RFP Saves AOL $25M

BOSTON -- StorageWorld -- If you're big enough, it can pay to get a vendor bidding war going on your behalf.

ISP America Online slashed about $25 million off its storage costs in the last two years by taking a long, hard look at its infrastructure and issuing a major request for proposal (RFP) to shake up its suppliers.

Speaking here today, Dan Pollack, the company's operations architect, said an RFP issued in 2004 sparked intense competition amongst storage vendors, paving the way for around $20 million in storage savings last year and $5 million this year. AOL has shaved 60 percent off its high-end storage expenditure alone.

"It's fairly remarkable the amount of cost reduction you get when you get past that RFP," Pollack said.

According to Pollack, a team within AOL's sourcing division came up with the idea for an RFP when they realized that a number of different vendors were trying to get a slice of the firm's business. "If your vendors are all competing at the same time, this drives costs down," he said.The AOL RFP covered three main hardware tiers -- high-performance arrays for primary storage, modular Fibre Channel arrays for mid-tier storage, and modular ATA arrays for the a third tier. Around a dozen vendors responded to the RFP, and AOL invited three or four to submit more detailed proposals before eventually settling on a dramatically improved deal from the firm's original supplier.

"Just by seeing the percentage discount we were able to achieve by making the vendors compete with each other, I can't see how anyone could possibly not do this," said Pollack.

The AOL storage guru echoed recent comments by the firm's competitor Yahoo about getting non-IT staff involved in this sort of storage overhaul. (See Get Users Involved, Says Yahoo Boss and Yahoo Honcho to Keynote StoragePlus.) "[The finance department] is important, because they can validate all the supposed cost savings you are discovering," he explained.

"Another interesting group to get involved is [that of] the largest users of storage -- they tend to have useful ideas related to the way they use storage that you may not be seeing," he said. "You also want to minimize the amount of grief you cause them."

Pollack won't specify the bidders or say who eventually won the AOL hardware deal, although the service provider has a longstanding services partnership with HP. (See HP & AOL Expand Relationship and AOL Picks HP for Storage Services.)The RFP also helped AOL get more bang for its buck. "Because we drove the price down dramatically, we were able to buy two to three times [the amount of storage that] we would have been able to buy for the same price," Pollack told Byte and Switch.

While it issued the RFP, AOL also embarked on an effort to streamline its storage infrastructure, largely by reclaiming under-utilized storage and consolidating its SAN infrastructure.

The service provider also eliminated its NAS filers, replacing them with NAS gateways that can be deployed on AOL's existing SAN-based infrastructure, unlike the filers, which came pre-integrated with an array. "Why not put gateways in front of our storage arrays, as opposed to buying someone's storage that we may not be getting the best price on?" he said.

There is a cloud in this silver lining. Pollack acknowledges that the ongoing savings AOL is experiencing post-RFP are partly offset by the firm's spiraling storage needs, which have jumped from 2.5 Pbytes to 4 Pbytes in the last two years. "We're getting low-cost storage, but we're getting an uptick in growth, which is eating into the cost savings," he said.

James Rogers, Senior Editor, Byte and Switch