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.