Advice for CIOs: Developing an Ideal Storage Business Model for Explosive Data Volumes

Following years of increasing economic uncertainties and huge data growth, enterprises in the global economy are looking for more flexible storage investment models to reduce capital expenditure (CAPEX). Against this background, industry influencers have introduced a new business model based on consumption.

Trend Analysis

1. Available storage capacity: Making storage more accessible

Current levels of investment in storage are too low for enterprises to meet ever-increasing data volumes. Breakthroughs in technology partially solve this problem because they reduce costs. Considering the most essential requirement of data storage is capacity, most enterprises will prioritize and procure large-capacity storage offering premium levels of security and efficiency. Thanks to data redundancy protection and reduction technologies, enterprises can now buy storage by available capacity, instead of the traditional method of purchasing by raw capacity.

Available capacity, also called effective capacity, refers to the storage capacity in a storage device that can be used for enterprise storage to accurately determine device capacity. This model helps lower the costs of deploying storage devices and reduce TCO. It is the result of a series of data reduction technologies, such as data dedupe and compression, and represents the capacity that can be written into data by users’ hosts. Data reduction algorithms increase the available capacity of users, allowing more data to be stored in the same space, which further reduces storage costs. Moreover, this model allows enterprises to pick and mix products to meet their data storage requirements, simplifying storage planning and procurement processes.

This new model has developed differently in different countries. While commonly available in Europe, North America, and Japan, developing countries, such as China, are still exploring it. But, there is optimism that the available capacity model can further help developing countries move towards a digital future.

2. STaaS: A counter by storage vendors against the consumption-based business models of public clouds

There has been an obvious shift in how enterprises are preparing their businesses. While traditionally, business would be enabled by purchasing assets, features, and functions, they are now emphasizing results. Specifically, they are prioritizing solutions to transfer low-value, repetitive tasks to suppliers and partners.

Generally, enterprises want flexible, low-cost, and low-risk IT facilities. Ideally, by leveraging low costs, the high-scalability advantages of multiple vendors can allow enterprises to avoid being locked in by a single vendor. But another issue is data sovereignty, which requires enterprises to consider data residency and supervision in the destination country when expanding their markets overseas.

Storage as a Service (STaaS) allows enterprises to replace their own internal storage infrastructure with hybrid cloud IT options that provide centralized lifecycle management for hardware and support from suppliers. This eliminates difficulties such as outdated infrastructure and architectures, and ensures reliable services through the continuous monitoring and optimization of data environments.

Currently, Dell Apex, HPE GreenLake, Hitachi Vantara, IBM, NetApp Keystone, and Pure are examples of vendors that provide STaaS to help customers explore new business opportunities.

STaaS can help enterprises achieve their digital goals because it uses innovative infrastructure technologies, is quick and easy to set up, and allows enterprises to coordinate technology adoption and IT operations. Stimulated by the pay-per-use consumption strategy in public clouds, hybrid cloud IT has begun offering an internal STaaS operation deployment mode. At the beginning of 2020, no major storage vendor provided STaaS, but by the end of 2021, almost every vendor provided the basic block STaaS to compete with ultra-large cloud vendors.

Gartner predicts that roughly 15% of enterprise storage capacity will be deployed as hybrid cloud IT STaaS by 2025, increasing to 50% by 2030.

One main factor impacting the take-up rate of hybrid cloud IT STaaS is that the data size of a single enterprise is quite small compared with that of a single public cloud. So, despite stable annual investment, the price of STaaS per unit capacity is higher than traditional CAPEX would be over the course of the contract.

What we suggest

One benefit of adopting cloud-based, service-oriented IT infrastructure is to change from purchasing devices to subscribing to services. This enables customers to more flexibly use IT resources, to better meet service development requirements. But in doing so, the following must be considered:

• IT resources should be purchased based on actual service requirements and future strategies. Enterprises should compare the CAPEX and OPEX of the entire hardware lifecycle to determine the right product. While STaaS offers stable costs every year, its price per unit of capacity throughout the contract period is higher than traditional CAPEX models.
• Storage devices or services should be built on the latest data reduction technologies and new business models to slash TCO and tailor IT facilities to business development needs.

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Disclaimer: Any views and/or opinions expressed in this post by individual authors or contributors are their personal views and/or opinions and do not necessarily reflect the views and/or opinions of Huawei Technologies.