As theinformation storage needsof many
large enterprises grow and become more complex, IT executives must
have better policies to guide their efforts.
For many companies,
data storage has become one of the
fastest-growing parts of the IT budget, thanks to
enterprise-wide transactional systems, massive data warehouses and
explosive growth in e-mail traffic. Although the storage market has
been growing 7% a year, in some large enterprises,
networked data storage - disk drives, tape systems, specialised
network gear - and the people and software to manage these has
grown by 20% or more annually, even where IT budgets have barely
budged.
The demand for storage has grown more than 50% annually in
recent years, a rate faster than the rapidly decreasing unit cost
of storage. If storage costs continue their rapid rise, enterprises
must manage storage more efficiently if they are to exploit new
forms of information such as more detailed financial data, digital
images in life sciences or video in media companies. It is a
daunting challenge for IT managers to combat the rising volume,
cost, and complexity of storage. They must make decisions on a wide
range of issues about storage architecture, design, operations and
performance.
Business users - the internal customers of IT - commonly ask for
more than they need because they are not accustomed to making
decisions about trade-offs between storage cost and quality. In
many cases, storage decisions result from policies designed by
legal and regulatory teams, which focus primarily on risk
mitigation. Some IT managers err on the side of caution to guard
against personal cost, were data to be lost. As a result, companies
store non-critical data on expensive configurations or keep too
many copies of information in too many places.
IT managers must implement
policies that define storage options and help business users set
priorities based on economics and needs. IT managers need to
engage with business leaders in a more systematic way on the
trade-offs of investments in risk, performance and cost. This
includes providing business customers with standard storage
configurations that define clear service levels and unit costs. By
working closely with the business, IT leaders can help internal
customers make better decisions to balance the competing demands of
storage, cost, resiliency and performance.
IT managers can then take important steps to streamline the process
for making new storage requests, planning future demand and
procuring hardware and software. One large enterprise reduced its
storage costs by 40%. It spent the capital on new capabilities and
applications it needed in the immediate future.
Struggling to manage storage
New applications, more complex business analytics and the need
to meet regulatory requirements fuel demand for additional storage.
Pharmaceutical companies, for example, are considering
digital-storage options for all their imaging data such as MRI
scans, a change that could hasten new products to market but double
the storage needs of these companies. Similarly, a hedge fund's
storage costs could increase exponentially as it captures and
stores more granular "tick-level" trading data to meet financial
regulations and develop trading strategies.
In many enterprises, the storage environment has grown so
rapidly it has outrun the IT department's ability to manage it
effectively. As a result, many organisations are experiencing a
common set of problems.
Too many copies of data
In many cases, companies find it quicker and easier to back up
information by making multiple copies. But across a large
organisation, this approach increases storage volumes dramatically
as companies keep too many copies of business data. An electronics
manufacturer, for example, kept as many as 12 copies of its core
production applications, each with its own full copy of data. This
tripled its storage needs for these applications.
The problem is further complicated by rampant replication.
Network storage derives its resiliency, in part, from the replicas
of underlying business data it creates, but multiple replicas
increase the demand for storage. An 11 terabyte database can
require 170 terabytes of raw storage for its replicas, depending on
its configuration. One pharmaceutical company stored ten copies of
clinical trial information indefinitely when four would have met
its legal obligations. Few companies archive and purge outdated
information aggressively, either because they are risk-averse or
they believe it is not worth the effort.
Placing data on inappropriate storage
configurations
For every storage decision, managers have to consider the type
of network, the size of drives and the required mirroring and
replication. Each choice has implications for cost, but these
decisions are often made haphazardly and can place data on storage
alternatives of a higher performance than applications require. One
electronics manufacturer stored 70% of its test and development
data on expensive storage options, even though much of this data
typically did not have stringent requirements for uptime or
performance.
Buying excess capacity
Well-managed companies use 80% or more of their available
storage, but in others that figure hovers around 40% to 50%. One
large IT organisation used only 50% of its storage capabilities.
Some of its individual storage systems were at just 10% to 20% of
capacity and one of its businesses used only 33% of the entire
amount of storage it had requested. One could argue storage always
needs to catch up with capacity, so having a little excess is not
so bad. But as storage consumes a growing share of IT budgets, the
cost of maintaining excess capacity becomes material.
Why effective management is difficult
Poor storage decisions stem from a variety of underlying issues,
notably time pressure, information gaps and breakdowns in the
relationship between business users and IT departments. Frequently,
these challenges are exacerbated by a capability gap. The storage
manager is promoted for technology skills rather than for business
and financial acumen. This focus on technology limits the manager's
ability to understand the total cost of storage and to communicate
those costs and the related trade-offs in business terms to the
rest of the company.
The
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This article was originally published in The McKinsey Quarterly
www.mckinseyquarterly.com
Copyright © 2008 McKinsey & Company. All rights reserved.
Reprinted by permission.
By James M Kaplan, Rishi Roy, and Rajesh Srinivasaraghavan, ©
The McKinsey Quarterly, June 2008
About the Authors
James Kaplan, a principal in McKinsey's New York office, leads
the technology infrastructure practice for McKinsey's global IT
group Rishi Roy is a consultant in the New York office and Rajesh
Srinivasaraghavan is a consultant in the Mumbai office.
The authors would like to thank Edward Hsu for his contributions
to this article.