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The Business Case for Storage Networks

  • Sample Chapter is provided courtesy of Cisco Press.
  • Date: Nov 18, 2004.

Chapter Description

This chapter covers the copious non-technical reasons for preferring storage networks, from the legal implications of Sarbanes-Oxley to the economy of scale created by their usage. Discover the other advantages storage networks could provide to your business within.

Just as the effects of the recent economic downturn have been universally felt across all sectors and industries, likewise do the principle concepts discussed in this chapter—the commoditization of hardware and storage utilization efficiencies—apply to all IT environments, regardless of the size or the nature of the business application. This chapter sets the stage for understanding the storage network as a value-add to the firm insofar as it is capable of alleviating the management and financial burdens associated with direct-attached storage (DAS).

Networked storage offers significant business advantages over DAS, and the impact of these benefits can be quantified and measured. To understand the nature of the business benefits of networked storage, a brief, general discussion of overall IT spending and the specifics of storage spending is required and provides a basis for the remainder of the analysis performed in later chapters.

This chapter covers the following topics:

  • Storage management

  • Implementing a storage vision

  • The commoditization of hardware

  • The impact of industry trends and legislation on storage consumption

  • Storage utilization, storage yield, and the Cost of Poor Quality (COPQ)

Storage Management Matters

In May, 2003, author Nicholas Carr garnered much attention with a Harvard Business Review article on the strategic worth of information technology. The article's provocative title, "IT Doesn't Matter," bespoke Carr's argument that the commoditization of information technology solutions has essentially depleted the strategic advantage of information technology as a whole. In "IT Doesn't Matter," Carr states succinctly, "What makes a resource truly strategic—what gives it the capacity to be the basis for a sustained competitive advantage—is not ubiquity, but scarcity."1 Carr points to innovations, such as electricity and rail transportation, which offered competitive advantages to early adopters, but whose value diminished over time as the use of these technologies became common place.

In 2004, Carr expanded his position in his book, Does IT Matter? Information Technology and the Corrosion of Competitive Advantage, in which he urges readers to decrease IT spending, to avoid being an early adopter whenever possible, and to focus on "vulnerabilities" instead of "opportunities" where critical services are at risk.2

Carr could not be more accurate. It is also important to understand, however, that investment in storage networks allows firms to decrease storage spending and focus on service vulnerabilities. In addition, Fibre Channel SANs are well past the early adopt phase. Investment in storage networking technologies (not just Fibre Channel, but IP-based storage solutions as well) can help companies become more efficient and therefore more competitive.


Everett Rogers originally outlined the concept of the early adopter in his work The Diffusion of Innovations. Detailed discussion of Rogers' work and how it applies to product adoption life cycles follows in Chapter 4, "How It Should Be Done: Implementation Strategies and Best Practices."

Understanding competitive forces is a fundamental premise of business leadership. Harvard Business School professor and author Michael Porter is a renowned expert on strategy and competition. He has written extensively on the nature of competition between rival firms and nations. Porter's groundbreaking essay, "How Competitive Forces Shape Strategy," was first published in 1979; twenty-five years later, Porter's "Five Forces," as they have come to be known, still aptly describe the interplay between rival firms' strategic endeavors.

As Porter outlined, the five main forces shaping competition between firms in similar industries are the following:

  • Buyer bargaining power

  • Supplier bargaining power

  • The threat of substitute products

  • Rivalry

  • Barriers to entry

In his essay, Porter lists "economies of scale" and "cost disadvantages independent of size" as two of the major sources of "barriers to entry."3 Although "learning curves," "experience curves," and "economies of scale" are concepts typically applied to manufacturing environments, these concepts also have distinct applications in IT, relative to the management of IT assets, and storage assets in particular.

Without a doubt, one of the most significant vulnerabilities facing companies today is the state of enterprise storage, now in overwhelming disarray following the deployment at breakneck speed of over two million DAS external disk units worldwide between the years of 1999 and 2003. The total number of DAS versus networked storage units sold between 1999 and 2003 is shown in Table 1-1.

Table 1-1 Worldwide External Non-OEM Factory Revenue ($M) and Shipments, 1999-2003 (Source: IDC, 2004)4

Worldwide External Non-OEM Factory Revenue ($M) and Shipments, 1999-2003



















DAS Units












Networked Units






*Denotes SAN and NAS storage.

Jon William Toigo outlined the storage management problem facing IT managers in his book, The Holy Grail of Storage Management, published in 2000. Toigo stated clearly and early on that corporate IT departments would face serious challenges in the coming years with managing data storage. The need for online or near-online data and the lack of a rational strategy for dealing with storage growth indicated that in a short amount of time, companies would have their hands full of storage problems.5 Few in corporate IT today are in a position to disagree with Toigo.

Storage networks allow firms to drive down operational costs and increase economies of scale to remain competitive. At the same time, storage networks allow firms to address critical business vulnerabilities. Although storage networks alone do not magically solve all storage-related problems, a networked storage infrastructure does help increase operational and utilization efficiencies, which ultimately lowers the overall storage total cost of ownership (TCO).


Storage networks do not intrinsically solve the problems related to data and information management, but in later chapters I demonstrate how economies of scale with regard to storage management (and the cost advantages of increased storage utilization) have a significant impact on the firm's bottom line.

The ubiquity of information technology resources in corporate datacenters underscores the drop in prices for IT products and the diminished magnitude of the capital outlays required to build an enterprise-level IT infrastructure. This ubiquity is the tangible evidence—the hangover, if you will—from the party that heralded the advent of the New Economy.

2. Implementing a Storage Vision | Next Section

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