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The Storage Problem You Can't Ignore: Page 3 of 5

The Economics Of Storage

Our InformationWeek Analytics Cloud ROI Survey revealed the top three reasons companies are using or evaluating public cloud services of all kinds: the ability to quickly roll out business technology, the expectation that they'll lower long-term expenses, and the need to reduce the number of activities that require in-house IT expertise. Replacing capital expenses with operational expenses came in No. 4.

With respect to storage, however, these considerations are of less concern. Many companies have the mind-set that, like gravity, storage prices always fall. In our public cloud storage survey, 21% said they're not at all concerned with costs. Half said they're somewhat concerned but see costs as manageable. "Buying more storage is a lot easier than trying to get a handle on how it's used," says the IT director of a global financial institution.

This attitude, while it makes storage vendors happy, isn't sustainable. When nearly half (44%) of respondents don't even know the per-gigabyte cost of their on-premises storage, how can they say expenditures are manageable? Now, figuring out how much any IT service costs is tough. We weren't surprised that few of the 551 respondents to our End User Device Management Survey said their IT organizations charge back or do cost allocations. Of the 122 that do, 83% charge only for the purchase price of the device and OS plus software required for the employee's duties. Network and server assets? Forget it, and this for something as relatively simple as a PC. It's no wonder that breaking down storage is a tall order. Do you include power? Maintenance and support? Data center floor space?

Tom Scroggins, an IT architect with a financial services group, pegs his organization's cost per gigabyte at the high end of our respondents' range but goes beyond just raw disk to include RAID levels and arrive at a per-usable-gigabyte price, which is allocated to business units. "Currently, the main benefit of cloud-based storage is variability," Scroggins says. "We can provide our own geographic diversity and can purchase storage as cheap, or cheaper, than the cloud providers deliver." He says his organization is also constrained by regulatory requirements and believes storage services with sufficient controls for financial and healthcare institutions are a few years away.

If you're moving toward an internal IT service management structure, you, like Scroggins, have a better than average understanding of your environment, but our survey found some knowledge gaps. And our experience shows that a lack of visibility into elements of a service, like cost and utilization, leads IT to take the path of least resistance--in this case, buy more disk.

chart: What is your approach to using public cloud storage services?