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Storage: when to outsource (Part II)

Part II of this two-part article explores the risk of storage outsourcing, and looks at future trends in this market segment.



Editor's note: The first half of this article appeared yesterday. Part II explores the risk of storage outsourcing, and looks at future trends in this market segment.

As storage volumes escalate, companies are weighing up the risks and benefits of outsourcing storage. How does it work?

Fujitsu's Crossing says that with typical enterprise storage growth at 40 percent per annum, the efficient management of storage is a key element in keeping operational costs to a minimum. "Personnel costs in the management of storage will generally outweigh hardware costs so the efficiencies obtained through sharing of common storage management practices in an outsourced environment will generally be cost effective to the customer," he says. "Because of the wide range of variables in the nature of customers' storage usage, an "average" storage saving through outsourcing or storage on demand is not an appropriate measurement," he warns.

John Wellar, director of Advanced Storage Systems, a Sydney-based distributor of storage systems says the highest cost in data storage is administration and backup. "If you offload this to an outsourcer, many of the costs are being shared with a multitude of clients and should yield an overall lower cost for storage," says Wellar. "At worst it gives a predictable cost with a more granular cost of growth. In the case of risk mitigation, the organisation automatically has data stored offsite and should have an SLA that ensures the outsourcer has the systems in place to guarantee that data can be restored and restored within the business requirements of the organisation," he adds.

According to José Alba, professional services manager at StorageTek Australia and New Zealand, the complexity of managing storage means that many players within a large organisation have a hand in storage management. "In addition to a dedicated storage management group, a component of the cost of capacity planning, network management, IT operations, application development, and operating the business itself needs to be taken into account to determine the total cost of storage management," he says. "Even if this total cost could be easily identified it would be difficult to extract the storage management component and produce a lower overall cost," he says.

Secondly, outsourcing has frequently been used as a means of reducing the cost or improving the quality of non-core activities but as organisations are recognising and ascribing value to their data it is becoming an important and strategic business asset, says Alba. "This trend is likely to continue as it is being supported by organisations that understand and leverage information lifecycle management and also by business regulators that are requiring more information to be kept and for longer periods of time," he says.

Is it worth the risk?
Simon Green, managing director of Network Appliance Australia and New Zealand, believes few companies will hand over their data, or as he calls it "their crown jewels", to a third party. "In the original model the cost was very high but we believe that as the price points come down, it will be a lot more viable for medium-to low-end customers who need to benefit from economies of scale," he says. "I'd be surprised if larger organisations, or say a national bank, would hand over its data to a third party because most have already made big investments in their data centres and are managing their own."

"Other things to consider are that storage hardware is now so inexpensive that users see the sense of putting a SAN or NAS box in the network, or in the case of NetApps a transparently ‘unified' SAN/NAS system, so as not to have to upgrade the servers every time the data volumes increase; which they're now doing at an alarming rate, of course," says Green. "Secondly, the software for storage management is becoming so smart that even relatively unsophisticated users are able to DIY," he adds.

Customers should also look closely at the NAS and SAN alternatives to determine which (if either) is best suited to their requirements, says Fujitsu's Crossing. "Typical considerations in the decision as to if and how to outsource their storage would include the size of their storage farm, the rate at which it is expected to grow, the difference in storage requirements on a seasonal basis. Clearly, the customer needs also to take into account other variables such as their own organisations policies with respect to asset ownership although a flexible storage outsourcer will generally be able to accommodate a range of options," he says.

Veritas' Fernando warns that most suppliers have their own version of storage management. "Customer don't want to be tied into storage and CPU utilities that are hardware dependent," he says. Fernando recommends that an IT manager should ensure they don't tie themselves into a particular brand of hardware. "If you go to X, Y, or Z vendor, their solutions usually only work on their hardware," he warns.

Dimension Data solution architect Chris Terry agrees that an obstacle to the idea of outsourced storage is that customers might choose single vendor solutions rather than best of breed. "When companies drink from the same trough for their storage and servers with providers like Sun or HP, who offer managed solutions based around their platform and the storage together, that can benefit the customer in terms of lower integration costs," says Terry. "But if the customer already has a multiple vendor environment, and chooses one storage service provider, it can end up with a less than best of breed solution, which suits one part of its architecture. Whilst it's ok to look at managed solutions, its best to choose the best of breed storage solutions and wrap the management around that," he adds.

Brent Paddon, general manager of WebCentral Complex says that once you have identified your storage requirements you should speak to colleagues from other companies and seek recommendations, and examine any contracts and guarantees available. "Increasingly, we are seeing strategic sourcing decisions being made using specialist providers for niche services rather than the previous ‘whole of IT' outsourcing approach. I would recommend you consider the location of the storage service, what SLAs are available, the stability of the firm providing the service, the provider's approach to technology upgrades, maintenance windows (if any), and whether there is separation from other clients' storage, backup procedures and cost," says Paddon.

Fujitsu's Crossing says that outsourcing is now in its second or third generation so today's IT management is generally very savvy in their selection of suitable providers. As with all outsourcing, there is generally no "one size fits all" so customers should look to a provider who can demonstrate that they not only have the skills and processes to undertake outsourced storage or storage on demand, but also the flexibility in both technology and contractual terms to meet the customers' specific requirements.

Future trends
According to Dimension Data's Terry, despite companies like Telstra creating storage server provider services in the form of Telstra Information Storage Solutions (TISS), companies still associate separation of their data and server as a risk.

For Terry, a more promising area than outsourced storage is managed storage. "In this way, the provider takes a monthly or quarterly fee for putting people on the customer's floor, and the customer doesn't have to worry about having core storage expertise in their business and can rely on their strategic partners to deliver the management," he says. "Customers can see, feel, and touch it and control risk," he adds. "If its just coming out of a fibre cable in a wall, customers don't have that control, and that's the reality of the fibre channel market. SAN security is still not a mature part of the market, whereas NAS-based devices provide stronger security."

Advanced Storage Systems' Wellar believes there will be a move to outsourcing the archiving of data for medium organisations. "These are the ones that have relatively large amounts of data and a small IT departments," he says. "For them the offloading of what can be time consuming, expense processes with low return for the organisation will yield the greatest benefit. For small organisations offloading the backup of data will give them savings and lower risk," he adds.

Wellar agrees that more and more companies are outsourcing data. "There are many ways for the outsourcing of data to work. It can start from the digitising of documents, to the use of data migration software to move data to an outsourced location. In the case of backup, the outsourced resources could be the target of the backup," he says. By this he means the movement of one or more logical data sets, viewed using an application or a Web browser at the client's premises. "For example an organisation might outsource all their old invoices. In this type of outsourcing, archival storage is being provided for e-files, just like various organisations provide for the storage of archived paper files," he adds.

Wellar says it is useful to remember that in most organisations at least 80 percent of the data is reference or historical data, and it might be this, and this alone, which is outsourced. "If you could outsource most of this data then the IT department and the storage investment can be directed at the critical high usage data," he claims. "For every terabyte of data you only have 200GB that is really high usage. It is a lot different having a system to cater for 200GB instead of one terabyte. Not all of the 80 percent could be outsourced but if even 50 percent of the data were moved offsite it would have a dramatic effect on the IT strategy and spending of an organisation."

Fujitsu's Crossing believes that as with all IT predictions, the only thing that can be said for a certainly is that new technologies, processes and driving forces will prove many predictions to be wrong over a relatively short period of time. "In general terms, though, the use of storage on demand and outsourced storage services is likely to keep track or perhaps even slightly stay ahead of general IT infrastructure outsourcing," he says.

This article was first published in Technology & Business magazine, a ZDNet Australia publication.