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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?"
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.
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.
Full service IT at it's best.
Apostrophe usage at its worst.
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
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
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.
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!
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.
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