Archives for category: Buying and Selling in the Storage Market

Storage performance is core to application performance and data access.  When we talk about storage performance, we typically talk about IOPS and throughput, but there is a third variable, latency.  Latency measures the time it takes for storage to respond to a request or instruction issued by the CPU.    The lowest latency is achieved by delivering data from memory at the speed of memory.  The typical latency is at 1us.  If data could be delivered at such latency, we would have a highly efficient server architecture, but  there are a number of factors that prevent out ability to see latency at that level.

  • Application latency – the inherent architecture of the application may make it impossible to achieve microsecond latency.  Typical operations add to the overall latency.
  • Local file system – since DRAM is volatile, data that requires persistence must be committed to persistent media before an acknowledgement is returned.  The local file system is responsible for taking blocks off DRAM and copying them to other media on the I/O bus.  A common Linux file sytsem such as XFS or EXT4 add as much at 250us.  Even with the replacement of DRAM with NVDIMM (persistent memory), the latencies remain at minimum at 250us.  Though 250us may seem like nothing, in a typical database environment the reduction of 250us alone would increase IOPS and throughput per core by 350% and 410% respectively.
  • Network – When data travels over the network, whether it is FC or IP, there are added latencies.   Most all SSD/Flash arrays deliver performance at 1ms or more latency.  If SSD/Flash is sitting on the PCIe bus, that latency may be reduced to  a range between 500 and 800 microseconds.  Recently, a new protocol has been developed to allow shared storage (SAN) to deliver the same latency as storage on the PCIe.   This is the NVMe standard.
  • Drive media – Flash has a lower latency profile than HDD; it is not surprising since HDD is a mechanical device where the speed with which the platters spin correlates to the time it takes for the data to be pulled off the drive.  Flash is not a mechanical media and doesn’t have the same delays built in.

Of course we can’t leave out IOPS and throughput.  IOPS measures how many operations can be performed per second while throughput is how much data can be transferred through a given pipe.  Depending on the application, one of the other of these metrics will be more relevant.

For applications that stream data sequentially require more bandwidth and are therefore more concerned with throughput.  Thoughput may be calculated by the total bandwidth of the drives in a given system, the controllers, and the network.  Even if you have a system capable of delivering gigabytes of data, it still needs the network to carry the data.  There is often an imbalance between the network and system capabilities.  Recently a client expressed concern exemplifying this issue.  As a research institution there is a lot of data created by the labs and then processed by the investigators.  The challenge they are facing is that the amount of data being created and moved to a centralized location is much greater than what the network can handle.  As a result, they are unable to transfer data over the wire; some use tape or don’t move data at all.

IOPS  measures the number of operations a drive or a system can perform.  We have seen huge gains with the adoption of SSD/Flash.  Where a 15K RPM drive has the ability to deliver around 180 IOPS, a flash drive has the ability to deliver thousands of IOPS.  About 10-15 years ago storage administrators would be forced to over-provision capacity in order to get enough drives in a RAID set to deliver required number of IOPS.  As an example:  if your application needed 1 TB of data and 1,500 IOPS, using 15K drives at 300GB of capacity each an administrator would have to provision 4 drives to reach required capacity and 9 drives to reach the required IOPS.  Today,  capacity and IOPS can be balanced.

Not all applications require microsecond latency, thousands of IOPS and gigabytes of throughput, but with higher performance, when properly designed, the system can perform at a much higher level of efficiency, both operational and financial.  Next time we talk about performance, let’s make sure we are clear what performance we need.

 

I haven’t written a blog in some time, I have been working on many interesting projects.  More on that later.

This week I saw that HPE has signed a definitive agreement to acquire Nimble Storage for $1B.  Nimble is a solid system and the company has done a great job bringing it to market.  Nimble did all the right things from a sales and marketing perspective.  I can understand why it is an attractive target for HPE or any other potential acquirer.  That said, here are some reasons why I question the value of this merger:

  • HPE has a hybrid SSD/HDD system (3PAR); they have spent a lot of time porting it to a smaller entry point.  There is a significant overlap between 3PAR and Nimble from a target market perspective.  BTW, 3PAR seems to be one area in storage at HPE that is growing so why cannibalize or compete with self?
  • HPE has areas of the portfolio that are really lacking in offerings.  This includes NAS/file system storage, Object storage, tier 3 bulk storage, and others.  There is growth in storage in unstructured data and virtualization.  If you want growth, go where there is growth in the market.
  • Part of Nimble’s success is its go to market strategy and execution.  HPE takes a different approach to channel than Nimble.  One consideration is whether the challenge is gaining more growth in storage is more associated with how HPE sells and markets than what products they care, at least in some areas.  If you want to compete with younger more agile firms, then try being more agile.  Agility in sales process is something other large companies lack.

Moving forward, I hope HPE  doesn’t take too long to integrate Nimble and adopt some of Nimble’s strategies.

I often write about what works and doesn’t work in the world of channels. There are new challenges we encounter daily but most can be overcome with open communications.  Of course there are always risks associated with partnerships in a reseller model and every entity wants to minimize their exposure.  In the end though, the business defines how the partnership will work and legal then works to put it into terms that are acceptable to all parties.

As an example,  if the reseller will not be providing any post sale support, there is no need to have any wording that dictates how support will be managed.

This is how most discussions work; sometimes though, we come across an organization where legal dictates business terms.  The challenge with these situations is that legal operates without business context and, therefore, often puts terms that are hard to accept for a reseller because they don’t represent reality.  I think when forging a partnership, it is best to first discuss and agree on the business terms, and then put these into legal terms.  In all situations remember, a partnership has to be a win-win for all parties, otherwise, it won’t work.

Here is a question frequently asked by end users when deciding on a purchase from a “younger” company, “Is this vendor safe?  Will they be around in five years?”

The answer is never simple, it depends on the end user’s risk tolerance profile.  Here are some musings.

  • Make sure you understand what is the objection.  Some are concerned with support being there 3-5 years from now, others are concerned about the company being a stand along concern 5 years from now, yet others wonder whether the product is mature enough to perform adequately in their environment.

 

  • What are you selling?  Is it software, services, or hardware?  From a functionality perspective, it may be less risky to purchase software and hardware than services.  There are numerous organizations running old versions of software without support.  I am not saying I recommend it, but depending on the criticality of the software or hardware offering, there may be support options.  With services such as anything-as-a-service, this may be more problematic.  If a company shuts its doors, the subscribers may end up without any services very quickly or will be forced to move their business elsewhere in a very short period of time.  This has happened a few times in the industry already.

 

  • Some organizations may be willing to take greater risk if the technology is uniquely positioned to offer them market differentiation.  If there are alternatives that are good enough, the risk of a new vendor may not be worth it.

 

  • At what point is a vendor considered viable?  Of course it depends on the timeline in question.  If you are looking out 3-5 years, the considerations are different than when you are considering a longer time line.  The shorter the time line and the smaller the financial investment, the less risk may be perceived.

 

Considerations for determining viability:

  • How many paying customers the vendor has.  The key stepping stones are 20, 100, 250, 500, and 1000.  The other key metric that goes along with the number of customers is how quickly these customers were acquired.  A newly GA vendor with 20 customers acquired in three months is on a different trajectory than someone who has acquired 20 customers in 12 months.  It is also important to understand a typical sales cycle time line and the expected value of a closed deal.
  • How is the company funded.  Most startups are VC funded.  Knowing what round of funding they are in and how much money they have taken is relevant to how well they may be doing.  A well run company will take money with a clear purpose; a round for development, a round for marketing and sales, a round for growth.  Taking too much money quickly may, not always, signal poor management or lack of focus.
  • If the company is well managed and has money in the bank, the next thing to consider is whether the product is doing well.  Does it have good references?  Does it pass the POC?  What is the support like?  Sometimes you can gleam some of this from the interactions with the sales team.  A competent sales team with resources in the back office to assist is a good sign.
  • What position does the product take in the market.  Is it a true disrupter or is it a me too?  How much competition is in the market?  How early or late is the vendor to market?  If a market is saturated with competition, the product has to stand out and the execution of the firm must be superb.  The other key is whether the competition is other startups or established vendors, the big four in the industry with the majority of the market share.  If the competition is primarily from other startups, there will most likely be a consolidation phase within a few years.  This means the established vendors will look at the startups that have been successful and may purchase them to add them to their overall portfolio.  Remember that innovation often starts with startups.
  • Many established vendors buy other companies when they are still relatively small.  What does this mean for those vendors who have reached the 500 or even 1,000 client mark?  It just implies that they may or may not be acquired but the key is that it will take some time for them to truly fail.   Meaning, a well run startup with 500 plus customers will not disappear from the field in a matter of days (with the exception of there being corruption).  It may take years for the company to spend what they have raised and to disenfranchise their customers.  More commonly, companies like that either continue to grow organically, eventually going public and expanding into other areas of the market, or they are acquired.  With a substantial customer base, there is value in a company even if the product is not super exciting.  The residual value of a company with a customer base is enough to attract industry buyers as well as equity management firms, and other private investors.

To answer the question ” Will this vendor be around?” requires more than just providing financial.  It requires an understanding the basis for the objection and then presenting the case in light of industry trends and market positions.  In the end, not all objections can be addressed to the satisfaction of the sales persons or the vendor they represent.  Sometimes, the perceived risk is too high for an individual or an organization to move forward.  It is always best to ascertain the buyers risk profile as early as possible in the sales process.

One of my biggest challenges every day is to cut through the industry noise and get to the bottom of what vendors are selling and what customers are buying.  It is a challenge because vendors message to what they think customers want to buy (not necessarily what they have to sell) and customers want to buy what they are hearing from the industry as what they need.  The reality is a lot simpler; what customers want to buy hasn’t changed in decades.

Enterprises want to leverage their IT resources to drive more business, more revenue, more profitability.  This means that IT must be more efficient, effective, differentiating, agile, and responsive.  These are the high level wants and needs.  Each organization translates these requirements into technical specification based on some criteria such as performance, scalability, cost, simplicity, risk, etc.  How these are prioritized depends mostly on the person/organization making the decision.

The noise complicates the conversation.

Enterprise need to become operationally more efficient and cut costs.  This doesn’t mean they want to buy cheap stuff.   It is about the price only when all other variables are equal.  The industry has instilled in the users the idea that cloud is cheaper and more flexible; you pay only for what you use.  There are many ways to define what cloud is, but if we take cloud infrastructure offerings, once you really look, they may not be cheaper or more flexible.  Here are two examples to demonstrate:

  • Company XYZ needs to store 1PB of data for 7 years.  It is not clear whether data will be accessed regularly or not, but there is a need for it to be secure.  Option 1 is to use cloud storage (S3, Glacier, Google Nearline).  A single location of public storage cloud is average $0.01 per GB per month.  Without accounting for egress and transaction costs, that equates to $123 per TB per year.  Over 4 years, the cost of keeping a PB in the lowest tier of cloud, in a single location would be $503,808.  Keep in mind that depending on where the cloud data center is located, you might need to concern yourself with mother nature.  If you store two copies for geographic distribution, your cost doubles to over a million in 4 years.  Conversely, you may procure an object storage system to host 1 PB of data for $400 per TB over 4 years.  The total cost of this solution would be $409,600.  Some object storage vendors support geo-dispersal which allows you to stretch the system across 3 sites with ability to sustain site failure without data loss.  The cost of such deployment would not be different than already stated $410k.  The facility costs may be off set by the lack of egress and transaction costs.

 

  • Another Example is company ABC is running a marketing campaign and requires compute and storage resources for the duration of the program, which is 9 months.  Provisioning a decent server in the cloud with a few TB of data and snapshots may cost $210/ month.  This equates to $1,890 for the duration of the project.  You might need to add a backup client for the data, but that could be another few hundred dollars.  If you had to purchase a server, it could cost you 4,500.

No one wakes up and says, I want to go cloud.  What they really want is faster and simpler way to deploy IT resources and applications, to pay for resources that they consume only and not have to pay forward, and to simplify management of their infrastructure.  Some will be willing to pay more to achieve these results, others may not.

There is a way for some to achieve these goals on premise or in a hybrid configuration.  First, identify applications that are not core to your business and can be better served via a service provider.  This could be CRM, email, or SCM.  Then evaluate your environment for places where resources can be shared among departments.  The more an organization centralizes IT services, the more efficiency can be achieved and the greater opportunity for flexibility in how resources are assigned and consumed.  The private cloud concept is exactly this, centralized IT services where end users can select what resources they need and an orchestration and management layer that simplifies provisioning and allocation of resources and tracking of consumption.

Though there are many variables that go into any buying decision, the conversation has to start with what does the business need.  Messaging the market that cloud is the only way, cloud is cheaper and faster, all SSD or Flash is the answer to all your prayers, or that you need 32 Gbps FC when you can barely fill an 8 Gbps pipe doesn’t help users make good decisions.  Instead of the hype and the noise, let’s build, package and deliver products and services that will move the enterprise forward. I seem to have an idealistic view of the world, but a girl can dream.

I have recently been working with two different universities on projects involving hardware.  In both cases, the acquisition of hardware was not new but an expansion of the existing system.  And yet, it still took us over 5 month to receive a PO.  I wouldn’t really care that it takes 5 month to process an order, but what made this challenging is that the actual buyer was running out of space and really needed this capacity to continue working. In this situation, the procurement department was standing in the way of the order.  There were all sorts of contract requirements; we spent weeks negotiating terms of a remote 4 hour install service.  Was the procurement department just following protocol or is there an unwillingness to see the bigger picture?  Are the legacy policies impeding progress in these and other organizations or are they really protecting them from harm?

The intent of the protocols set out in procurement processes is to protect the organization from undue harm and to procure the best solution for the money.  I have been working with contracts throughout my career and business context is a critical component of any negotiation.   It is here where we communication and consensus break down. It is as though we were all walking down the same road at one time, then the industry turned left but not all procurement protocols noticed.  So here are some thoughts to put business context back into the conversation:

  • Many procurement departments treat complex IT purchases the same as they treat buying commodity items like paper or pencils.  Cost typically is only one factor in an IT buying decision; the more relevant criteria may be performance, resiliency, density, and support.  Allowing the users to select the technology first may allow the organization to make better decisions overall that in the long run will save them money and headaches.  That said, we understand that there are required processes in place to ensure fair play.  The RFP process most commonly used lacks necessary detail and flexibility.  If ask a yes or a no question, you don’t get to learn how it actually works and whether it makes sense for your application/business.  An alternative approach that has worked in many situations is to instead issue an RFI to many vendors first.  This provides a response with enough detail to select two or three that fit the need the most.  There may be pricing presented in the RFI but it is not typically contractually binding.  The user may now spend time working with the various vendors to architect a solution that fits their specific need.  This also allows them to perform any POC work and speak to references.  After an extensive evaluation process, the user will be ready to proceed with a solution that has a detailed configuration and will require pricing.  This is where procurement can step in and assist.  Once they have a solution configuration, then pricing may be negotiated either directly with the supplier or through an RFQ process where the submitted quotes are contractually binding.

 

  • There is another phenomena that exists in the industry that procurement departments are either not aware of or don’t understand.  This is called channel partner commitment.  It means that if a channel partner (reseller, VAR) is working with the user on a solution, the vendor/manufacturer treats this partner as a contract sales representative of their organization.  This means that this channel partner will have the same pricing/discounts as if the user was working directly with the vendor/manufacturer.  In the background, the vendor will pay a sales commission to its channel partner.  When procurement departments spend a lot of time sending out requests for competitive quotes in these situations, they are really wasting time and resources.  They could probably get a better return on their effort by negotiating further with the partner presenting the solution.

 

  • Another mistake some procurement departments make, as do users, is think that if they go directly to the vendor they will get better pricing.  The industry has changed over the past two decades from having a few large solution providers to a diverse ecosystem of vendors, manufacturers, and software developers.  It is cost prohibitive in most cases to grow business by building out a direct sales force.  To stay competitive in the market, vendors they have contracted with regional and national reseller and VAR organizations to be the extension of their sales force.  More feet on the street without carrying full time employees.  Resellers and VARs provide a lower cost of sale to the vendor community.  What all this means is that in many cases, there is no way to buy direct from the manufacturer/vendor.  It is not to frustrate users or procurement department, it is just what makes business sense for the vendors.

 

  • Finally, I know everyone wants to protect themselves as much as possible, but please be reasonable.  Most companies/people are not out there to screw you or harm you in any way.  We all know that sometimes things happen and we all agree that protections need to be in place for when these situations occur.  That said, let’s not go overboard, be reasonable, consider what you are buying first (business context).  I have seen contracts from procurement that cover every possible situation that may occur across all products and services they may purchase.  This means that I might need to agree to terms and be held liable for situations that don’t apply.  A good example:  contract says that if the product I am selling is going to cause death of a patient due to malfunction, my organization is held liable.  Here is the problem with this.  I am just selling a storage box.  I am not developing or managing the application.  I am not making a decision whether the system is adequate from a resiliency perspective for your needs.  I don’t have any control where this system will be deployed.  Holding me liable in this situation is not logical.  The key message here is that we are all in this together.  Our goal is to do right by our customers, to go the extra mile when it matters most and in return, we want clients who value what we do for them.  We want a win win.

My hope is that the next time I work with a procurement department on a purchase of IT solutions, that there is a clear understanding, I am not selling pencils and it does matter what the end user ends up with.  Let’s work collaboratively to serve those who are both our customers.  Maybe I am a bit idealistic here, I am sure I am, but a girl can dream.

My job requires me to be at the intersection of customer buying products and services and the industry creating and bringing to market technology.  I have found that there is a great disconnect between what the industry is hyping and what is really possible.

For a number of years now we have been touting the cloud as the answer to all our infrastructure aches and pains.  “If you go cloud, you will have more flexible, just what you need, less expensive services” the trade magazines and pundits claim.  The reality though is, “it depends”.

The concept of utility computing has been around for some time. Back in the dot.com boom there were a number of companies attempting to provide storage as a service, shared infrastructure, etc.  I actually worked for one of these companies, Genuity.  What really defines utility based services is the delivery of a service just in time and the payment for such service based on consumption.  That is how the electrical services work.  And if we all needed the same exact service varying only in the quantity of it, then we would be set, but application infrastructure doesn’t run that way. If you poll organizations that have standardized on VMware as an example.  They all may have and even run application such as MSSQL Server or MySQL or another common applications, but the demands of these applications on the infrastructure will be different in every situation.

When customers ask me about cloud or how to get there, usually because someone higher up has decided that cloud is the way to go, I first ask them what it means to them.  I then try to understand the drivers behind wanting to go to the cloud.  Here are some reasons that make sense:  spikes in demand, seasonal applications or projects, don’t want to manage my application, don’t have a secondary site for my backups or DR.  The most common way to embrace the cloud actually aligns with some of the traditional business concepts such as ‘focus on your core competency and outsource secondary services’.  This means if an application or service is not core to your organizations business objectives, then consider outsourcing it.  Best examples of this include email outsourcing (Office365, gmail, other email services), email archiving, CRM, telephony and conferencing, backups, and file sharing.  It also makes sense that if you need some resources for a short period of time, it is more likely to be cost effective to go to the cloud than to procure it in house.

Of course we should keep in mind that not all clouds are the same and that not all applications are the same.  The traditional enterprise applications are highly dependent on the underlying infrastructure to perform while newer cloud-centric applications have build much of those dependencies into the application it self.  This means that your Oracle db may not work well in EC2 but your MongoDB will have no issues.

Finally, if we are talking about utility we are talking about operational costs.  If the goal is to achieve OPex rather than CAPex, cloud is not the only answer.  There are traditional outsourcing offerings in the market that allow you to consume as an OPex, even if the infrastructure is dedicated to you.  There are specialty service providers that offer services for specific applications where the infrastructure is shared but the application is yours and yours alone.  At the bottom of all these options is operational leasing.

I am not saying that cloud is not great and that it is not reality.  What I am saying is that we have to be careful when we refer to cloud.  We need to qualify what we mean, what, expect.  The technology continues to evolve; there is a lot of innovation in the industry today and we are making great progress to making cloud more ubiquitous.  Part of it designing and building applications that run better on commodity infrastructure; part is enabling quality of service and custom service delivery in a multu-tenant environment.  If you think you want cloud, just make sure you have a clear idea of what that means to you.