Storage explained: Consumption models of storage procurement

What is the traditional storage (and IT) refresh cycle?

The traditional storage refresh cycle takes place every three years and entails the entire replacement of all storage infrastructure by new hardware. It is a capital purchase in which ownership is transferred entirely to the customer, with licensing and support contracted from the supplier from then on.

There are some benefits to the traditional storage refresh cycle. These include that the customer gets a brand new set of hardware, with adequate capacity and sufficient storage controller power, plus confidence in the security and software update status of the equipment. Customers will likely see a huge improvement in performance following a refresh.

Often, new equipment will be more energy efficient and need way less maintenance, both of which cut costs. Scalability will be enhanced and new systems are more likely to provide better flexibility and integration with newer components of the wider infrastructure. Here, think cloud connectivity or containers, for example. 

What are the key challenges of the traditional refresh cycle?

Most things that are benefits in traditional procurement cycles can also become downsides. While equipment may arrive shiny, new and work well, with huge amounts of capacity to move into, performance will likely degrade over time.

With storage, increases in the volume of data held can affect performance and reliability. Technologies move on, and what was good two years ago might be in sore need of an upgrade now – and old hardware might just not scale easily after a certain point in its lifespan.

There are also limits to improvements that can come via software patching. The concatenation of updates over time can result in a complex build-up of infrastructure patches.

Older hardware will tend to suffer performance degradation and likely more outages. Meanwhile, outdated hardware will struggle to meet the needs of newer software and applications.

And then, when the time comes to upgrade infrastructure, there is likely to be huge disruption as installation, migration and go-lives take place.

Buying storage hardware outright entails a transfer of risk from the vendor to the customer. The customer may pay for maintenance going forward, but ultimately it’s the customer’s business that suffers if outages occur and/or the infrastructure falls short of what’s required.

What is capex vs opex?

Capital expenditure (capex) is money spent to buy or upgrade physical, non-consumable assets. It’s a one-time investment with ownership transferred to the buyer. Capex can’t usually be deducted from taxes, but fixed assets can be depreciated over time to spread out expense over the lifetime of the asset.

Operational expenditure (opex) is money spent on day-to-day running costs that can be one-time or recurring. In storage and IT, the obvious example is payment for cloud services. Opex is listed in financial statements and can be deducted for the year in which it occurs, and it is listed on the company’s balance sheet. Opex is included in calculations of operating income, which is then used to calculate net income, or the bottom line.

Notably, some organisations – in the UK public sector, for example – have mostly paid for infrastructure via capex purchases, but that is changing.

Why is all this relevant to storage purchasing? The emergence of the cloud and models of operating and purchasing that have arisen from it have brought opex as a commonly used method of expenditure for storage and IT. 

What is the cloud operating model and what are its benefits for storage purchasing?

The cloud operating model arose with the consumption methods of purchasing prevalent in the cloud. Instead of owning infrastructure in the cloud, customers consume it.

The cloud operating model has a number of benefits for hardware procurement, including storage. Key among these are that the organisation is not locked into the three-year refresh cycle, and can avoid all the downsides that come with it.

Storage hardware can be paid for on an as-you-go basis. That means the vendor makes sure equipment is updated, capacity is increased to meet current and future needs and breakdowns are attended to.

That also means no disruptive forklift upgrades every three years, and no necessity to suffer increasing levels of infrastructure inefficiency as it ages. Equipment can be updated on an ongoing basis, with the latest hardware and required capacity always on tap.

Often that’s taken care of via remote monitoring in which some vendors allow for cloud-like purchasing of increased capacity and performance, while also monitoring for technical issues in the infrastructure stack.

Costs can come down or can be matched more effectively to ongoing needs as organisations pay for storage on a pay-as-you-go basis. All that can also mean fewer on-premise employees for support and maintenance while existing employees are freed to focus on more strategic projects.

What are the downsides of capex storage purchasing and the cloud model?

While capex procurement entails a transfer of risk to the purchasing organisation, consumption (opex) procurement brings different concerns and risks.

This can include some loss of control. Where outright ownership can bring a feeling of control and security to the organisation, handing over ongoing maintenance and upgrades to a third party may entail the opposite. It’s potentially a double-edged sword, because to hand over responsibility is exactly what the customer wants from as-a-service purchasing. If all goes well, that’s a benefit.

But when things go wrong in the traditional model, everything remains in the customer’s hands. That might not be the case where a vendor monitors and controls on-premise infrastructure. In particular, there may be security and compliance needs that a cloud service provider cannot adequately meet, which can mean as-a-service procurement just doesn’t fit some organisations.

Some kind of relationship management with the vendor is absolutely essential for any customer in a cloud operating model so that supply of services and their performance can be monitored and managed.

Finally, it can be argued that paying for storage infrastructure as a service brings supplier lock-in.

What consumption models of purchasing do storage vendors offer?

Storage vendors offer consumption purchasing that range from pure opex as-a-service models to fully owned capex spend, but with contracted hardware upgrades.

In as-a-service models, customers usually commit to base levels of usage with upgrades to storage and controller hardware delivered as required. 

At the capex end of the spectrum, customers can purchase storage hardware while still benefiting from upgrades to storage hardware, with monitoring and predictive analytics.

What do the storage vendors offer?

Dell Apex Flex on Demand

Dell’s consumption model for hardware is Apex Flex on Demand. This allows customers to select from block, file and object storage hardware, plus data protection appliances.

Dell and its customers work out a “committed capacity” and “buffer capacity” that is likely to be required in the future. Raw and usable capacity data is measured at component level using automated tools installed with the hardware.

Customers commit to a usage term, after which they can go month-to-month, extend the subscription or return and refresh hardware. Also, customers can view and approve pre-invoice reports of metered infrastructure usage and costs via the APEX Console.

Storage available via Flex includes PowerStore, PowerMax, PowerFlex, PowerScale and ECS. PowerProtect DD and PowerProtect DP data protection appliances are also available, as are PowerEdge servers and HCI solutions.  

HPE Greenlake

HPE GreenLake delivers preconfigured hardware and software and manages the system during its lifecycle with payment via a monthly subscription fee.

Storage offered includes block, file and object, that includes HPE Primera high-end flash, HPE Nimble all-flash and hybrid-flash, Simplivity hyper-converged, Qumulo hybrid cloud scale-out storage, and StoreOnce data protection appliances.

Storage from GreenLake consumption comes alongside the whole of HPE’s datacentre offer. So, GreenLake comes with the full range of the HPE offer behind it, from composable infrastructure such as HPE Synergy, third-party software and services and professional and operational services from HPE Pointnext.

Hitachi Vantara

Hitachi Vantara’s Flex plans offer storage hardware via purchase or lease, as well as consumption models. The latter is EverFlex and is its storage as-a-service offer, which varies depending on whether infrastructure is managed and monitored by the customer or Hitachi. Both of these are pay-per-use, cloud-like models.

IBM

IBM offers storage as a service and Storage Utility consumption purchasing.

Storage as a Service can work across on-premise datacentre and hybrid cloud and is based on IBM FlashSystem and DS8900F hardware. It comes with a base level to meet current needs plus 50% on top of that pre-installed. Base and expansion capacity are charged at the same rate.

Storage Utility is a pay-per-use model that delivers 200% over base needs capacity on day one with datacentre upheaval avoided by over-provisioning and use of IBM Storage Insights to monitor capacity needs.

Customers pay only for what they use and if their data needs shrink during any month the bill will reflect capacity usage, with a minimum “base”. The purported benefit of over-provisioning means additional capacity is readily available, at least within the contract period.

NetApp Keystone

NetApp Keystone offers hardware in various non-capex formats that include on-premise and cloud capacity.

Keystone payment options range from pay outright for the hardware (Flex Pay), through Flex Subscription pay-as-you-go, to Flex Utility, which aligns costs to usage.

A range of service levels is available and billing is for predicted committed capacity, plus pay-per-use for burst capacity and support for file, block, object and cloud storage services.

NetApp’s Active IQ dashboard allows customers to monitor and manage storage usage, provision storage and data protection policies, review usage and billing, and to request capacity and services.

NetApp’s BlueXP provides a single control plane in which all NetApp storage is visible, on-site and in public clouds.

Pure Storage

Pure Storage’s as-a-service-like offerings come under the Evergreen brand. Evergreen//Forever offers customers purchase outright, but with lifetime upgrades.

Evergreen//Flex allows hardware to be purchased but capacity bought on a pay-as-you-go basis. Capacity can be delivered on any Pure hardware that can host it. So, in theory, Flex allows customers to use capacity in any of their arrays.

Evergreen//One unifies on-premise and public-cloud storage resources in a single subscription to provide block, file and object storage. Customers pay only for what they use.

Pure1 management tools allow management across datacentre and cloud from a single dashboard. This includes monitoring and provisioning, as well as the ability to manage capacity and performance upgrades from Pure.