Storage Futures or is it Options?

One of the trickiest problems in the storage industry is managing demand. Internal customers seem to think that storage isn't physical and we just have tons of the virtual stuff we can pick out of the air as required. I don't think they expect to talk to the server teams and find they have dozens of servers sitting spinning just waiting for the next big project, but for some reason with storage they do.

So this lack of foresight causes demand problems as arrays have to be managed. Whilst we could simply add a new RAID group or bunch of disks when customer demand requires it, allocating all the new storage on the same RAID group, chances are performance would "suck". Really we want to add storage in bulk and spread the workload.

Similar problems occur when arrays cannot be expanded and a new footprint has to be installed (which can have significant lead time and ongoing costs, for instance fabric ports for connectivity). I can hear the bleating of many a datacentre manager now, asking why yet more storage is needed and where it will go in the already overcrowded datacentre.

The standard charging model is to have a fixed "price guide" which lists all the storage offerings. Internal customers are then charged on arrears for their storage usage. Some companies may have an element of forward planning but they are torturous processes and anyway, someone always comes along with an allegedly unforseen requirement.

Ideally, the answer is for all storage users to manage their own demand, estimating BAU (Business As Usual) growth and requirements for new products. Unfortunately, the penalties for lack of planning don't usually exist and poor practices perpetuate.

So now about offering futures (or options) on storage? Internal customers can purchase a right to buy (option) or an obligation to buy (future) storage for some time in the future, say 1, 3, 6 or 12 months ahead. In return they receive a discounted price. Storage hardware costs from vendors are always dropping so the idea of charging less in the future in order to gain more of an insight into demand is probably not an unreasonable concept.

Futures/Options could also work well with thin provisioning. Storage is pre-allocated on a virtual basis up front, then provided on the basis of futures contracts by adding more real storage to the array.

Now the question is, to use futures or options? Well, perhaps futures best represent BAU demand as this is more likely to be constant and easily measurable. Options fits project work where projects may or may not be instigated. Naturally futures would attract a higher discount than options would.

I think I need to make up a little spreadsheet to test this theory out...