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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.

The Impact of Competition on IT

As previously seen, a number of industry trends and current events have helped to shape IT spending over the last three years. The worldwide storage market (which includes sales of disk, software, and storage-related services) now constitutes more than $40 billion of business and, despite the commoditization of disk storage, showed signs of recovery in 2003. Table 1-5 highlights recent increases in revenues for storage software and services.

Table 1-5 Worldwide Storage Software and Services Market ($M), 1999–2003 (Source: IDC, 2004)18

Worldwide Storage Software and Services Market ($M), 1999-2003







Storage Software






Storage Services






While disk sales notched a nearly four percent increase in 2003 (see Table 1-2), sales of storage software and services were more robust. Sales of storage software in 2003 increased nearly 16 percent over 2002, whereas sales of storage services increased more than 10 percent over the previous year.

As worldwide server revenues indicate, after two consecutive years of double-digit declines, server sales also experienced a slight uptick of 3 percent in 2003 (see Table 1-4).

Recent increases in IT spending are now driven by companies seeking both a competitive edge in the marketplace and compliance with new laws and regulations stemming from current events.

Despite the lack of a clear correlation between IT spending and profitability, increased competition in every sector forces companies to continue to seek ways to use IT to create a competitive advantage. The advantage of IT, as envisioned during the dot-com era, no longer exists. IT is now correctly seen as the framework around which solid business strategies are built.

These strategies are executed primarily through one or more of these four tactics:

  • Electronic commerce

  • Enterprise resource planning (ERP)

  • Supply chain management (SCM)

  • Customer relationship management (CRM)

Each of these solutions requires significant investment in storage infrastructure, server resources, and disaster-recovery capabilities.

Electronic commerce has profoundly changed the face of the retail industry. Many traditional brick-and-mortar businesses are now "brick-and-click" businesses that require around-the-clock availability. These environments demand high performance servers and terabytes of storage to house logs for millions of website hits and queries.

In August of 2003, The Economics and Statistics Administration of the U.S. Census Bureau announced an uptick in e-commerce retail spending of 27.8 percent over the previous year. These figures indicate a 214 percent increase in e-commerce retail sales since the fourth quarter of 1999.19 Similarly, figures for the first quarter of 2004 showed an increase of 28.1 percent over the first quarter of 2003.20

Although consumer retail e-commerce is growing, the overwhelming majority of e-commerce transactions are still between businesses. According to data from the U.S. Census Bureau, 93.3 percent of e-commerce sales in 2001 and 93.9 percent in 2000 were business-to-business (B-to-B) transactions. This percentage, however, reflects only 7.3 percent of all traditional B-to-B and business-to-customer (B-to-C) shipments and revenues (or only $1,066 billion out of $14,572 billion) in the United States. 21 These statistics indicate there is still significant room for growth in e-commerce markets.

Similar to e-commerce environments, ERP applications (which often connect to complex e-commerce infrastructures) demand high performance and high availability, as well as replication capabilities. In addition to increased requirements for enterprise class storage, these environments also need massive amounts of storage for the frequent migration and redeployment of application code-trees.

SCM and CRM environments—although extremely different from each other in terms of business functions—have similar high availability requirements and strict performance specifications. As electronic commerce continues to show steady growth, demand planning and call-center capabilities, along with other SCM and CRM functions, become more important. Manufacturing and sales support functions, therefore, now have availability requirements comparable to those of ERP and e-commerce systems.

In addition, the discussion of the business application of IT is incomplete without some mention of email, the foundation of business communication in the 21st century. Although most emails are relatively small in size, the inclusion of attachments in emails greatly increases the burden on backup and storage environments. Regulatory trends and recent legislation dictate the lengthening of email retention policies, which in turn increases the TCO for storage.

Finally, a surge in demand for business process management (BPM) software and ERP software add-ons designed to simplify the process of compliance with complex regulations indicates businesses are coming to terms with compliance with new legislation.

5. The Impact of Legislation on IT | Next Section Previous Section

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