It's really difficult to make a business case for infrastructure. Find out how SAN and NAS customers have contributed more than $6.5 billion to bottom line results.

The conversion to Storage Area Networks (SAN) and Network Attached Storage (NAS) technologies has been dramatic among IT managers. The combination of low cost hardware and switched network infrastructures has brought the benefits of consolidation to a great number of customers. Competition among storage vendors has become fierce, margins are shrinking and the journey to software value add is well under way. The figure below demonstrates the rapid shift from the direct-attached storage approaches to networked storage among IT organizations. Direct attached storage (DAS) which accounted for more than 80% of all storage spending in 1999, will make up less than one-third of all spending in 2006. The up tick in networked storage is impressive as the economics of NAS and SAN are overwhelmingly evident.

Return on Storage Investments

ITCentrix recently conducted 227 interviews with senior storage professionals from a wide variety of US companies around the ROI of storage. The study found that:

• Networked Storage paid-off in a big way for customers. In 2002, for every dollar customers spent on storage, approximately $5 was returned to the business in additional benefit. The basic approach is to measure business value in three areas including:
  • TCO reduction
  • Business value of higher service levels
  • Business value of improved time to market
• Storage will continue to be a dependable investment for data center managers, achieving notable returns that far offset its costs. In 2002, for example, IT centers worldwide reduced their cost of storage management by $6.5 Billion through direct investments in storage networking. While storage networking costs (e.g. switching, software and implementation) are higher than DAS infrastructure, these additional costs are often offset by savings in management expenses.
• Moreover, the cost of disk storage continues to erode at a rapid pace, around 35% annually. The following figure underscores the dramatic price erosion in the storage market. The rapid price declines have, in many respects contributed to storage ROI by dramatically reducing storage expenditures needed to achieve benefits.

• The cost of managing a terabyte of storage has declined rapidly over the period from $190,000 in 1999 to just over $9,000 in 2006. Whereas monolithic storage started the trend in the 1990's, SAN and NAS have accelerated the declines in management complexity and brought superior economics to the marketplace.

The ROI problem facing IT buyers is twofold. First, infrastructure, in and of itself, is perceived to deliver no tangible value to an organization. Second, the justification for a capital investment in storage hardware and software usually boils down to cost savings (the reduction in total cost of ownership - TCO). Many organizations have difficulty measuring TCO and communicating savings in a simple yet compelling way to financial and business management.

Total Cost of Ownership

The return on storage investments is just one important component of a storage business case. During these difficult economic times, IT centers are (rightly) focused on cost cutting and cost containment. Accounting for total cost of ownership has become an imperative. Given the push for networked storage, many recent storage TCO studies have focused on the TCO of SAN vs. NAS. These studies have suggested that NAS is superior in all environments. Other studies have concluded that NAS will replace SAN completely. The common mistake is to forget that smart storage specialist have chosen the right solution for their environment, and that sampling from such environments will reflect those choices.

NAS in its early days was frequently used in scientific sites to help manage large filers. As the profile of NAS changes over time and different workloads are placed on NAS, the value of suppliers providing better tools grows. Currently NAS is found in most application types, and the tools are getting better to help manage environments that are more diverse. But the installed base of NAS is heavily biased towards its origins in technical computing, file and print.

ITCentrix is aware of serious mistakes made in studies where storage management efficiencies have been measured by taking samples of installations without normalizing for workload. To help bring sanity to some of the outrageous claims in this area, ITCentrix has used its Storage Value surveys, tools and methodologies to normalize SAN & NAS costs for the same workloads.

In looking at storage TCO, ITCentrix took into account the cost of storage (average costs), the cost of management, the cost of connectivity (Fibre switching or Ethernet), and the cost of implementation over a three-year period.

Costs have been normalized for the NAS and SAN topologies to achieve roughly equivalent response times at the application level. The purpose of this analysis is to debunk certain myths in the industry related to the TCO of various storage types. Simply put, NAS and SAN are appropriate for different workloads/configurations and direct cost comparisons should only be made with an understanding of the complexity of work being performed by the applications supported.

As shown in the next figure, for technical workloads, management costs as a percent of the total are relatively small. In such workloads the added complexity, implementation costs, switching costs and performance of SAN are not warranted and NAS is a more attractive approach.

The next figure shows the same data in a business critical workload. Note that the management costs are substantially higher, dramatically increasing the 3-year TCO. It is also notable that SAN complexity, switching costs and higher implementation costs are warranted in such workloads because of the potential savings in management costs.

Notable industry studies in the past have mistakenly surveyed NAS and SAN users to conclude that NAS is cheaper to manage than SAN. The mistake made by these studies is they simply ignored the type of work being performed. An analogy is a 747 jet is more expensive to operate than a Cessna and therefore a Cessna is superior for shorter flights. But a 747 is superior on a trip from New York to Tokyo. Simply looking at the cost of operating a Cessna on a flight from New York to Boston and comparing it with the cost of operating a 747 from New to Tokyo is dubious.

ITCentrix concludes that NAS & SAN will coexist in the marketplace. The choice of NAS or SAN will remain a question of "horses for courses", and experienced Storage professionals will continue as now to configure and choose the right solution for the right environment.