Business Case for Unified Storage Consolidation for Microsoft Windows Installations

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1 Analysis from The Wikibon Project September 2011 Business Case for Unified Storage Consolidation for Microsoft Windows Installations Author: David Floyer A Wikibon Reprint

2 Business Case for Unified Storage Consolidation for Microsoft Windows Installations Author: David Floyer Executive Summary Unified storage is infrastructure that supports multiple types of storage within a single management framework. In an ideal scenario, an admin can access a single set of tools and functions that are transparent to the type of storage used. Unified storage has been a hot topic of discussion in the storage business for the last months. The discussion has largely focused on which vendors offer which products and functionality, and the degree of unification that is actually delivered. Unified storage is particularly attractive in Microsoft Windows installations because the size of installations is big and varied enough to require the use of multiple types of storage (e.g. file and block or Ethernet and FC), but not so big that silos of storage can be justified. NetApp introduced unified storage about a decade ago and has the largest number of customers who are using unified storage. In our opinion the NetApp storage array has the most integrated implementation with the highest level of functionality at the moment. Wikibon has used NetApp storage as the standard in an investigation into the business justification for consolidating the storage required to support Microsoft Windows installations onto unified storage. Wikibon used its extensive models and field data to help develop the business case and tested them with a combination of in-depth interviews of NetApp customers who had consolidated and other research. We found that the benefits of consolidation are compelling. It creates a single pool of storage resources that can be managed with a single set of tools, which maximizes the base-line efficiency of storage utilization and storage management. The type of storage and storage protocol that is best suited to the application could be deployed. The virtualization allows advanced functionality such as thin provisioning and thin copying to be implemented. The snapshot technology together with Microsoft VSS allows a different and modern way of managing backup, recovery, and remote replication, which is more cost effective and easier to manage. The specific business case analysis detailed later compares a base case of a varied number of storage solutions with a unified storage solution for a Wikibon Reference Organization with revenues of $250 million, 1,000 staff, and an IT budget of $7.5 million (3% of revenue). The results of the analysis are shown in Figure 1 below, and the details Wikibon.org September 2011 Page Number 1 of 10

3 are in "Business Case for Unified Storage". The financial metrics were: A reduction in storage and related OPEX budget (Year 4)of '''35%''' The 4-year net benefits of about $1.1 million The Net Present Value (NPV, 5%) of $882,118 The Internal Rate of Return (IRR) of 376% Break-even at 4 months IT Budget Impact of Migration to Unified Storage over 4 Years Annual OPEX Storage & Storage Related Budget Year 1 Year 2 Year 3 Year 4 "Bespoke" Storage & Storage Related OPEX Budget Unified Storage & Storage Related OPEX Budget Cumulative Savings Cumulative Savings ($) Figure 1: IT Impact of Migration to Unified Storage over 4 Years (for an Organization with $250 million in Revenue & an IT budget of 3% of Revenue) Wikibon.org September 2011 Page Number 2 of 10

4 The main disadvantage of unified storage is a degree of lock-in to a single vendor for storage software and hardware. This was estimated to be 10% and included in the analysis above. Unified storage will not cover all storage needs; specific applications that mandate very high levels of I/O performance or availability may require stand-alone storage. Wikibon strongly recommends that installations with a predominately Microsoft Windows environment pursue a unified storage strategy. Microsoft Windows Installation Characteristics A large number of small and mid-sized organizations have IT infrastructure predominately based on Microsoft software. This software includes: Microsoft Windows operating system Virtualization Hypervisors, usually VMware or less frequently Hyper-V User , productivity and communication tools such as Exchange and SharePoint Operational database applications mainly based on SQL Server (with some Oracle) Microsoft network management software including Active Directory File/print services in support of Microsoft Office client applications In general, the application software is predominantly based on ISV industry packages and Microsoft productivity packages. The IT infrastructure in Microsoft installations are supported by limited staffs of IT generalists who support all sections of the infrastructure including servers, storage, and network. Infrastructure design and expert support is obtained from hardware resellers, local consultants (often industry-based), and Microsoft. Application support is from a small internal application support group with support from ISVs and Microsoft. Wikibon.org September 2011 Page Number 3 of 10

5 Storage requirements for Microsoft Installations Wikibon interviewed three such installations in depth, and researched many other sources of data. Wikibon found that the most important criteria for storage in support of Microsoft installations are efficiency and simplicity. The most I/O-intensive parts of the storage infrastructure are usually supporting exchange and the operational SQL Server applications, and these often used Fibre Channel (FC) drives. These applications have the most visibility to senior management. iscsi was the dominant protocol in Microsoft installations. All the installations that Wikibon interviewed run a separate network for the iscsi storage. The I/O-intensive applications were usually run on either direct attached storage (DAS) or Fibre Channel. NAS CIFS protocols support the file/print storage and Web-based applications, whereas NAS NFS is mainly used to support technical computing. Definition of Unified Storage Unified storage is a single integrated storage infrastructure that simultaneously supports Fibre Channel (FC), Fibre-Channel-over-Ethernet (FCoE), IP Storage Area Networks (iscsi) and Network Attached Storage (NAS) data protocols. Sometimes this is also referred to as network unified storage (NUS). Unified storage pioneer NetApp has a single storage operating system called ONTAP and a single file system called WAFL, which virtualizes all storage and manages it in 4K blocks. With this architecture, NetApp expanded the original NAS filer into a full function storage array with the ability to handle the following protocols: NAS (CIFS and NFS) (File-based storage assessed over Ethernet) iscsi (block-based storage accessed over Ethernet) Fibre Channel (Block-based storage accessed over Fibre Channel (FC) or Fibre Channel over Ethernet (FCoE) The functions that NetApp have added to this virtualized storage system include: Thin provisioning (known as FlexVol) Dynamic increase of volume sizes Space efficient snapshots (FlexClone) Consistent SnapManager for Microsoft Exchange, Oracle, SQL Server, and VMware SnapMirror Asynchronous and synchronous remote mirroring Two-way file access between CIFS and NFS protocols De-duplication of common 4K blocks in-line identification, batch volume reduction Compression using LZO technology Flash storage as an SSD and flash storage as a read-only cache Wikibon.org September 2011 Page Number 4 of 10

6 Compellent, Dell, Dot Hill,EMC, FalconStor, HP, IBM, Microsoft, Oracle (Sun), Reldata and other vendors also provide unified storage products. All the specific features listed above are available on one or other of the unified storage products from other vendors, and some of the products have additional features, particularly in flash cache management. NetApp has the widest feature set, the largest installed base, and the best integration of the features, and Wikibon has therefore used the NetApp as the base for the comparisons and business case below. Business Case for Unified Storage The business case is based on the Wikibon Standard Company Reference Model, modified for the smaller businesses that would usually be found with a Microsoft Windows Infrastructure. The business characteristics are: Revenue $250 million Employees 1,000 IT Budget $7.5 million (3% of revenue) The IT budget breakout is shown in figure 2. Allocation of $7.5M Budget (3% of Revenue) Software % Management % Facilities % Network Infrastructure % Storage Hw & Sw % Server Infrastructure % PCs with Basic Software % Development % Operations % Figure 2: Wikibon Reference IT budget (for an Organization with $250 million in Revenue & an IT budget of 3% of Revenue) Wikibon.org September 2011 Page Number 5 of 10

7 The storage budget line item of $375,000 covers the hardware and software depreciation or leasing costs for storage, together with the cost of maintenance for the hardware and software. However, in looking at the total cost of storage, some parts of other line items should be included. Table 1 shows all the related storage line items that are affected by storage decisions. The total budget for storage and storage-related items is $1.25 million. Annual Storage Related Line Items Budget Storage Hardware Depreciation/Leasing & Maintenance $250,000 Storage Software Depreciation/Leasing & Maintenance $125,000 Storage Operational Costs (40% Operational Budget, including Backup/Recovery) $450,000 Backup/Recovery/Archive Software (7% Software Budget) $131,250 Facilities (Storage Component, Proportional) $154,412 Network (25% of Network Budget for Storage Network, Replication, etc.) $75,000 Management (Proportional) $62,403 Total $1,248,065 Table 1: Annual Budget for Storage Related Line Items (for an Organization with $250 million in Revenue & an IT budget of 3% of Revenue) Unified storage promises significant benefits for the IT infrastructure. The assumptions behind these are summarized in Table 2. The following comments are an expansion of the thinking and evidence for the assumptions: Penalty for Single Storage Vendor: Wikibon has asked this question of many senior IT executives for many technologies. The spread of replies has been between 5% and 20%. Wikibon has chosen a 10% penalty as a reasonable median. Cost of Implementing a Unified Storage Strategy: Wikibon estimates that effort to establish the initial implementation of a unified storage strategy as low, as most of the effort is a simplification of existing procedures. These simplifications can be done over a period of time as the amount of unified storage increases over four years. Growth in IT Budget: Wikibon is not expecting an increase in budget any time soon. Improved Utilization: Wikibon discussed this issue with customers who had implemented a unified storage strategy. The list of functions that are available in this environment is significant. All the functions are also available in alternative piece-part solutions. However, the feedback from the interviews that Wikibon conducted indicated that it was much easier to implement additional functions within a single array and management system that across different arrays or server-based storage implementations and storage management systems. A major additional component is that storage can be shared across the all the protocols, and spare space can be reallocated without constraint. Wikibon believes that a Wikibon.org September 2011 Page Number 6 of 10

8 reduction of 35% is a reasonable assumption that can be achieved without excessive effort. Without doubt the biggest saving that can be achieved is the reduction in operational effort required to manage storage. Simplicity of administration, a single storage operating system, the automation of repetitive functions, and the simplicity of backup and recovery for Microsoft infrastructure software is significantly ahead of what any other combination of DAS or a number of different arrays can achieve. As a result of the Wikibon analysis and discussion with practitioners, Wikibon is comfortable that savings of 50% can be made in the cost of operations. The more modern backup, recovery, and remote replication capabilities available with unified storage uses the standard snapshot capabilities of the array combined with the ability to use the VSS capabilities of Microsoft to create consistent copies. The backup is just of the changed data, and can be streamed remotely. The sophisticated recovery that is available from modern backup recovery systems such as Syncsort Integrated Backup is more efficient and less costly than traditional backup systems. Wikibon is confident with an assumption of 25% savings in backup and archiving software with a unified storage strategy. Reduction in the storage component of facilities costs the assumption used is the same as the reduction in storage (35%). Reduction in the storage component of network costs by having a single array system that can take as an endpoint native Fibre channel, iscsi and FCoE, the storage network is significantly reduced in ports and management complexity. Wikibon assumes a reduction of 25%. The reduction in management costs is proportional to the other saving areas. Assumptions for comparing Traditional Storage (DAS & SAN on a Project Basis) with a Unified Storage Strategy Penalty for Single Storage Vendor 10% Cost for Implementing a Unified Storage Strategy $20,000 Number of years for Financial Analysis 4 Growth in IT Budget 0% Improved Utilization with Unified Storage for New Storage Equipment 35% Reduced Storage Maintenance Cost on New Equipment 35% Improved Operational Budget on New Equipment 50% Reduction in Backup/Recovery/Archive Software Costs for New Equipment 25% Reduction in Facilities Costs for New Equipment 35% Reduction in Network Costs for New Equipment 25% Reduction in Management Costs on all Savings 5% Table 2: Annual Budget for Storage Related Line Items (for an Organization with $250 million in Revenue & an IT budget of 3% of Revenue) Wikibon.org September 2011 Page Number 7 of 10

9 The result of the assumptions discussed above is given in Table 3. Cost Benefit Analysis of Unified Storage Year 1 Budget Budget Year Budget Year Budget Year Projected Costs for Current Storage Strategy CAPEX Year Total Budget New Storage Hardware/Software $208,333 $52,083 $52,083 $52,083 $52,083 $208,333 Leasing/Depreciation of Existing Storage Hardware/Software $156,250 $156,250 $156,250 $156,250 $624,999 Maintenance (20% Purchase Price) 20% $166,666 $166,666 $166,666 $166,666 $666,666 Storage Operational Costs (40% Operational Budget, including Backup/Recovery) 40% $450,000 $450,000 $450,000 $450,000 $1,800,000 Backup/Recovery/Archive Software (7% Software Budget) 7% $131,250 $131,250 $131,250 $131,250 $525,000 Facilities (Storage Component, Proportional) 29% $154,412 $154,412 $154,412 $154,412 $617,647 Network (25% of Network Budget for Storage Network, Replication, etc.) 25% $75,000 $75,000 $75,000 $75,000 $300,000 Management (Proportional) 5% $62,403 $62,403 $62,403 $62,403 $249,613 Total Current Storage & Storage Related OPEX Budget $1,248,065 $1,248,065 $1,248,065 $1,248,065 $4,992,258 Projected Costs for Unified Storage Strategy Single Vendor for Hardware/Software (10%) 10% $20,833 $5,208 $10,417 $15,625 $20,833 $52,083 Implementation Costs for Unified Storage Strategy Project $20,000 $20,000 $20,000 Management Overhead for Unified Storage Strategy Project 5% $1,000 $1,000 Total Unified Storage Project Costs $40,833 $26,208 $10,417 $15,625 $20,833 $73,083 Projected Benefits for Unified Storage Strategy Improved Utilization of Unified Storage New Equipment 35% $14,844 $29,687 $44,531 $59,375 $148,437 Reduced Maintenance on New Equipment 35% $11,875 $23,750 $35,625 $47,500 $118,750 Improved Operational Budget on New Equipment 50% $56,250 $112,500 $168,750 $225,000 $562,500 Reduction in Backup/Recovery/Archive Software Costs 25% $8,203 $16,406 $24,609 $32,813 $82,031 Reduction in Facilities Costs 35% $13,511 $27,022 $40,533 $54,044 $135,110 Reduction in Network Costs 25% $4,688 $9,375 $14,063 $18,750 $46,875 Reduction in Management Costs 5% $5,469 $10,937 $16,406 $21,874 $54,685 Total Benefits $114,839 $229,678 $344,517 $459,356 $1,148,389 Net Benefits ($40,833) $88,631 $219,261 $328,892 $438,522 $1,075,306 Revised Unified Storage & Storage Related OPEX Budget $1,159,434 $1,028,803 $919,173 $809,542 $3,916,952 Financial Metrics Reduction in Storage & Storage Related OPEX Budget 7% 18% 26% 35% Benefits Cash Flow ($40,833) $129,464 $219,261 $328,892 $438,522 $1,075,306 Net Present Value (5%) $882,118 Internal Rate of Return (IRR) 376% Breakeven (Months) 4 Table 3: Cost Benefit Analysis of Unified Storage Figure 3 consists of three parts. The first part is a four-year OPEX budget, where CAPEX items are expressed as leasing or depreciation costs within the IT budget. The storage capital items for year 1 are reflected in a column. The first section represents the base case for existing storage where a combination of DAS and separate storage arrays have been used for high performance block (FC), standard block (iscsi), and NAS volumes. The analysis includes storage and related budget line items. The total budget for storage related expenditure over four years is about $5 million. The largest single item is storage operational costs (mainly staff), which is about 36% of the total. The second section of the analysis in Table 3 gives the additional costs and savings to the base budget that would accrue from the installation of a unified storage strategy over four years. It is assumed that the unified storage is phased in over four years as the budget for additional storage becomes available each year, and old storage is replaced. This reflects the general practice which we found in our interviews and is a sensible low risk strategy. The net savings for the project are estimated to be about $1.1 million, and the largest savings came from operations ($0.56 million). The lines in blue in sections 1 and 2 compare the overall budgets of the base case and unified storage case. Wikibon.org September 2011 Page Number 8 of 10

10 The third section of Table 3 shows the financial metrics from the analysis. The reduction in storage and storage related budget increases to 35% by year 4, as older storage is replaced. The Net Present Value (NPV) of the project using a 5% interest rate was $0.88 million, as the benefits increase year by year as the old storage is replaced. The Internal Rate of Return (IRR, defined as the interest rate that will give a NPV of $0) is 376%, which is well above any target rate for higher risk projects within an organization. Even though the project is backloaded with benefits, the break-even is only 4 months, as the initial capital costs are low ($41,000). Conclusions and Recommendations A summary of the Financial Metrics from the analysis is shown in Table 4. Financial Metrics for Unified Storage Implementation Reduction in Storage & Storage Related OPEX Budget (Year 4) 35% 4-year Net Benefits $1,075,306 Net Present Value (5%) $882,118 Internal Rate of Return (IRR) 376% Breakeven (Months) 4 Table 4: Summary of Financial Metrics from Analysis of Unified Storage All the financial metrics are very positive and resilient to changes in the assumptions. The most important assumptions to test would be the amount of the operations budget and was related to storage and related items (assumed to be 40%), and the reduction in effort that is projected to be achieved over the four year period (50%). Some of these benefits would come from cost avoidance and some from lower outside consultancy costs. The four-year timescale make Wikibon comfortable that these benefits could be realized in most Microsoft Windows environments. Wikibon strongly believes that avoiding having to deploy or hire storage specialists is an important strategic direction for small IT installations, and Wikibon observed that the installations that had implemented a unified storage strategy had a generalist IT strategy with staff participating in all aspects of the installation. One significant improvement that can be achieved with a unified approach is to move away from the traditional backup model of a daily backup or incrementals and a weekly full backup. By moving to continuous snapshots and copying these asynchronously to local and/or remote targets, a much finer-grained recovery system can be built with the ability to adjust the resources according to the RPO and RTO needs of the business for each application suite. This is a lower cost approach for the software, staff resources and network. Wikibon.org September 2011 Page Number 9 of 10

11 Action Item: Wikibon strongly recommends that IT management responsible for a predominantly Microsoft Windows environment and without the requirement to support very I/O-intensive applications and/or extreme RPO/RTO requirements pursue a unified storage strategy. This strategy will provide the greatest degree of storage and support efficiency combined with the flexibility to choose the optimum storage protocol for every workload. Wikibon recommends that installations utilize the space-efficient snapshot technologies to architect a more modern approach to backup, restoration, remote replication, and archiving, and migrate to this model over time. Wikibon.org September 2011 Page Number 10 of 10

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