Like everyone else, data storage professionals pretty much have one thing on their minds these days — the economy.
“The economy has many anxious about jobs,” said Tim Chester, CIO of Pepperdine University in Malibu, Calif. “A 10 percent budget cut for 2009 has been painful for us.”
Chester has been CIO at Pepperdine University for two years. During that time, he’s already had to deal with a 10 percent cut in expenses to justify new investments. In recent years, the university has deployed a new wireless network infrastructure as well as major storage upgrades. A few months back, it purchased 40TB of Fibre Channel disk from EMC (NYSE: EMC), and it also has an IBM (NYSE: IBM) Shark.
Squeezing Maintenance Contracts
As the college has already been through a round of belt-tightening to find the money to add all that new gear, Chester is looking at maintenance costs as one of the primary areas of cost savings.
“We are asking external vendors to take a 10 to 15 percent drop in regular maintenance fees, with mixed success,” he said. “Some are very understanding and are working with us. Others aren’t willing to help.”
There isn’t much wiggle room with EMC, for instance, as that is a relatively new contract. For many of the others, Pepperdine frames the discussion around a choice — either take a hit of up to 15 percent on maintenance or risk losing any further maintenance, as those items could be taken off the floor.
Overall, Chester is glad the organization engaged in so much technology build-out in the last few years. That has positioned the university to tough it out through a few years of potentially lean allocations.
“We are sitting tight as regards new storage purchases,” said Chester. “Our new SAN can be expanded up to 100 TB, so we are probably good for the next three years or more in terms of capacity.”
Justifying Storage Budgets
While Pepperdine is trimming, local governments like the City of Encinitas in Southern California are instituting zero-based budgeting.
“There is a considerable amount of concern in the local government sector about wage freezes, layoffs and outsourcing of services,” said Rainer Mueller, an IT analyst for the City of Encinitas. “With zero-based budgeting, we have to justify every dime we spend.”
He gives the example of desktop replacement. Desktops used to be routinely replaced every four years. That has now been extended to five. Vendor loyalty, too, is difficult to maintain.
“We are always checking to see if another vendor can offer the same or similar product at more aggressive pricing,” said Mueller.
Similar shifts are occurring in storage purchasing. According to Mueller, the city used to throw more hard drives or another box at a storage problem.
“We always used to buy more storage space to be on the safe side,” he said. “Invariably, we were always too safe and would end up with lots of untapped storage.”
He’s now focusing more on Virtual LANs (VLAN) so he can consolidate excess storage space into the equivalent of one large storage device.
“This makes it much easier to manage, monitor, maintain and back up,” said Mueller. “Although the initial price may be a stumbling block, the long-term return on investment will allow us to better utilize the storage space we already have.”
Maximizing Storage Resources
How are vendors dealing with the economic crunch? They too are feeling the heat.
“It’s all about saving time and money,” said Jim Dougherty, lead engineer at network monitoring vendor Plixer International of Sanford, Maine. “Budget curtailment has to be the hottest topic in my conversations with customers and prospective customers.”
At the end of the year, he reported that just about everyone was telling him that they were on a budget freeze or had suffered from significant cuts. That has forced users to focus on their core needs.
Bill Stith, senior director of storage solutions at SunGard Availability Services of Wayne, Pa., echoed Dougherty’s view.
“We are hearing customers ask how they can align storage with critical business necessities when we’re faced with lower budgets and over-extended IT departments,” he said. “We are seeing an expectation from the business side that IT budgets and headcount get reduced by as much as 20 percent in 2009 versus what they were in 2008.”
He points out, though, that even in economic downturns, the necessity for available data and regulatory compliance requirements do not slow down, and companies must continue to ensure that information availability and disaster preparedness remain a key part of IT operations. As a result, the financial climate may play into SunGard’s hands. Plans for new disaster recovery sites, for example, are being put on hold in some quarters, with collocation being a much cheaper option — at least in the short term.
“Customers are asking the hard questions around how they are using their infrastructure and if there is an ability to optimize and re-prioritize,” said Stith. “Specifically, organizations want to know if they can rebuild a management strategy for value from an existing infrastructure. They want to know if it is possible to put off buying more storage for a year or more by optimizing what they already have.”
He’s also seeing companies ask if they can adjust SLAs for the business and operations to lower costs (cost/benefit analysis) and look to simplify solutions with processes and tools that help remove waste and “overspending.” Thus, SunGard is implementing better storage management services to its customers to permit then to better control their costs.
So how is the current economy influencing the popularity of the various availability services that SunGard offers?
“Services that can help companies lower their TCO with rapid ROI are the most popular, such as storage optimization, data center optimization/consolidation and virtualization,” said Stith. “Companies are looking to reduce existing expenditures and create the ability to put off spending on organic growth by getting more out of what they already have.”