Simple Storage Cost Model (Part 2)

One of the most obvious omissions of the previous cost model is anything that would account for the costs associated with providing a DR/BC (disaster recovery / business continuity) environment for the data. After all, if the data is important enough to your business under normal conditions then chances are it will still be required following a disaster.

Costing Storage for DR/BC

The DR/BC components to be included in the costing model will vary wildly from enterprise to enterprise depending on the specific installation choices and recovery methodologies supported. As the recovery environment becomes more complex, more costs must be accounted for in the cost model.

In designing a fully mirrored operating environment with complete data replication, at first one might assume that a simple doubling of the costs associated with the primary site might be close enough. In rare cases this might be true, but this assumption should not be accepted by IT management unless it can be verified by a much more in-depth cost analysis.
Some of the differences that must be considered are:

Acquisition costs (CapEx):

• Storage costs: The secondary storage may be a different device type with different features, performance and cost characteristics.
• Network Equipment: Additional equipment such as channel extenders, routers, switches, etc. may be required.

Operational costs (OpEx):

• Support personnel costs: May be less than double due to economies of scale and less day-to-day management required of the recovery environment.
• Maintenance (warranty) costs for the equipment: Will probably be different based on the secondary device configuration.
• Environmental (power and cooling) costs: May be reduced at the secondary site by having redundant environmental systems in standby instead of active mode.
• Network costs: Additional monthly costs to provide the bandwidth necessary to support data replication.

Given these considerations, it is safe to assume that not only will the ratio of CapEx to OpEx expense be different but also that a simple doubling of the primary site costs would not be appropriate.

Updating the model

Again, for the purposes of illustration only, let us make-up some numbers to insert into our expanded cost model. We will utilize the following assumptions as the basis for our additional entries:
Acquisition costs (CapEx):

• The secondary storage can be acquired at 1.2 times the primary storage


• The necessary network equipment will be acquired at a one-time cost of $250,000

Operational costs (OpEx):

• The additional support personnel costs are estimated at an additional 40%
• The maintenance costs assigned to the secondary storage is estimated at 80% of the primary unit
• Secondary environmental costs are estimated at 60% of the primary site
• The additional expense for network bandwidth is estimated to be $25k/month
• The hardware maintenance expense associated with the additional network equipment is estimated to be $27,500 per year

Using these assumptions, the revised cost model is shown here:

Storage Cost Model
Acquisition Costs
Purchase 1 800TB Disk Unit		$1,100,000
Less any discounts or credits		$0
Purchase secondary storage (1.2* primary cost)		$1,320,000
Less any discounts or credits		$0
Purchase network equipment		$250,000
Less any discounts or credits		$0
Total Acquisition Costs			$2,670,000
Operational Costs	Per Year	Term 5 years
Primary Site
Support Personnel	$91,000	$455,000
Maintenance (EXCLUDING first year)	$77,285	$309,140
Environmental	$51,300	$256,500
Secondary Site
Support Personnel	$36,400	$182,000
Maintenance (EXCLUDING first year)	$61,828	$247,312
Environmental	$30,780	$153,900
Network
Circuit (Bandwidth) Expense	$300,000	$1,500,000
Equipment Maintenance (EXCLUDING first year)	$27,500	$110,000
Total Operational Costs			$3,213,852
Total Cost			$5,883,852
Cost per TB			$7,354.82
Cost/TB/Month			$122.58

Obviously, in this more complete cost model, the price per TB has gone up due the to additional hardware and network costs that are incurred for this particular DR/BC option. (Please remember that the specific costs shown are for illustrative purposes only and should not be used for any purpose other than to demonstrate the components of the cost model).

Once you have determined the appropriate numbers for your environment, it will be useful to compute the cost ratio between the non-mirrored storage and the fully mirrored and recoverable storage. This will allow you to provide two simple planning numbers to your data owners and application designers. The first is the Cost/TB/Month of the un-mirrored (and presumably unrecoverable) storage while the second number represents the monthly cost for the fully mirrored and automatically recovered storage. Once this process (and the associated costs) have been socialized throughout your enterprise, the business owners can determine early on what level of support they are willing to fund for their data.

The spreadsheet that was used in creating this sample cost model is available by visiting the Recovery Specialties website.

Simple Storage Cost Model (Part 1)

In the previous missive I described a means of assigning value to business data. In this post I will continue the discussion and show how to determine the storage costs associated with providing business data.

The cost of providing business data

The means by which IT organizations determine and assign costs are as varied as the organizations themselves. Some organizations may not have implemented any chargeback methodology or may use only hard dollar accounting costs. However, in order to gauge the true cost of data, the operational costs should be included as well.

Accounting costs

Acquisition costs (CapEx): The capital or acquisition costs are the easiest to calculate as you begin with a simple bottom-line number. In order to determine the true costs, however, it is important to understand that the capital acquisition costs typically represent less than half of the actual cost of acquiring and operating equipment.

Operational costs (OpEx): There are many operational costs that can be associated with a cost model. For the purposes of an IT cost model, at least three operational costs should be considered:

• Support personnel costs
• Maintenance (warranty) costs for the equipment
• Environmental (power and cooling) costs

Some IT environments will also include depreciation and floorspace costs to the calculation, while others may need to include specific taxes, insurance fees, or other costs specific to the enterprise.

Creating a cost model

Once you determine the components that you will include in the cost model, it is simple enough to enter these values into a spreadsheet to calculate the costs. The spreadsheet should capture the agreed upon major aspects, which include the capital and operational costs, including personnel, maintenance, and power and cooling. A typical operational time frame may be picked, such as three years to five years (depending upon the accounting practices currently in place within the enterprise).

Provided below is a very simple cost model demonstrating the costs associated with a single 800 TB disk storage unit over a five-year term. (Note: The specific costs shown are completely arbitrary and are supplied only for illustrative purposes).

Storage Cost Model
Acquisition Costs
Purchase 1 800TB Disk Unit		$1,100,000
Less any discounts or credits		$0
Total Acquisition Costs			$1,100,000
Operational Costs	Per Year	Term 5 years
Support Personnel	$91,000	$455,000
Maintenance (EXCLUDING first year)	$77,285	$309,140
Environmental	$51,300	$256,500
Total Operational Costs			$1,020,640
Total Cost			$2,120,640
Cost per TB			$2,650.80
Cost/TB/Month			$44.18

Although this model is still quite simple, I favor it as the starting point for determining actual storage costs. In particular, I am an advocate of being able to provide a “Cost per TB per Month” figure that can be referenced as IT clients request additional storage for new projects and systems.

The sample spreadsheet that was used in this example is available from Recovery Specialties.