A little more than two years ago, managing storage assets as a service was all the rage. But unfortunately for the providers, dubbed SSPs (storage service providers), enterprises weren't keen on turning over their precious data to these then-green startups. After some massive overhauls of their business models, the SSPs are once again trying to attract enterprise customers. This time, however, everyone seems to have a different approach.
"Some of the SSPs just didn't deliver on the model so they are morphing into a different direction," said John Webster, a senior analyst at Illuminata Inc., a research firm in Nashua, New Hampshire. "Some are providing managed service, while others are going after pure software."
In addition to transforming themselves into managed service providers and ISVs, some are offering services to carriers that will permit them to offer storage as a service over their existing networks. All the new strategies are extremely confusing to enterprises trying to get a handle on their storage.
Initially, SSPs were companies that bought millions of dollars worth of storage equipment and offered a management service on top of their equipment at a third-party facility.
But enterprises with storage assets in place balked at the idea. The only ones who bit were essentially young companies, often Internet-based startups without a storage infrastructure.
The dot-com implosion and the reluctance of enterprises to give up their storage was the blow that eventually sent SSPs scrambling to find a viable model.
The granddaddy of the SSPs is StorageNetworks Inc. Founded in 1998, the Waltham, Massachusetts-based company was one of the first to offer storage as a service and probably the first to change its model. In May 2001, StorageNetworks began selling software to carriers to enable them to provide storage to customers. It was the very software StorageNetworks had used to manage its former customers' storage.
"Customers asked why the big telecoms were not in this space," said Peter Bell, CEO of StorageNetworks. "They weren't because they didn't have the software."
StorageNetworks STORos software allows carriers to do billing, capacity planning, provisioning, job scheduling, and a host of other storage management functions. And whereas StorageNetworks goes after the carriers that serve enterprises, others are attacking the enterprise market.
Dublin, California-based Sanrise, which once had more than 600 customers for its equipment, released its storage management software in January. Creekpath, based in Longmont, Colorado also released its software suite, the CreekPath Automated Intelligent Management, in January. And Southborough, Massachusetts-based Storability, which never purchased storage equipment to host customer data, will also enter the software fray.
Later this month Storability will unbundle the software it uses to provide software management for customers as a managed service and will begin selling it directly to enterprises. The company is not going to ditch managed services straight away, but sees that business petering out.
"In our fourth quarter, 75 percent of revenues came from services, the rest was technology solutions. Our first quarter will be a 50-50 split," said Tim Leisman, the new CEO of Storability. He added that software sales would eventually account for 80 percent of revenues.
Meanwhile, companies such as Managed Storage, spun off from StorageTek in March 2000, are now content to offer a managed backup and storage solution. This decision was reached after a failed attempt to offer storage as a service.
"We did the SSP model and our Internet datacenter partner went out of business," said Walt Hinton, CTO of Managed Storage in Broomfield, Colo. "We had to go back to EMC (Corp.), one of our investors, and return the $12 million worth of equipment we had purchased from them."
The company's backup service includes selling an enterprise a tape library and offering a service in which Managed Storage monitors and manages the company's backup via Veritas' NetBackup software application. In January the company announced it would begin offering this service remotely and said it has no interest in becoming an ISV. "We're not a software developer," Hinton said. "We're sticking with data protection. It fits with our heritage."
Despite the countless players in the storage management space, it still isn't clear if enterprises are quite ready to implement a new storage management platform.
"The economy is dictating our spending. We have to optimize what we have," said David Graham, director of information technologies at Vignette, an Austin, Texas-based developer of content management software that has been working with Storability off and on for the past two years in a consulting capacity. "[Buying storage management software] is not a priority for us right now," Graham said.
Illustrating the point is StorageNetworks' revenues for their fiscal fourth quarter. Despite the availability of its STORos software for more than a year, managed services still accounted for 97.7 percent of the company's fourth quarter revenue.
The company insists that will change soon.
In February StorageNetworks announced that it had signed up EDS as a customer. EDS, of Plano, Texas, will install the software in its datacenters and use it to manage the storage of its enterprise customers. The company also lists two Japan-based divisions of Merrill Lynch as software customers as well as Cisco Systems, Ford Motor, and BellSouth.
Meanwhile, Creekpath Systems, Storability, and Sanrise haven't announced any paying customers.
In January, BellSouth, the Atlanta-based telecom giant, introduced BellSouth Enterprise Data Backup Service, a backup and restoration service.
Loudcloud announced this month a subscription-based Storage Management Services 2.0, powered by its Opsware technology.
The service can be customized for a range of operations, from low-end Web sites that deliver pages quickly with content changes every 10 to 15 minutes, to interactive sites sharing storage across multiple servers, as well as high-volume environments requiring SAN (storage area network) solutions, said Frank Chen, director of product management at Sunnyvale, California-based Loudcloud Inc.
Outsourcing storage is often worth the riskFor many people, the prospect of outsourcing storage seems risky and raises countless concerns regarding performance, confidentiality, and security, among others.
Nevertheless, companies have been moving storage off-site for years for reasons ranging from securing backup tapes to ridding the datacenter of rarely used historical data, such as old engineering or accounting records.
In those cases, using an outside location is the best approach because it frees precious storage space while providing a safe harbor for data. Moreover, SSPs (storage service providers) can help manage data movements quickly and flexibly by performing backups directly to a remote location without actually transporting media, for example, or offloading bulky datasets from local storage to the provider's.
Companies that see their storage demands doubling every year may be tempted to extend the outsourced storage model to live applications' data. It may seem like an easy way to manage increased demand, but it won't work.
Instead, outsourcing an entire application -- rather than only its storage -- is easier and more convenient. Moving storage devices away from applications puts an unbearable strain on the telecom infrastructure between local premises and the SSP. For most transactions, the number of data transfers between an application and its storage repository is several orders of magnitude higher than those between that application and its client. A typical example is a business intelligence application that scans millions of database rows to generate a short summary.
Like other service providers, SSPs often face customers who are out to throw a hot potato into someone else's lap. It's not unusual for a company to suddenly realize that it doesn't know exactly what's filling those terabytes of storage, nor what is critical to business and what is not.
Outsourcing will solve that problem at a predictable cost, right? Not quite. It's a serious business decision that should be supervised by managers. But the SSP can provide the technical skill and knowledge of best business practices to analyze and straighten out the mess.
Even companies that keep all their storage in order may be tempted to outsource it, typically to reduce costs (assuming the SSP can do it better and cheaper) or to free up resources for other projects.
Clearly, managing storage is more expensive than buying the hardware. So the problem is storage management cost, not ownership cost. The SSP comes to the rescue again: By keeping storage inside the company and hiring a service provider to handle architecture design and management, a company can actually spend less and get a better infrastructure. As recent news indicates, even a company as well-acquainted with technology as EDS can find it convenient to hire a reputable SSP such as StorageNetworks.
-- Mario Apicella.