1. 1 © 2004 Cisco Systems, Inc. All rights reserved. OPT-4052 9628_05_2004.c The Business Case for Storage Networks Storage Strategies for Lowering TCO

2. 222 © 2004 Cisco Systems, Inc. All rights reserved. OPT-4052 9628_05_2004.c1 The Cost of Poor Quality Most companies waste more than half their storage. Between 1999 and 2002, an estimated $35 billion of storage assets have gone unutilized.* Approximately one quarter of all annual computer- related U.S. revenues. *Worldwide OEM Revenues 1999-2002

3. 333 © 2004 Cisco Systems, Inc. All rights reserved. OPT-4052 9628_05_2004.c1 Summary Falling disk prices = Increased TCO Create value with STORAGE STRATEGIES. In order to take advantage we must: Understand the problem Visualize the impact Use metrics and know TCO components Cisco has implemented a STORAGE VISION to direct strategies for storage management with significant impact.

4. 444 © 2004 Cisco Systems, Inc. All rights reserved. OPT-4052 9628_05_2004.c1 Agenda Storage Strategies for Lowering TCO Definitions Strategies Measurement Metrics

5. STORAGE STRATEGIES FOR LOWERING TCO 555 © 2004 Cisco Systems, Inc. All rights reserved. OPT-4052 9628_05_2004.c1

6. DEFINING TCO TERMINOLOGY 666 © 2004 Cisco Systems, Inc. All rights reserved. OPT-4052 9628_05_2004.c1

7. 777 © 2004 Cisco Systems, Inc. All rights reserved. OPT-4052 9628_05_2004.c1 Definition—Total Cost of Ownership (TCO) The sum total of all costs associated with implementing a storage solution including acquisition and depreciation of raw storage, labor, support, maintenance, and so on over the lifetime of the solution. Provides for “apples-to-apples” comparisons of different solutions. Measures impact on environment and on bottom line—real world costs. Cash basis or depreciation? Cash basis—Present value of all acquisition costs** Depex—Matches budget structures

8. 888 © 2004 Cisco Systems, Inc. All rights reserved. OPT-4052 9628_05_2004.c1 Cash Versus Depreciation Year 1 labor costs = $0.1*(0.9^1) Year 2 labor costs = $0.1*(0.9^2) **Cash Basis—Present Value of Future Costs at 10% Discount Rate Cash BasisYear 0Year 1 Year 2Total HW $ 1.00 Maint $ 0.20 Labor $ 0.10$ 0.09$ 0.08 Total $ 1.30$ 0.09$ 0.08$1.47 DepexYear 0Year 1 Year 2Total HW $ 0.33 Maint $ 0.20 Labor $ 0.10 Total $ 0.63$ 0.43 $1.50

9. STORAGE STRATEGIES 999 © 2004 Cisco Systems, Inc. All rights reserved. OPT-4052 9628_05_2004.c1

10. 10 © 2004 Cisco Systems, Inc. All rights reserved. OPT-4052 9628_05_2004.c1 Storage Demand Storage Resource Management VirtualizationFramework Information Lifecycle Management Data Integrity and Resiliency Management and Consolidation Storage Supply Storage Management Utility-Like Storage Service Service-Level ManagementService-Level Management Appropriate Hardware TiersAppropriate Hardware Tiers Storage Recovery Program Best Practices and ProcessesBest Practices and Processes Special Tools and MetricsSpecial Tools and Metrics Strategies

11. 11 © 2004 Cisco Systems, Inc. All rights reserved. OPT-4052 9628_05_2004.c1 Strategies Migration to storage networks Increases allocation efficiency Decreases management costs Storage consolidation Fewer hosts and fewer frames Reduce points of management Reduce maintenance costs Storage recovery Increases utilization efficiency Reclaim unused storage

12. MEASUREMENT 12 © 2004 Cisco Systems, Inc. All rights reserved. OPT-4052 9628_05_2004.c1

13. 13 © 2004 Cisco Systems, Inc. All rights reserved. OPT-4052 9628_05_2004.c1 Measurement Data collection Asset reports Accounts payable Storage inventory SRM Spreadsheets Need measurement of “before” picture Key values Allocation efficiency Utilization efficiency

14. 14 © 2004 Cisco Systems, Inc. All rights reserved. OPT-4052 9628_05_2004.c1 Utilization Allocation Efficiency 60% Utilization Efficiency 40% PROD

15. 15 © 2004 Cisco Systems, Inc. All rights reserved. OPT-4052 9628_05_2004.c1 Allocation Efficiency Storage Type Industry Average Allocation Efficiency DAS30%–40% SAN50%–60%

16. 16 © 2004 Cisco Systems, Inc. All rights reserved. OPT-4052 9628_05_2004.c1 Measurement Example: (DAS) Sample DAS TCO Seven storage frames 7 x external RAID arrays (total 24,192 GB) $350K purchase price $2.45M total One storage manager $150K per year Seven datacenter tiles $10K per tile $5K for cabling $75K total

17. 17 © 2004 Cisco Systems, Inc. All rights reserved. OPT-4052 9628_05_2004.c1 Measurement DAS (Cont.) Backups Per GB$0.086 Plus tape costs per GB$0.868 Total per GB$0.954 Total $63,698 Maintenance $6K per frame per month $42K per month $504K total Utilization Allocation efficiency factor (60%) Utilization efficiency (40%)

18. 18 © 2004 Cisco Systems, Inc. All rights reserved. OPT-4052 9628_05_2004.c1 Sample DAS TCO Sample TCOCash BasisDepex—Year 0 Seven Storage Frames 7 x External RAID Arrays (Total 24,192 GB) $350K Purchase Price $1.75M Total2,450,000.00$ 816,666.67$ One Storage Manager $150K per Year398,160.00$ 150,000.00$ Seven Datacenter Tiles $10K per Tile199,080.00$ 75,000.00$ $5K for Cabling Backups Per GB$0.086 Plus Tape Costs per GB$0.868 Total per GB$0.954 Total63,698.51$ 23,079.17$ Maintenance $6K per Frame per Month $42K per Month $504000K Total1,337,817.60$ 504,000.00$ Utilization Rates Allocation Efficiency Factor (60%)0.6 Utilization Efficiency (40%)0.4 Total Storage24,192,000 Utilization Efficiencies5,806,080 Total Cost4,448,756.11$ 1,568,745.83$ TCO Per MB0.77$ 0.27$ *Expenses not depreciated, but totaled over 3 years **Discount rate needed for present value—years 2 and 3 discounted at 12 precent

19. 19 © 2004 Cisco Systems, Inc. All rights reserved. OPT-4052 9628_05_2004.c1 Measurement Example: SAN Migration Strategy Sample SAN TCO Seven storage frames 7 external RAID Arrays (36 GB drives) (total 24,192 GB) $350K purchase price $2.45M total One storage manager $150K per year $15K for training $165K total Seven datacenter tiles $10K per tile $5K for cabling $75K total Maintenance $6K per frame $42K per month $504K total Backups* Total $63,698.51 *Significant savings in backups possible—not analyzed here

20. 20 © 2004 Cisco Systems, Inc. All rights reserved. OPT-4052 9628_05_2004.c1 *Assumes 15% Increase Measurement SAN (Cont.) FC switches $500K total including maintenance Utilization Allocation efficiency factor (75%*) Utilization efficiency (40%)

21. 21 © 2004 Cisco Systems, Inc. All rights reserved. OPT-4052 9628_05_2004.c1 Sample SAN TCO Sample TCOCash Basis Seven Storage Frames 7 x External RAID Arrays (Total 24,192 GB) $350K Purchase Price $2.45M Total$2,450,000$816,667 One Storage Manager $150K per Year $15K for SAN Training $165K Total$437,976$165,000 Facilities - Seven Tiles $10K per Tile $5K for Cabling $75K Total$199,080$75,000 Backups Per GB$0.086 Plus Tape Costs per GB$0.868 Total per GB$0.954 Total$61,261$23,079 Maintenance $6K per Frame per Month $42K per Month $504K Total$1,337,818$504,000 Switches 4 Director Class Switches (Inc. Maint.)$500,000$166,667 Utilization Rates Allocation Efficiency Factor (75%)0.75 Utilization Efficiency (40%)0.4 Total Storage24,192,00035,040,000 Utilization Efficiencies7,257,60010,512,000 Total Cost$4,986,134$1,750,412 TCO per MB$0.69$0.17 Depex — Year 0

22. 22 © 2004 Cisco Systems, Inc. All rights reserved. OPT-4052 9628_05_2004.c1 Consolidation Impact $0.07 Sample TCOCash BasisDepex — Year 0 Two Storage Frames 2 x External RAID Arrays (42,048 GB) $750K Purchase Price $1.5M Total$1,500,000$500,000 One Storage Manager $150K per Year $15K for Training $165K Total$437,976$165,000 FacilitiesThree Tiles $10K per Tile3 $5K for Cabling $35K Total$92,904$35,000 Backups Per GB$0.086 Plus Tape Costs per GB$0.868 Total per GB$0.954 Total$61,261$23,079 Maintenance No Maintenance for 3 Years$0 Switches 4 x 32 Port Switches$500,000$166,667 Utilization Rates Allocation Efficiency Factor (80%)0.8 Utilization Efficiency (40%)0.4 Total Storage42,048,000 Utilization Efficiencies13,455,360 Total Cost$2,592,141$889,746 TCO per MB$0.19$0.07

23. 23 © 2004 Cisco Systems, Inc. All rights reserved. OPT-4052 9628_05_2004.c1 Recovery Impact Sample TCOCash BasisDepex — Year 0 Two Storage Frames 2 x External RAID Arrays (42,048 GB) $750K Purchase Price $1.5M Total$1,500,000$500,000 One Storage Manager $150K per Year $15K for Training $165K Total$437,976$165,000 FacilitiesThree Tiles $10K per Tile3 $5K for Cabling $35K Total$92,904$35,000 Backups Per GB$0.086 Plus Tape Costs per GB$0.868 Total per GB$0.954 Total$61,261$23,079 Maintenance No Maintenance for 3 Years$0 Switches 4 Direct Class Switches$500,000$166,667 Utilization Rates Allocation Efficiency Factor (80%)0.8 Utilization Efficiency (60%)0.6 Total Storage42,048,000 Utilization Efficiencies20,183,040 Total Cost$2,592,141$889,746 TCO per MB$0.04$0.13

24. 24 © 2004 Cisco Systems, Inc. All rights reserved. OPT-4052 9628_05_2004.c1 Solution Cash BasisDepex TCO per MB DAS$0.77$0.27 TCO per MB SAN$0.69$0.17 TCO per MB Consolidation$0.19$0.07 TCO per MB Recovery$0.13$0.04 Solution/Cost Comparison TCO/MB

25. METRICS 25 © 2004 Cisco Systems, Inc. All rights reserved. OPT-4052 9628_05_2004.c1

26. 26 © 2004 Cisco Systems, Inc. All rights reserved. OPT-4052 9628_05_2004.c1 Metrics Project metrics Payback method ROI NPV

27. 27 © 2004 Cisco Systems, Inc. All rights reserved. OPT-4052 9628_05_2004.c1 Metrics Examples: Payback Pros “Napkin math” Suitable for small capital investments Measures time to recoup investment Payback period = initial investment/annual income Cons Doesn’t work well for large investments Doesn’t work well for long time horizons (>1 year) Example: $5000 for new disk infrastructure to increase performance for online transactional system that increases revenue by $2500 over two quarters. Payback period is one year $5000/$2500 = 4 Quarters = One Year Reasonable payback—Do the upgrade Payback period is one year $5000/$2500 = 4 Quarters = One Year Reasonable payback—Do the upgrade

28. 28 © 2004 Cisco Systems, Inc. All rights reserved. OPT-4052 9628_05_2004.c1 Metrics Examples: ROI Pros “Napkin math” Suitable for large capital investments Well known Cons Easy to manipulate Maligned as a marketing tool Does not account for cost of capital Does not account for time value of money Example: $5000 for new disk infrastructure to increase performance for online transactional system that increases revenue by $2500 over two quarters. ROI = ($2500-$5000)/$5000 = -%50 ROI is negative—Don’t do the upgrade ROI = (All Returns-All Investments)/(All Investments)

29. 29 © 2004 Cisco Systems, Inc. All rights reserved. OPT-4052 9628_05_2004.c1 Metrics Examples: NPV Pros Accurate measurement Suitable for large capital investments Accounts for cost of capital and time value of money Cons Definitely not “napkin math” Example: $5000 for new disk infrastructure to increase performance for online transactional system that increases revenue by $2500 over three years; cost of capital is 12%. NPV = -$5000 + (833.33*(1.12^1)) + (833.33*(1.12^2)) + (833.33*(1.12^3)) Excel = NPV (Rate, Value1, Value2...) NPV = -$2998.47 NPV is negative—Don’t do the upgrade NPV = -$2998.47 NPV is negative—Don’t do the upgrade

30. 30 © 2004 Cisco Systems, Inc. All rights reserved. OPT-4052 9628_05_2004.c1 Summary DAS-to-SAN migrations: significant cost savers. Coupled with consolidation and storage recovery, programs greater reductions in TCO possible. Use FC and IP networks as enabling technologies for lower TCO. Use strategies to adjust storage TCO FUNCTION. Uptime and availability are part of TCO. Use FC and IP storage networks to increase business continuance, uptime, and availability; in turn, further decrease TCO. Play WHAT-IF scenarios with uptime, availability, backups, and retention.

31. 31 © 2004 Cisco Systems, Inc. All rights reserved. OPT-4052 9628_05_2004.c1 Recommended Reading The Business Case for Storage Networks [1-58720- 118-6] Available October 2004 Cisco Storage Networking Architectures Poster [158720102X] Internetworking Technologies Handbook, Fourth Edition [1-58705-119-2]"

32. 32 © 2004 Cisco Systems, Inc. All rights reserved. OPT-4052 9628_05_2004.c1 Online References Business Ready Datacenter http://www.cisco.com/go/datacenter http://www.cisco.com/go/datacenter Cisco Storage Networking Solutions http://business.cisco.com (click “Storage”) http://business.cisco.com Search Storage http://www.searchstorage.comhttp://www.searchstorage.com Byte and Switch http://www.byteandswitch.comhttp://www.byteandswitch.com Storage Networking World Online http://www.snwonline.com http://www.snwonline.com

33. 33 © 2004 Cisco Systems, Inc. All rights reserved. OPT-4052 9628_05_2004.c1