Storage service provider revival?

Do you remember all the promotional hype about storage service providers (SSP)? Several years ago, some start-ups attempted to develop a new business practice by allowing companies to outsource their storage requirements. The SSPs would either provide the connections for remote storage services or deliver on-site storage operations managed by them. The idea was that storage could be provided and managed more economically by the SSP than by the customer.

This experiment was, in a word, unsuccessful. However, all was not lost, as many of those start-ups morphed into software companies that provide storage management software. New storage management tools needed to be developed, and these companies developed that software for their own needs. Companies that made this transition include Creekpath and Storability.

So why did the first incarnation of SSPs fail? There are several reasons. It could have been the fact that the industry went into a severe economic downturn then. It may also be that the economics were really not that compelling. And a major factor was the reluctance of businesses to turn over the control of their data to someone else, especially to a company that was not a well-known entity.

Revival

Recent announcements by major vendors seem to presage a new generation of SSP activities. However, everyone's been careful not to proclaim the dreaded words "storage service provider" so far. As an aside, it should be noted that a number of companies have been providing data protection outsourcing for some time.

So, how has the storage landscape changed to the point where SSPs may now succeed where before they failed? There are several factors to consider:

  • The economic downturn seems to have ended, and the economy is headed in a positive direction.
  • The demand for capacity continues unabated, but IT budgets have grown only slightly. This means something has to give. Data storage must be managed more efficiently, or storage management will be chaotic. Outsourcing the storage is one alternative to this chaos.
  • Business continuity is required to protect operations from local or regional interruptions. From a storage standpoint, information needs to be replicated so that businesses can continue to operate in times of disaster. Using a service for the replication may be an economical way to meet this business requirement.
  • Regulatory requirements are having a great impact on storage. Addressing those requirements on top of dealing with capacity demands when budgets are tight may be a good enough reason to look for an outside service.

Everybody in

The recent announcement by Sun Microsystems that it will provide storage for customers at a fixed cost is significant. Sun will provide storage that is used in the grid computing environment and also provide storage as a service. While the details are not completely available, it certainly appears that the storage service model is alive.

Other major vendors will provide storage as a service in special arrangements but without the declared flat-rate pricing of Sun. These vendors include such system heavyweights as IBM and Hewlett-Packard. Because these major vendors have established reputations, they do not have to overcome the issues of trust that plagued the first generation of SSPs.

Vendors offering data protection outsourcing provide remote information replication for organisations that would not otherwise be able to afford it. These companies include Amerivault, Arsenal Digital, EVault, Iron Mountain and LiveVault.

Meeting regulatory compliance requirements for information storage is a ripe area for exploitation as an outsourcing service. To date, very few companies are in this business, but it is such a good idea that others can be expected to join the fray soon.

Success potential

Demands for business continuance and regulatory compliance may drive some financially challenged organisations to use limited storage outsourcing services, which may give this recovering industry the shot in the arm it needs to survive. Certainly, the aggressive fixed-rate price established by Sun is attracting attention and presents a challenge to other vendors.

The storage world has changed since SSPs first failed, and while some of the reasons behind that failure are still present today, in some cases they have morphed into opportunities. This does not mean that a storage service would work for every business, but it does mean the idea may be viable enough to attract new customers.

Randy Kerns is a partner at The Evaluator Group. He can be reached at randy@evaluatorgroup.com.

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