SAN ROI is a sticky wicket

With IT budgets tighter than a noose, return on investment (ROI) is the only chair that some managers have to stand on. Determining ROI is a tough task in all areas of IT, but it may be even tougher on the storage front because capacities are increasing unabated and slashing storage expenditures is simply not an option.

So, how do you determine ROI for a storage area network (SAN)? It's easy to figure out how much it'll cost, but it's much more difficult to determine the return on that investment. This is in part because you have to link storage expenditures to business benefits in some quantifiable way.

In my opinion, it's impossible to do this accurately, but as Alan Earls' Special Report this month attests, there's hope.

When we began researching the article, we planned to write it based solely on interviews with end users. But it didn't take long to figure out that most users have not been able to calculate ROI for their SANs.

The major SAN vendors offer tools to assess SAN ROI, but most companies assume that those tools are biased. However, as our Special Report points out, one exception is BlueCross BlueShield of Tennessee, which got good results from SAN ROI tools from McData.

In the first month alone, BlueCross saved $120,000 in asset management costs and about $300,000 by avoiding additional storage acquisitions. Bob Venable, manager of enterprise systems at BlueCross, estimates that the company has been saving about $1 million annually since installing a SAN. And, although its storage network has grown to more than 60TB, the number of personnel required to manage that data hasn't grown at all.

Although we were not able to find many other users that had solid ROI figures for their SANs, industry analysts came through with some helpful advice for justifying storage expenditures to upper management. Analysts say that calculating SAN ROI entails a number of factors, including the following:

  • Weighing the cost of the SAN against the cost of increased personnel that would be required to manage your data without a storage network.
  • Factoring in the increased capacity utilization that's possible with a SAN (70% to 90%, compared to 30% to 50% in a direct-attached storage environment).
  • Estimating cost savings from more-accurate storage provisioning.
  • Calculating total cost of ownership. (One study shows that the TCO for direct-attached storage is $0.84 per MB, vs. $0.34 to $0.38 per MB in a SAN environment—an improvement of more than 50%.)
  • Determining increases in the amount of storage that administrators can manage. (On average, they can manage 10 times more with a SAN.)
  • Comparing payback vs. ROI: They're not the same.

Dave Simpson,

This article was originally published on January 01, 2003