What's the true cost of IT?

NETWORK WORLD NEWSLETTER: MIKE KARP ON STORAGE IN THE ENTERPRISE
08/18/05
Today's focus: What's the true cost of IT?

Dear networking.world@gmail.com,

In this issue:

* Price of widgets are down but what about the cost of managing
  those widgets?
* Links related to Storage in the Enterprise
* Featured reader resource
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Today's focus: What's the true cost of IT?

By Mike Karp

The price of the highest performance (15K rpm) SCSI drives is
now below $6.50 per gigabyte. On the other end of the scale, the
price for low-end SATA drives has dropped to about one-tenth
this amount. Quantity one. I am guessing most of the readers of
this column buy their storage in somewhat larger quantities, and
thus their price per gigabyte is going to be substantially
lower.

As my friends on the software side of the business are fond of
pointing out, "storage is free, it's the management that costs."

Well, maybe. The dollars used in buying all that storage
hardware come out of somebody's budget - I rarely come across a
hardware vendor who really is just giving the storage hardware
away or an IT manager who tells me that his "money bucket" is
infinitely deep. But the point is well made. Those operational
costs associated with managing the storage infrastructure just
keep on coming, quarter after quarter after quarter. It's the
operational expenses that gets you.

Most IT managers try to understand the total cost of ownership
(TCO) of whatever they purchase, but if truth be told, most fail
miserably at the job. It is just too hard for them to come to
grips with all the associated expenditures that may appear as
"trailing costs." Price of course is always important, but what
about all the things that may contribute to cost during the
lifecycle of the devices you buy? I wonder how many of my
readers are consistently willing to purchase products that are
not the cheapest choices available?

Simplistic TCO analyses have always been a blight when it comes
to contributing to IT decision-making. After all, they make the
fundamental assumption that cheapest is best - but if cheapest
is always best, why don't Fortune 500 companies trust critical
corporate data to cheap devices? Because they know the cost of
managing many cheap devices is often exorbitant. More
importantly of course, they also appreciate the potential
breadth of costs associated with data downtime. So they choose
something as bullet proof as they can find, swallowing the
up-front cost in favor of long-term, deferred savings and a good
night's sleep.

"Cheapest" can only be determined on the day a piece of hardware
is retired from the IT room, written down by the accounting
department, and donated to charity.

"What this country needs is a good five cent cigar," said Thomas
Riley Marshall, Vice-President of the U.S. in 1919, probably a
somewhat simplistic analysis of how things were back then.

Several decades later Franklin P. Adams added the following
rejoinder: "There are plenty of good five-cent cigars in the
country. The problem is they cost a quarter. What this country
needs is a good five-cent nickel."

All of which I take to indicate that the real cost of things -
cigars, storage arrays, whatever -is much more than just the
purchase price. It also means looking at whatever else may
contribute to cost throughput the product's life. With cigars,
this meant accounting for inflation. With hardware, above all
else it means accounting for the costs associated with
manageability and with downtime.

Economists and business people have understood this for a long
time. Technologists have not.

The top 5: Today's most-read stories

1. Windows worm beginning to spread
<http://www.networkworld.com/nlstorage5446>

2. Cisco to juice 6500 switch
<http://www.networkworld.com/nlstorage5225>

3. Help Desk: Sniffing on a switch
<http://www.networkworld.com/nlstorage5447>

4. Zotob worm exploits Windows 2000 Plug and Play
<http://www.networkworld.com/nlstorage5448>

5. Google goes berserk
<http://www.networkworld.com/nlstorage5417>

Today's most-forwarded story:

Cisco to juice 6500 switch
<http://www.networkworld.com/nlstorage5228>
_______________________________________________________________
To contact: Mike Karp

Mike Karp is senior analyst with Enterprise Management
Associates, focusing on storage, storage management and the
methodology that brings these issues into the marketplace. He
has spent more than 20 years in storage, systems management and
telecommunications. Mike can be reached via e-mail
<mailto:mkarp@enterprisemanagement.com>.
_______________________________________________________________
This newsletter is sponsored by Nokia
Empower Your Mobile Enterprise

Nokia believes that business mobility will fundamentally change
the way work gets done-and for the better. To allow the entire
organization to get the most from this paradigm shift in
productivity, Nokia Enterprise Solutions focuses on delivering
increased efficiency through enhanced mobility. Learn more by
downloading this white paper today!
http://www.fattail.com/redir/redirect.asp?CID=110485
_______________________________________________________________
ARCHIVE LINKS

Archive of the Storage newsletter:
http://www.networkworld.com/newsletters/stor/index.html

Breaking storage news and analysis:
http://www.networkworld.com/topics/storage.html
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