The spread of networked storage, and the increasing willingness of firms to consider using third parties to help them manage their storage requirements, may mean the days of a single-location datacentre, managed only by internal staff, are numbered.
Add in the requirement to back up data safely in a location away from the main business operation, and the increasing demands of regulatory compliance in terms of being able to access data quickly and in an acceptable format, and it should be no surprise that companies now have several options when it comes to designing, implementing and paying for data storage systems.
The main options for companies are: continuing to specify, buy and manage systems internally; getting some outside help with all or some of these areas; using storage systems on a pay-per-use basis without having to buy fixed licences and hardware; or outsourcing the complete storage process or elements of it, such as management.
Hamish Macarthur, chief executive at research firm Macarthur Stroud International, said, "The type of cost model a firm chooses for its storage very much depends on the style of management at the company and the business changes it is going through.
"There has been consolidation and change in the datacentre. The number of servers has gone down and, from a service level viewpoint, the performance of storage arrays has improved. There has also been the benefit of virtualisation technology, which allows firms to network together different systems."
Macarthur said a number of firms were now in the next phase of consolidation, which was leading to some companies outsourcing all or part of their storage requirements.
Chris Haden, managing director of storage outsourcing supplier Anacomp, said, "Nearly all manufacturers of data storage equipment outsource the service and maintenance of their devices to third parties, such as us. So, given that the outsourcing model is already so prevalent in the industry, it is no surprise that attention is also turning to enterprises outsourcing the equipment itself and its management."
Outsourcing can be attractive for many reasons, such as access to technical specialists that may not be readily available inside the organisation, and the mitigation of risk in introducing new storage strategies, which comes with outsourcing.
Macarthur said the complete outsourcing of an enterprise storage system and its management generally depended on how that option fitted into the company's overall IT outsourcing strategy, but he said users should be cautious about industry hype concerning wholesale outsourcing.
"The industry and users should not get too carried away with making everything an on-demand function. This attitude was prevalent during the dotcom boom."
Another option for companies when paying for their storage is pay-per-use. This often sees storage suppliers absorbing the cost of the storage hardware installed and offering cheaper and/or more flexible software licence charges. In return, users pay them by the number of gigabytes of storage that has to be managed and backed up.
The idea is that companies do not have to buy storage systems and capacity outright based on speculative forecasts of their future needs - a method that can often leave firms with redundant capacity for much of the month or year. Rather, companies pay for precisely what they use.
Although effectively giving away hardware and providing cheap licences seems generous on the surface, Macarthur pointed out that in the past, many suppliers installed larger storage arrays than users were paying for. They did this, he said, in the hope the extra capacity would be paid for through extra licences and peripherals being purchased in the future to cope with further data storage expansion.
One advocate of pay-per-use data storage is the Wakefield Health Informatics Service, the IT department for health care trusts and GP surgeries in South Yorkshire.
Wakefield Health uses capacity-based pricing for the storage management provided by Computer Associates. The price Wakefield pays is based on the raw capacity used, removing the burden of tracking multiple licences (see box, p44).
By using Computer Associates' model, users can have spare capacity at their disposal ready to cope with peaks and troughs in their storage management requirements. So even if a user had data capacity for 10Tbytes of data but only used 5Tbytes, they would pay only for the management of 5Tbytes.
Also, the tools included in the contract give companies the ability to streamline data use, reducing the amount of storage needed and the amount of capacity they need to pay for, according to Computer Associates.
Wakefield's switch to capacity-based storage has led it to predict a saving of 37% on its costs for licencing. It has also freed up more than 4Tbytes of storage capacity with the help of the bundled storage tools.
Despite enthusiasm for the pay-per-use model in some quarters, Rupert Beeby, vice-president of strategy service at storage services company GlassHouse, said companies still needed to be convinced. "The nature of storage means that unwanted supplies must be actively removed, or disproportionate growth costs can be applied to the customer," he said.
Beeby added that customers were still buying outright because it was the "easiest and least-risk option".
"Pay-per-use results in the title to the goods remaining with the supplier and a reliance on the supplier's processes to deliver capacity in a timely manner. Such a model relies on the supplier making money in the latter years of the contract and customers exceeding their data growth projections."
GlassHouse has large customers that have chosen to stick with internal control of their storage by buying it outright, not least Dixons Group, which recently used GlassHouse to help implement a new data back-up system.
Steve Nunn, European partner at consultancy Accenture, agreed that pay-per-use may not be ideal for some. "A true pay-per-use model would allow users to give back what they were no longer using after buying licences for fixed amounts of storage, but this market segment is not mature enough to offer that kind of service, so may not be suitable for many companies."
Nunn said companies could get better outright purchasing deals or leasing arrangements if they knew what their storage capacity was, and what their future needs would be. In a buyers' market, with basic storage costs coming down, large firms in particular can dictate buying terms.
The problem for many firms, said Nunn, is the increasing distribution of storage around the organisation, with many locations having servers installed. The result is that many companies do not know what their storage requirements are. This lack of expertise in provisioning has opened up the market to suppliers specialising in outsourcing and pay-per-use, said Nunn.
However, despite some uncertainty at a number of companies about storage requirements, the vast majority of firms still prefer outright buying or leasing, according to analyst firm Gartner.
Rakesh Kumar, vice-president at Gartner Research, said 80% to 85% of companies still chose the buy/lease model for their storage requirements, and only 10 to 15% chose to outsource, with "no more than 10%" opting for pay-per-use.
"Where we see companies outsource it is usually part of a general IT outsourcing strategy at their company and not specific to storage," said Kumar. "It is a buyers' market and the price of hardware is coming down, and the density of the disc space is going up and holding more data, so why would most companies not want to take advantage of good buying or leasing options?"
Kumar said firms that chose pay-per-use models were often paying a premium for flexibility, while also effectively paying more per gigabyte of data.
"Companies that go down that road have to be very careful as they can commit to per-gigabyte prices for the next 36 months, when by that time the price on the open market could be a lot cheaper," he said. "Suppliers may ask users to sign complicated contracts based on industry price averages, and this is what companies must look at closely."
Kumar also said the licensing issue is not as clear cut when it comes to pay-per-use. "Contracts may offer variable prices for the price of each gigabyte and terabyte stored and managed, but the management software licences are not as variable, and users generally do not get refunds for licences that are under-deployed."
Also, said Kumar, companies usually have to add in the cost of licences for additional storage management software not included with the hardware/software from the pay-per-use supplier.
There is still only a gradual shift towards outsourced storage, and pay-per-use is still in its infancy. Further modifications may come from pay-per-use suppliers to make it more attractive and seemingly less risky to users. So perhaps the traditional datacentre, owned and managed from within, still has plenty of life left.