1© 2004 Cisco Systems, Inc. All rights reserved.

OPT-40529628_05_2004.c

The Business Case for Storage Networks

Storage Strategies for Lowering TCO

222© 2004 Cisco Systems, Inc. All rights reserved.

OPT-40529628_05_2004.c1

The Cost of Poor Quality

• Most companies waste more than half their storage.

• Between 1999 and 2002, an estimated $35 billion of storage assets have gone unutilized.*

• Approximately one quarter of all annual computer-related U.S. revenues.

*Worldwide OEM Revenues 1999-2002

333© 2004 Cisco Systems, Inc. All rights reserved.

OPT-40529628_05_2004.c1

Summary

• Falling disk prices = Increased TCO

• Create value with STORAGE STRATEGIES.

• In order to take advantage we must:

Understand the problem

Visualize the impact

Use metrics and know TCO components

• Cisco has implemented a STORAGE VISION to direct strategies for storage management with significant impact.

444© 2004 Cisco Systems, Inc. All rights reserved.

OPT-40529628_05_2004.c1

Agenda

• Storage Strategies for Lowering TCODefinitions

Strategies

Measurement

Metrics

STORAGE STRATEGIES FOR LOWERING TCO

555© 2004 Cisco Systems, Inc. All rights reserved.

OPT-40529628_05_2004.c1

DEFINING TCO TERMINOLOGY

666© 2004 Cisco Systems, Inc. All rights reserved.

OPT-40529628_05_2004.c1

777© 2004 Cisco Systems, Inc. All rights reserved.

OPT-40529628_05_2004.c1

Definition—Total Cost of Ownership (TCO)

• The sum total of all costs associated with implementing a storage solution including acquisition and depreciation of raw storage, labor, support, maintenance, and so on over the lifetime of the solution.

• Provides for “apples-to-apples” comparisons of different solutions.

• Measures impact on environment and on bottom line—real world costs.

• Cash basis or depreciation?

Cash basis—Present value of all acquisition costs**

Depex—Matches budget structures

888© 2004 Cisco Systems, Inc. All rights reserved.

OPT-40529628_05_2004.c1

Cash Versus Depreciation

• Year 1 labor costs = $0.1*(0.9^1)

• Year 2 labor costs = $0.1*(0.9^2)

**Cash Basis—Present Value of Future Costs at 10% Discount Rate

Cash Basis Year 0 Year 1 Year 2 Total

HW $ 1.00

Maint $ 0.20

Labor $ 0.10 $ 0.09 $ 0.08

Total $ 1.30 $ 0.09 $ 0.08 $1.47

Depex Year 0 Year 1 Year 2 Total

HW $ 0.33 $ 0.33 $ 0.33

Maint $ 0.20

Labor $ 0.10 $ 0.10 $ 0.10

Total $ 0.63 $ 0.43 $ 0.43 $1.50

STORAGE STRATEGIES

999© 2004 Cisco Systems, Inc. All rights reserved.

OPT-40529628_05_2004.c1

101010© 2004 Cisco Systems, Inc. All rights reserved.

OPT-40529628_05_2004.c1

Storage Storage DemandDemand

Storage Resource ManagementStorage Resource Management

VirtualizationVirtualization FrameworkFramework

Information Lifecycle ManagementInformation Lifecycle Management

Data Integrity and ResiliencyData Integrity and Resiliency

Management and ConsolidationManagement and Consolidation

Storage Storage SupplySupply

Storage Storage ManagementManagement

Utility-Like Storage ServiceUtility-Like Storage Service• Service-Level ManagementService-Level Management• Appropriate Hardware TiersAppropriate Hardware Tiers

Storage Recovery ProgramStorage Recovery Program• Best Practices and ProcessesBest Practices and Processes• Special Tools and MetricsSpecial Tools and Metrics

Strategies

111111© 2004 Cisco Systems, Inc. All rights reserved.

OPT-40529628_05_2004.c1

Strategies

• Migration to storage networks

Increases allocation efficiency

Decreases management costs

• Storage consolidation

Fewer hosts and fewer frames

Reduce points of management

Reduce maintenance costs

• Storage recovery

Increases utilization efficiency

Reclaim unused storage

MEASUREMENT

121212© 2004 Cisco Systems, Inc. All rights reserved.

OPT-40529628_05_2004.c1

131313© 2004 Cisco Systems, Inc. All rights reserved.

OPT-40529628_05_2004.c1

Measurement

• Data collection

Asset reports

Accounts payable

Storage inventory

SRM

Spreadsheets

• Need measurement of “before” picture

• Key values

Allocation efficiency

Utilization efficiency

141414© 2004 Cisco Systems, Inc. All rights reserved.

OPT-40529628_05_2004.c1

Utilization

Allocation Efficiency

60%

UtilizationEfficiency

40%

PRODPROD

151515© 2004 Cisco Systems, Inc. All rights reserved.

OPT-40529628_05_2004.c1

Allocation Efficiency

Storage TypeIndustry Average

Allocation Efficiency

DAS 30%–40%

SAN 50%–60%

161616© 2004 Cisco Systems, Inc. All rights reserved.

OPT-40529628_05_2004.c1

Measurement Example: (DAS)

• Sample DAS TCOSeven storage frames

7 x external RAID arrays (total 24,192 GB)

$350K purchase price

$2.45M total

One storage manager

$150K per year

Seven datacenter tiles

$10K per tile

$5K for cabling

$75K total

171717© 2004 Cisco Systems, Inc. All rights reserved.

OPT-40529628_05_2004.c1

Measurement DAS (Cont.)

• BackupsPer GB $0.086

Plus tape costs per GB $0.868

Total per GB $0.954

Total $63,698

• Maintenance$6K per frame per month

$42K per month

$504K total

• UtilizationAllocation efficiency factor (60%)

Utilization efficiency (40%)

181818© 2004 Cisco Systems, Inc. All rights reserved.

OPT-40529628_05_2004.c1

Sample DAS TCOSample TCO Cash Basis Depex—Year 0

Seven Storage Frames7 x External RAID Arrays (Total 24,192 GB)$350K Purchase Price$1.75M Total 2,450,000.00$ 816,666.67$

One Storage Manager$150K per Year 398,160.00$ 150,000.00$

Seven Datacenter Tiles$10K per Tile 199,080.00$ 75,000.00$ $5K for Cabling

BackupsPer GB $0.086Plus Tape Costs per GB $0.868Total per GB $0.954Total 63,698.51$ 23,079.17$

Maintenance$6K per Frame per Month$42K per Month$504000K Total 1,337,817.60$ 504,000.00$

Utilization RatesAllocation Efficiency Factor (60%) 0.6Utilization Efficiency (40%) 0.4

Total Storage 24,192,000 24,192,000Utilization Efficiencies 5,806,080 5,806,080Total Cost 4,448,756.11$ 1,568,745.83$ TCO Per MB 0.77$ 0.27$

*Expenses not depreciated, but totaled over 3 years**Discount rate needed for present value—years 2 and 3 discounted at 12 precent

191919© 2004 Cisco Systems, Inc. All rights reserved.

OPT-40529628_05_2004.c1

Measurement Example: SAN Migration Strategy

• Sample SAN TCOSeven storage frames

7 external RAID Arrays (36 GB drives)(total 24,192 GB)$350K purchase price$2.45M total

One storage manager$150K per year

$15K for training$165K total

Seven datacenter tiles

$10K per tile$5K for cabling$75K total

Maintenance$6K per frame $42K per month$504K total

Backups*Total $63,698.51

*Significant savings in backups possible—not analyzed here

202020© 2004 Cisco Systems, Inc. All rights reserved.

OPT-40529628_05_2004.c1

*Assumes 15% Increase

Measurement SAN (Cont.)

• FC switches

$500K total including maintenance

• Utilization

Allocation efficiency factor (75%*)

Utilization efficiency (40%)

212121© 2004 Cisco Systems, Inc. All rights reserved.

OPT-40529628_05_2004.c1

Sample SAN TCOSample TCO Cash Basis

Seven Storage Frames7 x External RAID Arrays (Total 24,192 GB)$350K Purchase Price$2.45M Total $2,450,000 $816,667

One Storage Manager$150K per Year$15K for SAN Training$165K Total $437,976 $165,000

Facilities - Seven Tiles$10K per Tile$5K for Cabling$75K Total $199,080 $75,000

BackupsPer GB $0.086Plus Tape Costs per GB $0.868Total per GB $0.954Total $61,261 $23,079

Maintenance$6K per Frame per Month$42K per Month$504K Total $1,337,818 $504,000

Switches4 Director Class Switches (Inc. Maint.) $500,000 $166,667

Utilization RatesAllocation Efficiency Factor (75%) 0.75Utilization Efficiency (40%) 0.4

Total Storage 24,192,000 35,040,000Utilization Efficiencies 7,257,600 10,512,000Total Cost $4,986,134 $1,750,412TCO per MB $0.69 $0.17

Depex—Year 0

222222© 2004 Cisco Systems, Inc. All rights reserved.

OPT-40529628_05_2004.c1

Consolidation Impact

$0.07

Sample TCO Cash Basis Depex—Year 0Two Storage Frames2 x External RAID Arrays (42,048 GB)$750K Purchase Price$1.5M Total $1,500,000 $500,000

One Storage Manager$150K per Year$15K for Training$165K Total $437,976 $165,000

Facilities Three Tiles$10K per Tile 3$5K for Cabling$35K Total $92,904 $35,000

BackupsPer GB $0.086Plus Tape Costs per GB $0.868Total per GB $0.954Total $61,261 $23,079

MaintenanceNo Maintenance for 3 Years $0 $0

Switches4 x 32 Port Switches $500,000 $166,667

Utilization RatesAllocation Efficiency Factor (80%) 0.8Utilization Efficiency (40%) 0.4

Total Storage 42,048,000 42,048,000Utilization Efficiencies 13,455,360 13,455,360Total Cost $2,592,141 $889,746TCO per MB $0.19 $0.07

232323© 2004 Cisco Systems, Inc. All rights reserved.

OPT-40529628_05_2004.c1

Recovery Impact

Sample TCO Cash Basis Depex—Year 0Two Storage Frames2 x External RAID Arrays (42,048 GB)$750K Purchase Price$1.5M Total $1,500,000 $500,000

One Storage Manager$150K per Year$15K for Training$165K Total $437,976 $165,000

Facilities Three Tiles$10K per Tile 3$5K for Cabling$35K Total $92,904 $35,000

BackupsPer GB $0.086Plus Tape Costs per GB $0.868Total per GB $0.954Total $61,261 $23,079

MaintenanceNo Maintenance for 3 Years $0 $0

Switches4 Direct Class Switches $500,000 $166,667

Utilization RatesAllocation Efficiency Factor (80%) 0.8Utilization Efficiency (60%) 0.6

Total Storage 42,048,000 42,048,000Utilization Efficiencies 20,183,040 20,183,040Total Cost $2,592,141 $889,746TCO per MB $0.04$0.13

242424© 2004 Cisco Systems, Inc. All rights reserved.

OPT-40529628_05_2004.c1

Solution Cash Basis Depex

TCO per MB DAS $0.77 $0.27

TCO per MB SAN $0.69 $0.17

TCO per MB Consolidation $0.19 $0.07

TCO per MB Recovery $0.13 $0.04

Solution/Cost Comparison

Effect of Storage Program on TCO

$0.00

$0.10

$0.20

$0.30

$0.40

$0.50

$0.60

$0.70

$0.80

$0.90

TCO per MB DAS TCO per MB SAN TCO per MBConsolidation

TCO per MBRecovery

CashBasis

Depex

TC

O/M

B

METRICS

252525© 2004 Cisco Systems, Inc. All rights reserved.

OPT-40529628_05_2004.c1

262626© 2004 Cisco Systems, Inc. All rights reserved.

OPT-40529628_05_2004.c1

Metrics

• Project metrics

Payback method

ROI

NPV

272727© 2004 Cisco Systems, Inc. All rights reserved.

OPT-40529628_05_2004.c1

Metrics Examples: Payback

• Pros“Napkin math”

Suitable for small capital investments

Measures time to recoup investment

Payback period = initial investment/annual income

• ConsDoesn’t work well for large investments

Doesn’t work well for long time horizons (>1 year)

Example: $5000 for new disk infrastructure to increase performance for online transactional system that increases revenue by $2500 over two quarters.

Example: $5000 for new disk infrastructure to increase performance for online transactional system that increases revenue by $2500 over two quarters.

Payback period is one year $5000/$2500 = 4 Quarters = One YearReasonable payback—Do the upgrade

Payback period is one year $5000/$2500 = 4 Quarters = One YearReasonable payback—Do the upgrade

282828© 2004 Cisco Systems, Inc. All rights reserved.

OPT-40529628_05_2004.c1

Metrics Examples: ROI

• Pros“Napkin math”

Suitable for large capital investments

Well known

• ConsEasy to manipulate

Maligned as a marketing tool

Does not account for cost of capital

Does not account for time value of money

Example: $5000 for new disk infrastructure to increase performance for online transactional system that increases revenue by $2500 over two quarters.

Example: $5000 for new disk infrastructure to increase performance for online transactional system that increases revenue by $2500 over two quarters.

ROI = ($2500-$5000)/$5000 = -%50ROI = ($2500-$5000)/$5000 = -%50ROI is negative—Don’t do the upgradeROI is negative—Don’t do the upgrade

ROI = (All Returns-All Investments)/(All Investments)ROI = (All Returns-All Investments)/(All Investments)

292929© 2004 Cisco Systems, Inc. All rights reserved.

OPT-40529628_05_2004.c1

Metrics Examples: NPV

• ProsAccurate measurement

Suitable for large capital investments

Accounts for cost of capital and time value of money

• ConsDefinitely not “napkin math”

Example: $5000 for new disk infrastructure to increase performance for online transactional system that increases revenue by $2500 over three years; cost of capital is 12%.

Example: $5000 for new disk infrastructure to increase performance for online transactional system that increases revenue by $2500 over three years; cost of capital is 12%.

NPV = -$5000 + (833.33*(1.12^1)) + (833.33*(1.12^2)) + (833.33*(1.12^3)) NPV = -$5000 + (833.33*(1.12^1)) + (833.33*(1.12^2)) + (833.33*(1.12^3)) Excel = NPV (Rate, Value1, Value2...) Excel = NPV (Rate, Value1, Value2...)

NPV = -$2998.47NPV is negative—Don’t do the upgrade

NPV = -$2998.47NPV is negative—Don’t do the upgrade

303030© 2004 Cisco Systems, Inc. All rights reserved.

OPT-40529628_05_2004.c1

Summary

• DAS-to-SAN migrations: significant cost savers.

• Coupled with consolidation and storage recovery, programs greater reductions in TCO possible.

• Use FC and IP networks as enabling technologies for lower TCO.

• Use strategies to adjust storage TCO FUNCTION.

• Uptime and availability are part of TCO.

• Use FC and IP storage networks to increase business continuance, uptime, and availability; in turn, further decrease TCO.

• Play WHAT-IF scenarios with uptime, availability, backups, and retention.

313131© 2004 Cisco Systems, Inc. All rights reserved.

OPT-40529628_05_2004.c1

Recommended Reading

• The Business Case for Storage Networks [1-58720-118-6] Available October 2004

• Cisco Storage Networking Architectures Poster [158720102X]

• Internetworking Technologies Handbook, Fourth Edition [1-58705-119-2]"

323232© 2004 Cisco Systems, Inc. All rights reserved.

OPT-40529628_05_2004.c1

Online References

• Business Ready Datacenter http://www.cisco.com/go/datacenter

• Cisco Storage Networking Solutions http://business.cisco.com (click “Storage”)

• Search Storage http://www.searchstorage.com

• Byte and Switch http://www.byteandswitch.com

• Storage Networking World Online http://www.snwonline.com

333333© 2004 Cisco Systems, Inc. All rights reserved.

OPT-40529628_05_2004.c1