Assessment: Brocade Network Subscription

Network Subscription is an acquisition model that lets companies pay for network ports when they are used. As monthly demand changes, the port count and costs rise and fall. This is a good model for companies with large differences between normal and peak usage, though subscribers pay more over time compared with a capital purchase. It is not a fit for companies with small variations in demand. Network Subscription doesn't include Fibre Channel ports. .

Mike Fratto

August 31, 2011

5 Min Read

Vendor Name: Brocade
Product Name: Network Subscription
Availability: Now
In the box: Covers all Brocade networking products except for Fibre Channel SAN products.
The Nut: Network Subscription is an acquisition model that lets companies pay for network ports when they are used. As monthly demand changes, the port count and costs rise and fall. This is a good model for companies with large differences between normal and peak usage, though subscribers pay more over time compared with a capital purchase. It is not a fit for companies with small variations in demand. Network Subscription doesn't include Fibre Channel ports.

Problem Statement

Organizations typically buy more port capacity than they need, but as demand grows, that capacity gets used up, requiring a new purchase. The purchase cycle also forces companies to assume all the risk and cost of acquiring new equipment, which poses significant up-front expenses for new projects and companies.

This ebb and flow of capacity causes wasted capital cost during the periods of excess capacity and performance degradation during peak demand.
Increasing capacity is time consuming because products have to be acquired and provisioned.
Increasing capacity carries financial risks because you carry the debt load if your demand falls.

Vendor Claims

Brocade's Network Subscription lets organizations add and remove capacity on demand and pay via the utility model.

You can match capacity to demand as the demand occurs.
You are not locked into a long term lease or capital investment.
Unlike leasing, you can remove capacity as needed.
You incur the IT expense as the revenue occurs.

Analysis

Brocade claims that over the lifecycle of a data center, IT adds capacity such as ports, servers and storage, in increments, to keep pace with increasing demand. Prudent IT managers buy more capacity than is needed to accommodate future growth, but eventually demand will exceed capacity.. This results in some years with substantially higher spend on infrastructure than other years, impacting project P/L sheets. The organization also assumes all the risk in the event that growth doesn't meet expectations--the cost of the equipment is already sunk.

Network Subscription is a service offering that lets companies pay for ports as needed, whether demand increases or decreases. This is a similar idea to using cloud computing to handle excess computing demand by "owning the base and renting the spike," as Jens Lapinski said in a comment over at GigaOm. In the case of Network Subscription, the customer doesn't own anything, but you do have to acquire base ports that will make up your steady state monthly charge and pay more for the spikes.Here's how it works. You account for normal and excess demand and determine how many switch ports are needed over all. You still need to estimate your base and peak usage because ports don't magically appear. You receive and rack up the switch ports for your maximum port count (you don't want to be racking and unracking switches to manage scale). Then, you pay for the ports that you use on a monthly basis, which are enabled or disabled via software licenses. There are no hard and fast numbers to compare costs because the network subscription details will vary on a case-by-case basis. However, Brocade estimates there is a 15% to 20% premium over a three-year period for the subscription model, compared with purchasing the same equipment in same period.

Brocade sent an example using MLXe and VDX switches for a total of 832 10 Gbit Ethernet ports and three years of Brocade's Essential Support with next-day delivery. The purchase cost is $1.4 million, or $46.74 per port. Brocade's Network Subscription for the same number of ports and Essential Support would be $1,687,495, or $56.34 per port. Remember, the prices are examples only. Your mileage will vary, but the network subscription is 17% higher over three years compared with purchasing. The cost is accrued when demand is needed, which may make the CFO happy by turning a capital expense into an operational one and staving off investments until the money is rolling in. Just in time for IT.

The subscription model works well in cases where there is a large difference between the base and the peak and when you can estimate what both will be. That is where you are going to see purchased equipment needed to support the peaks idling throughout the year whereas using a subscription model, unused ports can be turned off and not paid for, unlike most leasing arrangements. Service providers and retailers are example targets for Network Subscription.

The impact of pay-per-use on your balance sheets will vary and is only part of the overall consideration. Network equipment expenditures are typically in the single digit percentage ranges of IT's total budget, so the monthly savings are going to be akin to rounding errors. However, if your company adopts a pay-per-use model, then the cumulative effect of small savings per month can add up and the coupling of spend with revenue will be better aligned. Just don't look to Network Subscription to have a great effect on its own.

Unfortunately, the subscription doesn't apply to FC ports. Most large IT departments use FC, and if they need to add ports to accommodate something like additional servers, it probably also means needing more FC ports for the additional storage.

We aren't aware of any similar offering from network vendors. The closest option is leasing. However, leases tend to have fixed periods and you can't vary the port count up and down over time to match demand. Usually you can only increase port counts.