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Internal Costs Per Gigabyte — What Do You Pay?

Posted by timothy on from the wonder-what-the-dept-of-education-pays dept.

CodePwned writes "I recently took over a position at a rather large company where I discovered my group was paying $30 per gigabyte per month! That's $360 per year per gigabyte to our own IT department. While I understand costs are different depending on the scale, redundancy, backup and support methods, there doesn't seem to be any good papers on what range you should expect your costs to be. So far, my research shows an average of $1 per gigabyte or less for internally hosted space. What do you pay?"

38 of 420 comments (clear)

  1. Eh? by ledow · · Score: 4, Insightful

    Bandwidth? Storage? Backup? Downloads from a particular site? What the hell are we talking about here?

    1. Re:Eh? by porkThreeWays · · Score: 3, Informative

      I don't think it's as vague as everyone is making it to be. Since his department is paying the IT department it most likely means data on a windows network through CIFS that is backed up and redundant. This is a common thing.

      --
      If an officer ever threatens to taze you, say you have a pacemaker.
    2. Re:Eh? by Guspaz · · Score: 5, Insightful

      That's not the point, the point is that you can buy a consumer grade hard disk for $0.05/GB.

      A 1TB consumer-grade HDD costs $50. $1/GB per month would mean $12,000 per year to store that. His employer is spending $360,000 to store that same amount of information. This is clearly far beyond the "consumer pricing has no bearing on enterprise pricing" argument.

      I don't think that more than one third of a million dollars can be justified to store one terabyte of data, no matter what the infrastructure involved. At that price, you can afford to colocate one hundred servers in one hundred different datacenters and replicate your data to all of them, including the staff to manage them all. $360k per year to store 1TB is insanity.

    3. Re:Eh? by Surt · · Score: 5, Informative

      He's at a large company, where one department (IT) actually charges other departments (sales, development) for services. He wants to know what he should expect to be charged by IT per GB of storage. He thinks the IT department at his company is overpricing to provide for Aeron chairs.

      --
      "Who is the Journal of Quantum Physics going to believe?" --Stephen Hawking
    4. Re:Eh? by causality · · Score: 5, Insightful

      I don't think it's as vague as everyone is making it to be. Since his department is paying the IT department it most likely means data on a windows network through CIFS that is backed up and redundant. This is a common thing.

      If you are having to speculate based on what is likely and common, then it fits the very definition of "vague".

      --
      It is a miracle that curiosity survives formal education. - Einstein
    5. Re:Eh? by oracleofbargth · · Score: 3, Informative

      The $30/month price likely includes an enterprise SAN array (~$150k+), a high-end server fail-over cluster (~$20k-$30k), an enterprise tape backup system (~$80k), a network to connect them all to each other and the users (~$200k), and 4 people's salaries (the SAN admin, the server admin, the backup admin, and the network admin) (~$50k-90k each).

    6. Re:Eh? by Anonymous Coward · · Score: 5, Insightful

      You've been suckered into believing that private enterprise is smarter and more efficient than government, when in fact both can be equally staggeringly incompetent!

    7. Re:Eh? by Z00L00K · · Score: 4, Insightful

      Interenal invoicing is just causing a lot more overhead in an organization making it move slower and be less responsive to changes.

      Managers will just sit down and fight about internal costs instead of heading forward.

      $30 seems to be very high too, but the important thing is also what do you get for it?

      --
      If builders built buildings the way programmers wrote programs, then the first woodpecker would destroy civilization.
    8. Re:Eh? by BigSlowTarget · · Score: 5, Insightful

      1) He isn't paying for today's 1TB. He's paying the loan IT took out to integrate a system to provide 1TB in 2005 across who knows how many platforms probably including wonderful legacy applications from 1982 written in COBOL.

      Think about the way that would work. IT buys the hardware but you don't pay penny one at that point. They set up the service and start charging you. Hopefully they forecast demand well and don't buy too much extra, but that hardware, setup cost, maintenance, integration, forecasting and everything else is a big lump in month one that you pay back over time in monthly charges. Two years down the line you are still paying for the initial cost even if going out and buying it new would cost only a fraction. Too bad about that, if you didn't need the capacity blame the forecasters or (probably) business people who provided data for the forecast basis.

      2) The charge that says "per GB" is not necessarily for storage. It's a proxy for it and it probably includes it, but charge back systems always include compromises about which services are packaged, which costs are shared across multiple charge items and who is using or owns the underlying assets. If you really want to know what the cost should be you have two possibilities: yell at the IT management until they provide you a special charge rate of assets specific to your department or yell at the IT accountant support until they cough up the entire IT budget and chargeback methodology. Both are nearly impossible.

    9. Re:Eh? by Nerdfest · · Score: 5, Funny

      Corporate IT: Taking the 'T' out of Hosted!

    10. Re:Eh? by Gorobei · · Score: 3, Insightful

      Fair point, but now add some time from:

      1. One audit group to ensure system continues to conform to spec.
      2. One test team to ensure all that backup stuff actually can restore according to SLAs.
      3. One legal/management group to ensure SOX compliance each quarter.
      4. One capacity planning group to track/handle trends and headroom.
      5. One data center build team to bring new farms online as needed.
      6. One decom team to manage end-of-line for obsolete resources.
      7. One architecture team to either spread your vision or show you how you're doing it wrong.
      8. Ten other groups you've never heard of doing things you think you don't need.

  2. IT all depends by camperdave · · Score: 4, Insightful

    I suppose it all depends on what, and how, you're measuring. Is that money spent on backup tapes, raid systems, flash drives, or what? Is that for offline storage, frame-relay throughput, ISP bandwidth. Does IP telephony get rolled up in that? The question seems a little vague to me.

    --
    When our name is on the back of your car, we're behind you all the way!
  3. Performance, reliability, and price, pick two. by GoNINzo · · Score: 4, Interesting

    Performance, reliability, and price, pick any two.

    High performance and reliable storage tends to be expensive.
    High performance and cheap tends to require a lot of maintenance.
    Reliable and cheap tends to be really really slow.

    So if they are on a SAN with that one gig spread across 50 drives, there are some applications that need that speed.

    --
    Gonzo Granzeau
    "Nothing the god of biomechanics wouldn't let you into heaven for.." -Roy Batty
    1. Re:Performance, reliability, and price, pick two. by Guspaz · · Score: 4, Insightful

      At those costs, one terabyte of data stored for three years would cost roughly $1.1 million. I find it hard to believe that you could legitimately build a SAN that stored 1 TB for that amount of money and not have hit some sort of performance wall that made the expense superfluous. I mean, at some point, you're maxing out multiple 10GigE fibre channels from your SAN and thinking "How can I spend the rest of this money?"

  4. Re:CDW, Newegg, etc by jhantin · · Score: 3, Insightful

    I think the OP is talking about total cost of ownership here, not purchase price. TCO is all-inclusive, covering network bandwidth to make use of the space, backup and redundancy, paying someone to keep it running, electricity to keep it spinning, a share of a fileserver box to put it in, etc, etc.

    --
    ...when you're writing a game...tweak the difficulty of "Easy" to something [your mother] can cope with. -- onion2k
  5. I thought it was RAM by sugarmotor · · Score: 3, Funny

    I thought it was RAM

    --
    http://stephan.sugarmotor.org
  6. Costs for what? by georgewilliamherbert · · Score: 4, Informative

    For backed up to tape storage? Storage replicated to another, remote datacenter? Snapshotted at regular intervals?

    SAN storage? NAS? Direct attach? On arrays with 10 drives, 100 drives, or 1000 drives?

    Fast SAS or FC drives? SATA arrays? 5400 RPM? 7200? 10k? 15k?

    If you're paying $360/GB/yr for low end storage that sucks. For very high end, with replication and snapshots and the fastest drives and so forth, that's pretty high, but not an order of magnitude high.

  7. $40 by spike2131 · · Score: 3, Interesting

    We pay a one time $40 per gigabyte as the capital cost of acquiring the storage. There is no monthly cost. I think $40 is still way too much.

    --
    SpyDock: Scientific Python in a Docker container
  8. I don't pay by El_Muerte_TDS · · Score: 3, Insightful

    My boss does.

  9. One idea... by lexcyber · · Score: 3, Interesting

    Stop beeing retards and do internal invoicing. Not like the board of directors is billing "per decision". IT department as a billing self ruling department is so damn stupid. And no one seem to understand it. It is like having a fire department only going to fires that is in line with their mission statement.

    And having an it department invocing per GB instead of having a budget for storage and then the company can allocate it as they please. And if someone has a bigger need, it should be a question for the company. Not a matter of giving a profitable it department.

    --
    - To understand recursion, we must first understand recursion -
    1. Re:One idea... by zero_out · · Score: 3, Interesting

      As I understand, this stems from the idea of outsourcing IT. IT outsourcing companies love this, because they can easily compare apples to apples. "Your internal IT dept. charges $30/GB to host and support your files, but we can do all that for $25/GB!" However, many IT needs don't fit into that model very well. Which model you use really depends on your needs, the size of your company, and the department structure.

    2. Re:One idea... by Cytotoxic · · Score: 4, Interesting

      Sure, if we'd work like this everyone will want to have a 100Gb homedirectory/outlook mailbox/subversion repo whatever. You say go to management and I'll tell you what they'll decide: the teams that make most of the money get it the rest wont. So cut out the middleman and make this common practise by rebilling I say. But then everything should be rebilled (and that's where it goes wrong most of the time: some team rebill and some don't. This effectively means mixing a capitalist and communist society and that don't work....)

      This is exactly what happens. If IT resources are "all you can eat" then IT ends up rationing the supply. This works in smaller organizations where IT is heavily involved in the business. As the size of the organization gets larger, having IT deciding priorities between various groups is less desirable.

      The inevitable result of unbilled IT is the CEO holding the line on the IT budget while the departments are demanding more and more services. Simple econ101 will tell you what happens next. If you fix supply and decouple demand, you get rationing.

      There is an inevitable curve as companies get larger and larger:

      1. IT handles everything
      2. resources become constrained and an executive group attempts to prioritize IT projects
      3. internal billing and budgeting is used to prioritize IT resources
      4. Numbers used for internal billing are used to justify outsourcing and/or mini IT departments spring up inside divisions.
      5. outsourcing/distributed IT produces mixed results and added complexity - so IT is insourced.

         

  10. Re:WTF? by Sponge+Bath · · Score: 4, Funny

    If it's internal why would you have to pay per year for that?

    The 30lb bags of Purina IT Chow are a recurring cost.

  11. Re:WTF? by XanC · · Score: 3, Informative

    "Internal" in the question refers (very obtusely) to the cost within a company. In other words, $X per gigabyte is taken from his department's budget in order to "pay" for their IT use.

  12. Cost Drivers by MyLongNickName · · Score: 4, Informative

    Hi,

    I am willing to bet that the "gigabyte" usage is simply a cost driver. Accounting simply needs to know how to divide up IT costs and settled on this as a cost driver, possibly one of many, to determine what it takes to support each department.

    This is neither new nor entirely bad. Sometimes it is better to go with an easy-to-implement, but only partially accurate number than one that is perfectly accurate but impossible to implement.

    --
    See my journal for slashdot ID's by year. Mine created in 2005. http://slashdot.org/journal/289875/slashdot-ids-by-year
  13. Re:Here is 67 Terabytes for $7867 by zonky · · Score: 4, Insightful

    You've not allowed for power, network, or backup in your costing. Try again.

  14. This may merely be an allocation scheme by neltana · · Score: 5, Insightful

    What you may be seeing, especially if you are working for a very large company, could just be a cost allocation scheme, not a real money cost as you are thinking of it. If your department brings in revenue, the organization needs to match expenses to it for purposes of Management Accounting.

    For instance, imagine you know it costs $X to run one of your cost centers. That dollar amount includes everything from the manpower, the equipment, the facility...everything. Now, they need to assign these costs to the departments that actually make money in a way that makes sense. They could do this by carefully costing out each service they provide and assigning an overhead rate, blah blah. That tends to be a pain. You do it if you have to...but you try not to have to. Another, easier, way of doing it is determining a usage metric (CPU hours, GB of storage, number of tickets) and using that to determine each profit center's percentage allocation of the overall cost.

    So, the $60 per GB may not even be close to a market rate for storage. However, if all the departments used twice as much storage next year, the per GB cost might fall to $31 per GB (slightly more than half to account for the fact that there would obviously be more real costs). Conversely, if you convinced your management to contract externally for storage, everyone else might find their per GB cost rise, since the fixed costs would be static.

    1. Re:This may merely be an allocation scheme by PybusJ · · Score: 3, Insightful

      Your description sounds about right. But, by using storage as your proxy for all IT cost you are putting perverse incentives for people to use less storage than is right for their business need (or to avoid using central storage, where it can be managed and backed up, and put their stuff on their own external HDDs).

      I think a per person overhead charge, plus a storage charged at closer to cost is likely to work out better.

      Conversely, if you convinced your management to contract externally for storage, everyone else might find their per GB cost rise, since the fixed costs would be static.

      Right, so this is the exactly what a rational department manager should be doing.

      Incidentally, I started looking into running my own departmental IMAP server yesterday to avoid much smaller charges of about $30/Gb/year for email archiving from central computing services.

  15. Re:Here is 67 Terabytes for $7867 by Eristone · · Score: 4, Insightful

    Also doesn't allocate anything for the cost of the person doing the maintenance/monitoring - that person doesn't come for free usually.

  16. Re:Gigabytes of Pr0n, maybe? by Anonymous Coward · · Score: 5, Funny

    Full service IT at it's best.

    Apostrophe usage at its worst.

  17. Re:Here is 67 Terabytes for $7867 by Dunbal · · Score: 3, Funny

    that person doesn't come for free usually.

    Nah but they're real cheap in Malaysia.

    --
    Seven puppies were harmed during the making of this post.
  18. why this happens by Nadaka · · Score: 5, Informative

    The big reason for internal IT departments to charge other departments for services rendered is this:

    When it comes time for a manager to "earn" his bonus, the first thing he looks at is cutting the budget for less profitable departments.

    The IT department rarely has external clients for income, but is absolutely vital to keeping the business running.

    Therefore to keep some short sighted pencil pusher from crippling the company with a failing infrastructure, the IT department has to show a "profit" for the services it renders.

  19. Re:Gigabytes of Pr0n, maybe? by hawks5999 · · Score: 3, Funny

    iPhone autocorrection at its normal.

  20. IT Department Pricing to You, not TCO to Company by billstewart · · Score: 3, Interesting

    There's a big difference between TCO to the company and whatever price the IT department charges *your* department for service. IT department prices are typically based on historical costs that don't necessarily represent the Moore's Law equivalent precipitous drop in disk space costs, and are often based on gold-brick engineering practices and specialized applications.

    For instance, if you're running a high-end database or an Exchange server that's supporting the whole company, it needs to have a blazingly fast SAN array from EMC or somebody, and instead of using $50 1TB SATA drives, it's using $300 15000rpm 300-Gb SAS drives with SSD accelerators and uber-fancy controllers, built into a framework that lets them do maximum IOPS and live no-performance-hit backups. On the other hand, if you're trying to back up desktop data in case of laptop failures, or provide shared file storage where people can retrieve dull bureaucratic standards documents, performance isn't critical, price and volume are, so you want a big slow cheap Network Attached Storage device packed full of TB SATA drives, with a bit of RAID to deal with the occasional drive failure, and still some kind of backup system or maybe a tape-loading robot (if tapes are still even cost-effective.)
    And it's not uncommon for IT departments to charge you for the former, even if you'd rather have the latter.

    I'm dealing with a variant on this problem right now, for a network management application. The servers and storage in the data center are designed for blazing speed, but the application I'm trying to support is customers who want to archive all their network event data for a couple of years to make Sarbanes and Oxley and their friends happy, so I need fast servers for today's data, maybe something medium-speed for a week's data (but SATA's probably enough), and 98% of my data will never be looked at again but the rules want it online, not in a box of tapes.

    --

    Bill Stewart
    New Fast-Compression-only CPR http://preview.tinyurl.com/dy575ks
  21. Our Cost by duplicate-nickname · · Score: 4, Informative

    Our data center provider offers storage on their FC SAN ( > 150mbps I/O) at a cost of $2.50/GB/month and an additional $2.50/GB for backups. This includes 24x7 support, 99.99% uptime, and is hosted in a tier 3+ data center. My guess is that smaller SANs cost more per GB, but you are getting boned at $30/GB.

    On the other hand, if you are requiring some sort of high performance DAS with off site replication, then I bet the cost is considerably higher.

    --

    ÕÕ

  22. Re:CDW, Newegg, etc by frosty_tsm · · Score: 3, Insightful

    Backup and redundancy can get awfully expensive, particularly if an online backup product like Evault is used. I don't know if its worth 30 dollars, but it's a pretty fucking good milkshake.

    Don't forget salary costs in IT to support it all.

    That said, if IT is really using $30 per Gig then they aren't necessarily using the right online backups or tools. Redundancy doesn't cost that much. Geographical redundancy doesn't cost that much. Off-site "vaults" can be pricey, but not that expensive. If I were in the OPs shoes, I'd ask the IT department to share with me how they came up with that number. It's simple and not too confrontational. If their math is fuzzy or their numbers don't make sense, I'd follow up with them justifying that cost. It could just be that there is no IT budget, it all comes out of other budgets through this sort of thing. It could also be that someone has built a very good empire.

  23. $12/gb per year by FishNiX · · Score: 3, Informative

    We pay about $12/GB/year for storage on 15k FC disks with RAID-DP and replicated across town. This does not include backups to tape, that's an extra fee. We are also in the process of working out lower cost storage without replication and on SAS (or SATA) disk. It's really silly to compare consumer grade USB storage to enterprise, replicated and professionally supported storage but it happens all the time.

  24. Re:CDW, Newegg, etc by DavidRawling · · Score: 4, Insightful

    Having done the modeling for this, here's some components to consider.

    • Cost of the SAN controllers - often spread across servers, but can be spread across disk shelves / disks
    • Maintenance on the SAN controllers
    • Production Disk shelves - the cabinet, the full set of disks, the rack space, the cables, the power connections and the connections to the SAN head if needed
    • Backup Disk
    • DR Disk
    • DR Backup Disk (ie you replicate backups to DR then restore)
    • Tape Libraries and Drives
    • Tape Software (commonly sold at $X per TB)

    I have one example (AUD) where this works out as follows:

    • SAN controllers - $100K for up to 40 shelves of disk, so $2500 per shelf - so as below $1 per GB
    • Production Disk shelves - 300GB 15K FC disks giving ~2.8TB for $24K - $8 per GB
    • Backup Disk - 1TB 7.2K SATA disks - 9TB per shelf for $23K - $2.5 per GB
    • DR Disk - same as production - $8 per GB
    • DR Backup Disk - same as Backup - $2.5 per GB
    • Tape Software - $3.5 per GB
    • Tapes - AUD60 each, LTO4 (1200GB/tape), 17 tapes required for complete cycle - $1 per GB!

    Do the maths above: excluding power, staff, tape libraries and rack space etc, it's already over $25 per usable GB for Tier 1 (and $13.57 in this model for the Tier 3 storage). Redundancy is baked in. Spare disks in the SAN are baked in (so a disk failure means immediate rebuild not "wait 4h until a replacement can be installed by an engineer" rebuild. And for this cost, we also have things like automatic deduplication of data (backup and online), data replication, historical backup to tape and so on and so forth.