Cloud Storage Options:  The True Costs
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Cloud Storage Options: The True Costs

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The cloud presents organizations with a new way to deliver IT services. It can significantly lower costs, improve efficiency, and, if implemented well, provide significant competitive advantage.......

The cloud presents organizations with a new way to deliver IT services. It can significantly lower costs, improve efficiency, and, if implemented well, provide significant competitive advantage. But cloud computing takes a number of forms: private, public hybrid and combinations of these. These options can be confusing in terms of their technical implementations as well as their economics.

This session describes the various types of clouds and major trends in the cloud market. It also looks at the economic issues to consider when making the decision on whether to go with cloud, and if you choose cloud, which path to take.

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  • Start with private cloud benchmarkCloud burstNeed for different financial models

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  • 1. CLOUD STORAGE OPTIONS: THE TRUE COSTS STEVE GARONE, DAVID MERRILL, AND DON MCNICOLL JANUARY 15, 2014 1 © Hitachi Data Systems Corporation 2014. All Rights Reserved.
  • 2. WEBTECH EDUCATIONAL SERIES CLOUD STORAGE OPTIONS: THE TRUE COSTS The cloud presents organizations with a new way to deliver IT services. It can significantly lower costs, improve efficiency, and, if implemented well, provide significant competitive advantage. But cloud computing takes a number of forms: private, public hybrid and combinations of these. These options can be confusing in terms of their technical implementations as well as their economics. This session describes the various types of clouds and major trends in the cloud market. It also looks at the economic issues to consider when making the decision on whether to go with cloud, and if you choose cloud, which path to take. Attend this webinar to learn how to: • Understand cloud variations and the technical and economic considerations associated with each. • Gain insight into the cost and other economic factors associated with implementing cloud solutions. • Become familiar with specific cloud use cases and their economic profiles.
  • 3. AGENDA OVERVIEW OF CLOUD MARKET AND CLOUD DELIVERY OPTIONS 1 CLOUD ECONOMICS PRINCIPLES CLOUD ECONOMICS USE CASES CONCLUSIONS: UNDERSTAND AND COMPARE 2 3 4
  • 4. WHY IS CLOUD INTERESTING?  Cloud brings greater agility and flexibility to IT -  Potential for universal access and services connectivity -  Scale up or down based on dynamically changing needs (especially where unstructured data is an issue) Choose the financial and cloud delivery models that make sense for you Flexibility of application choices Access to applications and data anywhere, anytime, and from any device Cost reduction (maybe) - Depending on delivery and financial models chosen, cloud can provide savings in some cases
  • 5. HOW BIG IS THE CLOUD?  Lots of ways to measure the impact of cloud Public cloud services  17.4% CAGR through 2017  End-user spending on public cloud services will reach almost US$250 billion by 2017 Source: Gartner, 2013 Private cloud IT infrastructure (hardware and software) Top reasons for using a private cloud  17.6% CAGR through 2017  Improve service levels and business agility  Software will grow faster than hardware  Quicker implementation of new services and business processes  Spending will grow to US$22.2 billion by 2017 Source: IDC, 2013  Reduce IT staff count Source: IDC, 2012
  • 6. THE CLOUD DEFINED  Three models dominate the cloud market    Private cloud: Implemented totally within the enterprise firewall and under complete control of the IT department Public cloud: Implemented typically by service providers making resources available to enterprises and the general public via the Internet Hybrid cloud: Combines private and public models; workloads reside on either or both and can easily interoperate
  • 7. CLOUD IS NOT 1 SIZE FITS ALL AT YOUR DATA CENTER Traditional Storage Needs Private Cloud OFFSITE DATA CENTER Hybrid Cloud OFFSITE DATA CENTER Storage Public Cloud
  • 8. ONE FOUNDATION, MULTIPLE IMPLEMENTATIONS FLEXIBILITY AND CHOICE TO MEET A VARIETY OF DEPLOYMENT MODELS AT YOUR DATA CENTER Traditional Storage Needs Private Cloud OFFSITE DATA CENTER Hybrid Cloud OFFSITE DATA CENTER Public Cloud Virtualized Storage STRONGER NEED FOR     Strict SLAs High performance Data security Control STRONGER NEED FOR  Opex financial model  Flexibility of use  Fast reaction to change
  • 9. WHY CLOUD ECONOMICS IS IMPORTANT  Cloud, like any other option, involves true TCO considerations    Cloud delivery models present different cost profiles      Cloud decisions can be long-term and “sticky” A real TCO evaluation involves many variables that may not be obvious up front (such as costs of data center modernization) Capex vs. opex Network access costs and data transfer costs Optional services (such as security) Costs and other economic considerations must be measured against benefits of various cloud (and non-cloud) options The cloud market is highly competitive   Requires a careful look at exactly what you are getting (are low published prices real?) Need to understand total costs given your exact needs
  • 10. AGENDA OVERVIEW OF CLOUD MARKET AND CLOUD DELIVERY OPTIONS 1 CLOUD ECONOMICS PRINCIPLES CLOUD ECONOMICS USE CASES CONCLUSIONS: UNDERSTAND AND COMPARE 2 3 4
  • 11. KEY PRINCIPLES OF I.T. ECONOMICS  It is becoming essential to apply economic and financial principles to IT ‒ Architectures, roadmaps, standards ‒ Operational excellence ‒ Consumption behaviors  Use TCO to measure and compare Identify Measure Reduce  Four key principles of storage and IT economics 1. Price does not equal cost – price is about 20% of TCO Measure Again 2. Thirty-four different types of cost – where is your sensitivity 3. There are economically superior IT architectures 4. Econometrics – “You cannot improve what you cannot measure”  Cloud economics requires an awareness of hard and soft costs
  • 12. DO CLOUDS REDUCE UNIT COSTS?  We need to first understand current unit costs before we start to compare to cloud offerings Much more to consider than just the price (as it will be lower)  Cloud may introduce new costs Risk Performance, latency Additional circuits Onboarding, migration, lifecycle costs Penalties Vendor management  Measure these costs over a multi-year horizon, then calculate the PV cost to determine if is really lower  Make sure that you are reducing costs, not just shifting costs  Don’t get seduced by very low-cost cloud pricing
  • 13. SHIFTING THE COSTS? Storage Total Cost Element Traditional Ownership Private Cloud, Utility Depreciation X Maintenance X Labor X (?) Electricity X X Floor space X X Backups Public Cloud X New data circuits Subscription fees X X X Usage penalty X Performance risk X Onboarding or offboarding X
  • 14. CLOUD ECONOMICS RESOURCES  Websites   White papers, books    www.economizeyourstorage.com http://www.hds.com/assets/pdf/four-principles-for-reducing-totalcost-of-ownership.pdf “Cloudonomics” by Joe Weinman, 2012 Blogs     http://blogs.hds.com/david/2012/03/storage-clouds-sweet-andsour-spots.html http://blogs.hds.com/david/2011/08/don’t-just-transfer-thecosts.html http://blogs.hds.com/david/2012/10/transformation-and-theimpact-to-your-staff-part-4-utility-based-consumption.html http://blogs.hds.com/david/2013/07/cloud-economics-from-theiaas-perspective.html
  • 15. AGENDA OVERVIEW OF CLOUD MARKET AND CLOUD DELIVERY OPTIONS 1 CLOUD ECONOMICS PRINCIPLES CLOUD ECONOMICS USE CASES CONCLUSIONS: UNDERSTAND AND COMPARE 2 3 4
  • 16. KNOW YOUR USE CASE − CAVEAT EMPTOR  Cloud introduces paradigm shift to IT and business -  Many options available; key to value is matching option attributes to your use case -  Significant benefits to be realized One size does not fit all The details matter Storage use cases - Systems of record  The day-to-day business, mission-critical Systems of reference  New(er) applications, business-important
  • 17. RELATIVE ACQUISITION COSTS $$/GB/Month 2.5 • Acquisition costs are very low 2 1.5 • Other costs need to be considered 1 0.5 • With cloud, emphasis changes 0 CAPEX IT Private Cloud Public Object Public Cold Stor Stor
  • 18. THE DETAILS MATTER  Information is readily available, so take the time to understand it - What are the rules, what do they mean, how do they apply to you  On-boarding costs - Network charges, requests, one time charges, gateways  Off-boarding costs - Network charges, requests, excess charges  Free retrieval - Five % per month is .167% a day  Retrieval time is impacted by daily rate  Simple models, vendor calculators, and 3rd-party tools available as well
  • 19. A SIMPLE MODEL Drag Slider to Select Target TB Stored 300 $$/Hour per Employee $ 60 FTE Affected 5.00 Retrieval Hours 24
  • 20. CONSIDERATIONS 300TB, NO USE BEYOND UPLOAD, DOWNLOAD  Onboarding ‒ Cost of storage TCO Including Onboarding and Offboarding $1,000,000 ‒ Requests $900,000 ‒ Network $700,000 $800,000 $600,000  Offboarding Obj Stor 0 $500,000 Cold Stor 0 $400,000 ‒ Requests $300,000 ‒ Network $100,000 $200,000 $- ‒ Excess charges ‒ Delete vs. retrieve is a plus 1 Year 2 Years 3 Years
  • 21. WHAT ARE YOUR REQUIREMENTS? $2,000,000 $1,800,000  What if retrieve is 5% with 4-hour response? $1,600,000 $1,400,000 $1,200,000 Obj Stor 0 $1,000,000 Cold Stor 0 $800,000 Cold Stor 5 $600,000 $400,000 $200,000 $1 Year 2 Years 3 Years  Or 5% with 24-hour response?
  • 22. TIME IS MONEY  Five % of 300TB - 15,360GB • 2,565GB per day  Five FTE group - $60/hour
  • 23. UNDERSTAND YOUR USE CASE  Retention period and disposition ‒ Longer is better ‒ Delete better than retrieve  Retrievals ‒ Percent per interval ‒ Response time  What is the cost to wait? ‒ Who or what is waiting on data?  Don’t be misled by low acquisition cost
  • 24. OUR AGENDA FOR TODAY OVERVIEW OF CLOUD MARKET AND CLOUD DELIVERY OPTIONS 1 CLOUD ECONOMICS PRINCIPLES CLOUD ECONOMICS USE CASES CONCLUSIONS: UNDERSTAND AND COMPARE 2 3 4
  • 25. BOTTOM LINE: DO YOUR HOMEWORK  Assess your goals and priorities in moving to the cloud up front     What problems are you trying to solve? Understand your use cases Determine mix of delivery and financial models Carefully assess options available to you    Gain a full understanding of all associated costs Take a “full-TCO” approach to determining the costs of your choices Measure vendors and providers against realistic economics metrics as well as functional ones If cost is a high priority in moving to the cloud, make sure you fully understand all costs associated with the move – there is more to the cloud than just acquisition costs!
  • 26. YOUR PATH TO THE CLOUD HYBRID Do it yourself or bring in HDS Services PUBLIC Transform into a service-defined IT organization Increase business agility with on-demand consumption of infrastructure More Responsive More Cost Effective More Efficient TRANSFORM Hitachi Services Framework PRIVATE CLOUD More Flexible
  • 27. HITACHI OPEN CLOUD ARCHITECTURE FRAMEWORKS AND PORTALS CLOUD AUTOMATION SUITE My Status Active Messages pending My Account My Services New payment Abc def g h ijk lm no pq rstuv wx yz Abc defg h ijk lm no q r s tuv wx y z Abc defg h ijk lm no pq rst uv wx yz Add services View bill View reports OPEN CLOUD TRADITIONAL SOFTWARE DEFINED ARCHITECTURE ARCHITECTURE ACCESS METHODS AND PROTOCOLS  Block  File  Object Amazon S3  Cloud REST/HTTP(S) WebDAV  Mobile ORCHESTRATION AND MANAGEMENT SOFTWARE  Entire solution stack  Across multiple frameworks  APIs for customer or 3rd-party integration INFRASTRUCTURE  3rd-party storage  Spin down  Server and network  Hard disk drive and flash  Optical  Tape
  • 28. QUESTIONS AND DISCUSSION
  • 29. UPCOMING WEBTECHS  WebTechs ‒ Best Practices for Deploying Exchange for Microsoft Private Cloud, January 29 a.m. PT, noon ET Check www.hds.com/webtech for  Links to the recording, the presentation, and Q&A (available next week)  Schedule and registration for upcoming WebTech sessions  Questions will be posted in the HDS Community: http://community.hds.com/groups/webtech
  • 30. THANK YOU 30