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Building A Business Case For Flash Storage

Building A Business Case For Flash Storage
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Although prices of flash storage are dropping, all-flash is still an expensive option for the enterprise. Here's what to consider and how to build a business case for flash storage in the data center.

As they are written, these words are being saved to a flash drive. The author, involuntarily separated from an IBM career, immediately spent the first part of his severance package on buying a MacBook Air, and flash storage proved to be the selling point -- after "I'm never buying another damn ThinkPad as long as I live!"

The point is, the MacBook Air was superior to the MacBook Pro in this consumer's opinion because of both the cost and weight savings. The sales rep yammered on about some high-end things I could only do with the kind of traditional disk drive found in the Pro, but he spoke to ears waxed shut. This thing weighs less than some comic books. Upon picking it up with two fingers, the deal was done. Flash beats disk drive for mobile devices, period. It's settled science.

But what about on the enterprise level? Your data center's raised floor doesn't have to tote storage around on its shoulder, so it doesn't care whether it's solid-state or spinning disk. Can the case be made -- financially, driven by hardware, software, labor, network or facilities savings -- to go with flash?

MORE: Advantages of Flash in the Data Center

No, not without getting creative. (In accounting, "creative" is no compliment.)

Calculating Current State Costs

How much are you paying now for storage is the first question you need to examine. Let's make some assumptions -- some unrealistically simple so we can focus on the process rather than the data or the growth factors:

  • The current state comprises a 1 PB array.
  • It is 100 percent disk, the entire kit is due for refresh next year at a cost of $3 million.
  • OEM maintenance is $0 for the year of purchase due to warranty, then 20 percent of purchase price for the out-years.
  • All software costs are bundled in with the hardware.
  • There is only one tier of storage service.
  • There is no general or wage inflation.
  • There is no organic growth (capacity requirements are flawlessly predicted and all storage is bought in three-year bursts).
  • There are five full-time, in-house storage administrators; including the manager and one highly skilled senior resource, they earn on average a fully-burdened $130,000/year ($100k cash, $30k benefits).
  • The storage array requires 2,500 square feet of raised floor, 1 million kW-hrs/year to spin disk and another 250,000 kW-hrs/year to cool.
  • Each square foot costs $150/year in rent and power costs 9 cents/kW-hr.
  • There are neither regulatory constraints nor any non-rational actors affecting IT architecture.
  • Our business case is predicated on cash flow, so there is no depreciation.

Those being the case, let's look at our annual spend.

Figure 1: Calculating Annual Spend on Storage

What are Your Capital and Transition Costs?

In the current state, we know that the installation costs are bundled in with the $3 million spent every three years. But what does it take to move to a flash environment?

The answer requires breaking down the one-time costs into goods and services. The goods are the actual flash cards and the plugs they go into.
Services are multi-phased. You’d start out with a feasibility study. It probably won’t cost too much but, whatever it costs, it doesn’t go in the business case. That’s because it’s a sunk cost; whether or not your company green-lights the flash initiative, you still had to spend time and money figuring out if it would be a good idea.

Then comes the assessment phase, which determines, in so-called "big animal pictures," what proportion of the workload needs to stay on disk and what is a candidate to migrate to flash. This is where the costs and benefits of implementation are SWAG'ed to plus-or-minus 25 percent.
After that comes the detailed design and planning phase, when a more detailed assay of the current state is taken, precise workload migration plans are drawn up, target-state configurations are determined, and the costs for both the new hardware and the migration effort are established, based on best-and-final pricing and detailed project plans.

But, at this point, the financial case was already made. The vendor’s financial analyst during the assessment phase was directed -- if he was new -- to guess high, so that the actual costs determined in the detailed phase would come in lower to make everyone concerned look good. There are no show-stoppers during the detailed phase, at least in the financial work stream. It's a freight-train ride clear through the implementation phase.

So let’s say that the feasibility study is $100,000. Or $100 million. Makes no difference. It’s a sunk cost. Let’s also say that the assessment is $250,000. Or $250 million. Since you’re not getting a business case until it’s all done and (presumably) paid for, you have to consider that a sunk cost too. Continuing with this example, detailed design is another $300,000 and the implementation is $1 million.

We’ll account for the solid state hardware the same way we did for disk, as cash expenditures as they’re incurred.

Lastly, we'll make the “magic wand” assumption that all expenses will occur in Year 0 and all benefits will accrue immediately starting in Year 1. (That’s baloney, but you got to start somewhere.)

Figure 2: Calculating Project Expenses

Where Are the Savings Coming From?

Now let's quantify the benefits of flash.

First of all, let’s be real and admit that nobody, nobody, nobody is going to go from a 100 percent disk platform to 100 percent SSD. But let’s say some slick sales rep talked your boss into a 50/50 hybrid array.

Storage in general is highly scalable in that you can add orders of magnitude of more capacity before you have to add people. But flash is even more so. No moving parts. Let’s assume that, if you go to 50 percent SSD, then you can go down from five admins to three.

Is that aggressive? Maybe so. Let’s balance it with a more conservative projection of facilities savings. Forecast a reduction of data center footprint from 2,500 to 2,000 square feet. (This presupposes that this is space that can be repurposed easily, but just go with it for now.)

Meanwhile, we’re cutting power and cooling costs in half.

Because we’re retaining half the spinning disk, we’ll still need to spend $1.5 million on refreshing that estate. So that means we still need to buy half a petabyte of SSD, right?

Wrong. The real problem with disk has always been the ratio of raw capacity to usable to operational. Let's say the SSD vendor made the case that you only need one-fifth the raw capacity of its product to have the same operational effect as disk. That means you only have to bring in 0.1 petabytes. So what if the unit price is double? Also, its maintenance cost is negligible and, for our current purposes, let's just say zero.


Figure 3: Target State

What's the Investment Case for Flash Storage?

Level that playing field through investment analysis. For further discussion of internal rate of return, net present value and payback period, see How to Build a Successful Business Case for an IT Project.

But it all comes down to telling the executives: "Going ahead with this project is like:

  • putting $5.3 million in the bank today at 10% interest;
  • getting 144% interest on your money; and
  • realizing all savings free and clear after z months."

Figure 4: Investment Analysis

Business Case Resources:

To help you get your business case for Flash Storage off the ground, download this Excel calculator and PowerPoint template, which you can customize to your needs.

The Excel calculator will help you determine your current state, project costs, and target state. It includes all of the inputs you'll need so you can present the final analysis. The PowerPoint template will walk you through adding the analysis from the Excel calculator so you can present the information to your stakeholders in a logical way.

  >> Download Excel Calculator
  >> Download PowerPoint Template

To get a better understanding of the key metrics and math used in these resources, take a look at How to Build a Successful Business Case for an IT Project.

More Business Case Resources:

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