Some areas of IT spending are relatively easy to justify
because they bring a direct improvement to the bottom line, but
most boards of directors have yet to see data storage in this
light.
For many it is seen as an IT cost and a significant one – the
combined spending on data storage from Europe, the Middle East and
Africa is about £3.4bn a year.
But if you look at the drivers that are fuelling spending on
storage, you start to understand the many real justifications for
seeing it as an investment. Take compliance for example. A survey
of 630 IT directors across EMEA – the Hitachi Data Systems Storage
Index – reveals that 37% view compliance with the raft of
regulations such as the Sarbanes-Oxley Act and Basel 2 as a key
driver for investment in storage.
Broadly speaking, the regulations are about managing risk,
reducing fraud and avoiding conflicts of interest. Failure to
collate and store the required data to comply with the regulations
could – in the extreme – lead to regulators halting an
organisation’s trading.
On the positive side, some financial institutions that are able to
take advantage of the improved risk calculations under Basel 2, for
example, may actually be able to release hundreds of millions of
pounds from their reserves. When you look at storage spending in
this context, you soon start to see the merits.
Two often quoted and related drivers for spending on storage are
business continuity and data availability. These were mentioned by
81% and 78% of IT directors respectively in the research. This
spending is fuelled by the fear of terrorism and natural disasters,
the rising importance of data to business processes and an
increasingly 24x7 business culture.
Spending on business continuity and data availability should be
firmly rooted in the cost to an organisation should disaster strike
or an outage occur, along with the probability of such incidents
occurring. For many organisations the potential costs are
significant.
According to analyst firm Gartner, two out of five enterprises
that experience a disaster will go out of business within five
years of the event. And for a typical financial institution, the
cost of service interruption is estimated to be between £40,000 and
£170,000 a minute.
Although storage spending is likely to remain a large part of the
IT budget, another driver is the fight to reduce storage operating
costs. IT departments are keen to make the storage infrastructure
more efficient by improving the utilisation of storage resources as
well as automating processes and reducing the burden on management
time.
The current buzzword in storage cost reduction is data or
information lifecycle management. ILM relies on the idea that the
value of a piece of data and how critical it is to an organisation
changes over time. The challenge for IT departments is to ensure
that data moves through appropriately costed storage
infrastructures during its lifetime.
Tony Reid is director of enterprise systems
EMEA at Hitachi Data Systems
This article is part of Computer Weekly's Special Report on
Storage produced in association with Hitachi Data systems.