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More go for SANs.

Even in times of tight budgets, companies must invest in order to remain competitive. Among the most important investments are those in future-proof IT infrastructures. To keep pace with ever growing amounts of data, many companies are forced to spend an increasing part of their IT budget for the upgrading of their storage capacities and the continuing maintenance of the implemented storage solutions. In the current economic situation, investment decisions are demanded of company executives which generate a sustainable value for the company. Successes can only be achieved by a clear commitment to medium and long term company goals. This is especially true for investments in enterprise-wide IT infrastructures. When one looks at IT priorities from an accountant's point of view this may be counterproductive, because this results only in short-term improvements of the business. CEOs, CIOs and CFOs must identify the consolidation potentials on every layer of the company and define strategic guidelines concerning the necessary IT infrastructure that help reaching the company's mid- and long-term goals.

Problem Storage

The storage issue becomes increasingly significant. A decisive factor for the quickly growing expenditures in this area is the fact that companies increasingly utilise data intensive applications for Enterprise Resource Planning (ERP), Customer Relationship Management (CRM), multimedia, e-commerce and data warehouse. Through transactions with distributed data and applications, all industries produce large amounts of mission-critical information, which needs to be stored, protected and kept available. In its recently published study 'Storage Networks and Services', Meta Group calculated that banks, insurance, telco and e-business companies had to triple or even quadruple their storage capacities per year. There is no end of this development in sight.

The coverage of their growing storage volumes and the increasingly complex administration has already become an essential task and forces the company leaders to significantly re-structure their storage environments.


By now, it is undisputed that decentralised storage needs to be consolidated. Storage Area Networks (SANS) offer a strategic solution to master the growing need for storage capacities, and the costs that are connected to that.

Decisions about SAN implementations belong in the hands of the company leadership, as all other projects that influence business processes. It is basically a specific project to optimise the business that applies to the IT infrastructure level. Like with any other consolidation project conducted by the leadership, it is about simplification, standardisation and prevention of redundancies. The goal is to enable the company to react flexibly on changing market situations. The respective risks, the costs, the increased efficiency and the complexity of the tasks are the most important factors to conserve.

No matter which level a consolidation project applies to, it usually affects and changes other levels of the company. For example, to reduce the workload of the IT staff they must be provided with better infrastructures and tools that allow them to work more productively. They will then have the time to concentrate on other tasks as well. Or, a company that implements an enterprise-wide SAN might need to hire a central storage administrator. This decision mostly leads to the re-organisation, or optimisation, of business procedures and thus has a significant impact on the company.

Financial Benefits of SANS

According to the above mentioned study, one third of the companies already utilise storage networks, and more than 40 percent plan an implementation in the near future. One reason for the success of SANs is certainly that they provide significant financial benefits. Besides improved business procedures, IT administrators mention faster data transfers, higher throughput, less downtime, more efficient utilisation of existing hardware resources and more effective IT management. 'The greatest benefit of our new storage network is that all our customers are able to access their data and their applications quickly and unrestrictedly, thanks to the high availability environment," states Dieter Herzog, head of the Data & Storage Management department at Swisscom IT Services in St. Gallen, Switzerland. "Furthermore, the existing infrastructure is more efficiently utilised by the SAN concept."

Many companies used to implement SAN solutions only in selected parts and project-specifically. Over time, this lead to the creation of SAN islands. In order to fully implement the financial benefits, executives should generally go for enterprise-wide SAN installations. Because, according to Robert M. Metcalfe, inventor of the Ethernet and founder of 3Com, the value of a network grows disproportionate to the number of users.

TCO in Comparison

In 2001, Merril Lynch and McKinsey performed a comparison of the overall costs (Total Cost of Ownership, TCO) of a network which highlighted the advantages of SANs compared to Direct Attached Storage (DAS) infrastructures. While the DAS concept costs around 84 cents per megabyte of storage, storage area networks cost only 38 cents per megabyte, less than half the DAS costs. This excludes the costs of about six cents per megabyte for additional hardware and its installation in SAN environments. Moreover, the study proves that a significant cost advantage of storage networks is the more efficient usage of storage resources. This correlates to a Gartner study from the same year that states that conventional storage solutions often use only 30 percent of the physical capacities.

Above all, the TCO comparison refutes the common reservation that the operation of SANs is connected to more personnel and time exposures than that of conventional storage infrastructures. In fact, the opposite is true: the amount of 'man-hours' necessary for a frictionless operation of the SAN is reduced by 87 percent, the costs decrease from 39 cents to 5 cents per megabyte.

Administration as Primary Cost Factor

According to IDC, in non-consolidated storage environments the costs for the data management alone might eat up more than half of the storage budget. Since an administrator can manage seven to eight times more data in a consolidated environment, these expenses can be significantly reduced by a SAN implementation. No wonder that the issue of server and storage consolidation has long since been recognized by small and midsize enterprises. However, the building of a powerful SAN infrastructure alone does not do the whole job. Despite decreasing hardware prices, IT departments note steadily growing operational costs, especially in large or fast growing SAN infrastructures. The primary reason for this is the fact that there are almost no adequate management tools available for the growing amounts of data and ever new applications. Companies try to meet this increasing management gap by more personnel. The better alternative, however, is a powerful SAN management software. Good software tools like McDATA's SANavigator enable admins to automate many of the day-to-day management tasks. Furthermore the trend is towards the virtualisation of the storage and of the switch fabric concepts that simplify the IT administrators' jobs.

According to this, there has been a change of priorities from the hardware-centered solutions towards the soft-ware-based solutions. This development is based on the realisation that appropriate software tools, which provide central control and easy operation of large amounts of data, are an important prerequisite for lowering the TCO with SAN infrastructures. McDATA is exhibiting at Storage Expo Olympia London from 15-16 October 2003.

Comment ... ROI of SANs

There are not many useful ways or tools to measure the amortization and the ROI of new SAN infrastructures which enable IT administrators to present verifiable numbers and facts to their executives. The return of a SAN is hard to measure, because factors like enhanced data availability, throughput rates, and management, as well as reduced downtime should be included in a sound calculation of the Return on Investment (ROI). The majority of users who implemented SAN infrastructures reach amortisation within 18 to 24 months. According to the 2002 Meta Group study 'Storage Networks and Services' 30 percent of companies questioned date the amortisation to the first 12 months, further 27 percent to the first 24 months. Moreover, 60 percent of the executives who plan a SAN implementation expect to amortize the project within one or two years. From that point on, companies obtain cost advantages that go beyond the costs of the initial investment.

Nigel St George, McDATA
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Author:St George, Nigel
Publication:Database and Network Journal
Date:Aug 1, 2003
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