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Internal Costs Per Gigabyte — What Do You Pay?
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?"
Bandwidth? Storage? Backup? Downloads from a particular site? What the hell are we talking about here?
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.
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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
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.
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.
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.
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You've not allowed for power, network, or backup in your costing. Try again.
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.
Also doesn't allocate anything for the cost of the person doing the maintenance/monitoring - that person doesn't come for free usually.
Full service IT at it's best.
Apostrophe usage at its worst.
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.
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.
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.
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Having done the modeling for this, here's some components to consider.
I have one example (AUD) where this works out as follows:
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.