, as well as large enterprises.

Re: There are other hidden costs

Thank you Brian. I believe object-based storage could be offered to SMB as part of their package, and public cloud providers could easily teach their customers its benefits.