For as long as I can remember, the standard model for buying enterprise-class storage has been based on a capital purchase. The customer specs out their requirements and perhaps runs an RFP (Request for Proposal) if the deal is large enough, or their industry sector requires it. The actual purchase of the hardware may be done as a finance deal and amortized over a number of years for accounting purposes.
Some key points of this process include:
- Time to delivery. Running an RFP is a time consuming and intensive process. Requirements have to be established; vendor bids are submitted and have to be validated and crosschecked. Terms have to be agreed and contracts signed before the hardware can even ship. The time from requirement to delivery can often be 3-6 months, putting lots of strain on the planning process.
- Over-purchasing. The effort involved in purchasing storage means there’s a temptation to over-purchase – fill up an array with 2-3 years’ growth, simply to avoid the pain of repeating the tender/RFP. Part of the problem here also arises from the pricing framework constructed by the vendor, many of whom will provide a reduced per GB buy price to customers who buy more up-front than those who add increments of capacity over time.
- Under-utilization. The consequences of over purchasing typically result in under-utilization of the hardware, as resources are consumed over the lifetime of the equipment. This extra capacity sits on the floor consuming space and power/cooling, making the TCO (total cost of ownership) of the purchase higher than expected.
More Flexible Models
Some end users attempt to avoid enterprise storage capital purchases by entering into a lease agreement using a third party financing company. While this avoids the up-front cost, it still results in the same consumption model, simply deferring payment to some point in the future and providing some degree of cash flow benefit. Leasing doesn’t fix the problem of over-purchasing or under-utilization. There are also other issues; the customer is typically tied into a minimum term (for example 2 years) for all of the capacity purchased and some leases may run longer. A lease typically doesn’t include the ability to refresh the technology during the lifetime of the agreement, as the contract is focused on providing financing for a hardware product, rather than a service.
Some vendors have tried to provide more flexible lease terms, most notably EMC with OpenScale, however these kinds of offerings typically scale up but don’t scale down as data is deleted or moved to other hardware. Costs therefore reach a “high watermark”, resulting in a higher $/GB cost as the capacity is scaled down.
As applications and data transition to the cloud and end users get used to this method of operation, yesterday’s hardware acquisition model for storage simply doesn’t work. Consumption needs to be based on capacity (GB and TB) with a price premium added for service features such as availability and performance.
End users want to:
- Buy storage on-demand (with little or no delays to deployment) and pay for what they use, whether the volume of data stored goes up or down. This includes having a small minimum commitment and contract term.
- Increase capacity easily in small increments and not be tied to volume acquisitions based around deploying new hardware arrays.
- Pay for consumption on a monthly basis – spread the cost of storage based on when it is consumed rather than all up-front. This enables customers to optimize their costs and to benefit from reductions in the cost of hardware underlying the service as new technology becomes available.
On Demand, On Premises
Zadara delivers On-Premises as a Service (OPaaS) storage for customers using VPSA (Virtual Private Storage Array) technology. OPaaS allows a storage solution to be deployed on-site with a minimum 6-month commit, including a 2 month proof of concept period. The service provides consumption-based charging with capacity increments as low as 10TB. As OPaaS is, by definition, a service, maintenance and support are included in the per GB price charged (typically less than 10¢ per GB per month).
Customers using VPSA benefit from the ongoing reduction in raw storage costs seen in both hard disk drive and solid-state drive technology. Additional capacity is supplied and installed, as the customer needs it, without an elongated acquisition cycle. The VPSA design also allows for capacity to be decommissioned and removed if required. Having the option provides customers with a degree of reassurance that their charges don’t always have to go up.
A true consumption-based purchase model provides the customer with significant advantages in their internal operating model, above the obvious CapEx (capital expenditure) avoidance. Storage can be purchased and recharged to internal businesses using the same financial model, rather than the IT department having to budget and plan ahead. It also avoids the awkward discussions that arise when unforeseen storage demands result in having to raise an “out of plan” capital purchase.
Storage as a service will see widespread adoption in the future by vendors that see the benefits of offering their customers flexibility and choice. Zadara Storage is delivering these benefits today.