This is just a quick blog post to draw attention to an announcement by Dell Technologies within the support of the APEX Storage Service offerings. As highlighted by Blocks & Files, Dell Tech is now giving customers the choice to run APEX Storage in a customer-managed mode. Why do this?
APEX was announced back in 2020 and we covered the GA availability back in May 2021. The intention is for APEX to be the transition to “as a service” models, like HPE GreenLake, NetApp Keystone, and Pure Storage Evergreen. Customers pick from service offerings via an online portal, selecting common options like capacity, performance, protocol and timespan. Dell delivers the equipment and manages the end to end lifecycle, leaving the customer to consume the available resources.
Dell Technologies now offers a “customer-managed” option to complement “Dell-managed”. In this scenario, the common tasks of performance and capacity management revert back to the customer. Dell simply provides the support functions for break/fix that would come with a traditional support contract. This new option seems remarkably similar to legacy EMC OpenScale offerings first introduced in 2003. Customers using that purchasing model will remember that capacity trending only went one way (upwards).
Dell’s online price calculator shows that for 1 PB of balanced performance capacity block storage with a 3-year subscription, the customer-managed cost is $41,120 per month (around $1.5 million over 3 years). The Dell-managed equivalent is $48,960 per month, or around $1.76 million. That’s around $282,240 over the lease period for the uplifted management capabilities ($7840/month).
However, do the same calculation for the Capacity Optimised and Performance Optimised offerings and the difference is huge. The performance option has a delta of $13071/month or $470,556, while the capacity option is $11,730/month or $422,280 over the lease term. Bizarrely, the Dell-managed cost of capacity storage is greater than that of a balanced solution by about 2.5%.
Just to be clear, the built-in support cost of choosing a performance optimised solution is almost double that of the balanced option. If these skills were being managed in-house, would the administrator costs be so starkly different? I don’t think so.
What’s going on here? Firstly, I would expect that the three available options represent three (or more) different platforms, including PowerStore, PowerMax, and PowerVault. Each of these solutions is engineered differently, with different management overheads. PowerMax, for example, is enterprise-class storage, compared to the midrange PowerStore. There’s also an aspect of legacy design here, including greater effort to deploy, and perform maintenance and upgrades. Second, if Dell is outsourcing the support and maintenance of these platforms to third parties, those companies may demand higher rates for the more complex products in the portfolio. This cost simply gets passed on to the customer.
Now, the calculations we’ve done with the online calculator took no more than a few minutes. Existing customers that have already priced up the Dell-managed options will be able to determine the services markup already, because they know the TB cost of storage today, without the “as a service” option. We’ve simply highlighted what customers already know – the markup costs of moving to the service model probably exceed the savings from having fewer on-premises personnel.
The inevitable conclusion is that Dell Technologies isn’t seeing the traction expected with APEX, and so has introduced the “customer-managed” tier to generate more sales that can be attributed to the APEX initiative. Of course we have no official insight into this and these assumptions are our own opinions.
The Architect’s View®
Customers are a savvy bunch and generally understand their costs in detail. So, the comparison of service model versus lease costs will have been already done by many CFOs and CTOs. The Dell online calculator now shows us all what the expected uplift of a service model will be. We now also see a markup that makes no sense for a service-based product, where the costs should be broadly the same and not based on the technology the vendor chooses to deploy. In the Dell scenario, unfortunately those cost are wildly different, because the underlying hardware used to deliver the service is so varied.
This service variability is an aspect of the “as-a-service” model we’ve been highlighting for years. Our position is consistent and hasn’t changed. If the underlying hardware used to deliver a service-based solution isn’t flexible enough to meet the parameters of that service model, then the costs will be higher than necessary. As a reference point, this blog post on Pure Storage Evergreen explains why a standardised hardware model (with in-place upgrades) is essential to delivering a true service.
It remains to be seen if this tweak by Dell Technologies will result in increased revenue. We think Dell Technologies is in a bind, with a portfolio of legacy products that don’t adapt well to an “as-a-service” model. Time will tell, as the impacts of a potential recession bite and customers become even more cost-conscious.
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