Johannesburg, 08 Aug 2007
CIOs are coming under increasing pressure from the boards of their organisations to not only contain ICT costs, but also to deliver infrastructure and applications that are more flexible and agile than those they provided in the past.
The trend is spurring an industry-wide transition to a new model of computing, known as 'services on demand'. This represents an inflection point that carries as much significance for CIOs at large organisations as the shift from mainframes to distributed computing and the advent of the Internet.
Under services on demand, companies essentially buy computing services and applications from service providers in the same way as they pay for electricity or water.
This model turns IT into a variable cost, eliminating most of the capital investment and fixed costs associated with ensuring the smooth running of the technology infrastructure.
The promise of this approach is that companies can buy only the computing capacity that they use rather than having to build expensive infrastructures of their own. Research shows that up to 70% of an average organisation's annual IT budget is consumed by operational costs, leaving only 30% for investment in new business solutions.
Services on demand clears the way for innovation because it eliminates the waste associated with building, owning and managing infrastructure such as storage, networks, and servers.
According to Johan van Huyssteen, general manager of outsourcing services at Business Connexion, there are different storage-on-demand models, and companies should be aware what each of these models offers.
"A typical South African vendor model of storage-on-demand is that a company purchases dedicated hard disk capacity which it must grow into over a period. The company only pays for the capacity it uses as it goes along. The user must provide the vendor with a capacity forecast, for instance, the expected usage for each of the next five years. The financial model of the vendor allows the user to grow into the capacity over time, and in the final year the full capacity must normally be used."
Van Huyssteen says though this model works for most organisations with in-house IT services, there are exceptions, and Business Connexion has found it necessary to offer a different model that caters for its outsourcing clients.
"In Business Connexion's model, a number of clients share the same storage infrastructure because technology ensures that each client's data remains secure. Clients purchase storage per month, and they can grow each month or stand still for a couple of months. The Business Connexion storage-on-demand model includes all services, including backup, storage management, offsite storage, replication and computer centre environmentals.
"For instance, retail organisations and banks get very busy at the end of the year and need additional storage capacity at that time. A client will typically request an additional 200GB space in December, and Business Connexion will immediately make that space available. In February, however, the client may no longer need the space and the capacity is reduced accordingly. The client is charged according to the number of gigabytes used."
As a number of different companies share the environment, Business Connexion can use this vendor model and adapt it to give their clients an attractive model. "This is the big difference between Business Connexion's storage-on-demand model and the typical hardware vendor model," says Van Huyssteen.
He does not know of anybody who has such a storage-on-demand model in South Africa. "When people talk about storage-on-demand they normally refer to the typical hardware vendor model."
In addition to having the freedom to choose the amount of storage, a client also has a choice in the security level, or tier, of storage, which introduces cost differentials to the model. The cost difference between mission-critical data storage and archiving storage is more than 300%.
According to Van Huyssteen, Business Connexion has a number of large organisations as storage-on-demand clients. However, the model is also very suitable for medium-sized businesses, and Business Connexion is increasingly targeting this sector of the market.
"Data centre space is incredibly expensive. We work on a footprint basis and if you consider that a medium-sized business is likely to have three footprints in its data centre, with three to six servers on each footprint, Business Connexion's 192 virtualised servers on a footprint in its data centre provide large economies of scale for medium-sized businesses."
He says in the first year of offering on-demand storage, it has proven to be so popular that Business Connexion has already had to increase its capacity. "The next logical step for Business Connexion is to place virtualised servers on top of the storage-on-demand model, allowing our clients the flexibility to buy storage and servers on demand," concludes Van Huyssteen.
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