The storage market continues to grow at a phenomenal rate, doubling just about every eight months according to IDC figures. But despite massive demand, revenues have flattened out as the cost per megabyte drops through the floor. With organisations of all sizes struggling to cope with increasingly complex storage environments, the best margins are to be made in helping customers deal with this data explosion through consultancy, integration, effective management and support. BRIAN CORRIGAN looks at opportunities and challenges in the storage services market.
IDC valued the Australian storage services market at $324.7 million in 2002 but has estimated a compound annual growth rate of 7.1 per cent will see it reach $457.6 million in 2007. Integration and management are highlighted as the fastest growing services during the period. Support has the lowest growth potential but will still represent the biggest piece of the services pie.
This market growth will be fuelled by a number of factors including mass digitisation, increased complexity, regulatory requirements and the need for consolidation. But while all organisations seek simplicity, few have the financial resources or desire to implement the perfect solution when it is much cheaper to add further hardware and solve the problem in the short-term.
Despite these restrictions, channel partners with the ability to organise storage systems in a way that suits priority business objectives will be able to save customers significant sums of money while making a very healthy living.
“The market at the moment is fantastic, especially for the channel, because when you look at storage in terms of maturity it is still fairly young,” EMC marketing manager, Clive Gold, said.
“There are interoperability and expertise issues where the channel can help customers to integrate new infrastructure and software as well as opportunities to create policies and procedures that tailor a solution for a particular environment.”
While storage management is an issue for all companies, traditionally data-hungry industries such as finance and government have been joined by a new breed of capacity guzzlers created by mass digitisation. Among them are broadcasting, healthcare and natural resources companies.
The broadcasting industry has binned analog in favour of digital because of collaborative advantages but, according to SLI-Consulting principal analyst, Jose Goldmann, “cannot continue on its creaking data infrastructure” with animators and directors demanding the real-time flow of high definition image files direct from a storage environment to workstations.
Healthcare has taken the same leap into the digital age and drastically reduced the time doctors and administrators spend looking for patient records and medical images. Mining companies are collecting vast amounts of high-resolution video files that need to be stored and easily retrieved for later analysis. Weather experts are currently able to forecast a week ahead with a certain degree of accuracy but are now using masses of stored digital data to track patterns as they look to predict what will happen in a month or six months time.
All of these industries will provide challenging but lucrative contracts to those with the knowledge and ability to provide continuity and manageability in an increasingly mixed-vendor storage environment.
IDC also pointed to the mid-market as a significant opportunity for the channel because these potential customers have fewer internal resources than larger firms but are feeling the same pressure to make the move to networked storage.
One problem facing integrators when bidding for storage contracts is balancing the desire to offer an ideal solution that has high initial costs but low maintenance requirements with the realities of the current economic climate and sense of urgency displayed by customers.
“You have to understand what a client is trying to do for their core business and address the problem from that perspective,” senior systems engineer for ASI Solutions, Alan McLachlan, said.
“But offering the best solution could mean losing the business because it is too expensive at the time. You have to be prepared to offer a range of solutions that give the customer a cheaper way of solving problems now.”
While a quick fix will make a problem go away in the short term, it can create problems for both customer and integrator further down the track.
“Providing cheap solutions every few months means you end up working five times harder for less money,” McLachlan said. “It is also fraught with peril because any implementation difficulties could have a negative impact on client relationships.
“If we can do the right thing and put in a low management solution it means lower overheads for us. We still make the margin and have more time to take new business on board.”
Honesty is likely to be the best policy when providing short-term answers to deeper problems. Customers should always be clear that adding another couple of servers will only ease the strain for a while and needs to be the precursor to a comprehensive restructure over a number of years.
“Services and support are remembered long after price is forgotten,” XSI Data Solutions sales manager, Glenn Gray, said. “The challenge is to manage data better and allow easy growth without the need for extra IT staff.
“A key going forward will be to set long-term plans with customers that achieve certain goals with certain funds. There’s more chance of a sale if a solution is spread over a longer period of time.”
Making the best of it
But before planning for the long-term it is important to make sure a customer is making the best of current equipment. Any savings made without the need for investment in new architecture are sure to build trust and give added weight to future advice.
“Every industry has different requirements so the way they process information and distribute it across the IT infrastructure is completely different,” SLI’s Goldmann said.
“The first thing I do when I walk into an environment is assess what they already have and look at how we can use it more effectively.”
Meta Group has estimated that 80 per cent of data is never accessed again after seven days. That makes it expensive and wasteful to apply primary storage techniques such as remote mirroring and snapshot capabilities across the board.
While hierarchical storage management was hardly a new concept, Goldmann claimed it would save many organisations more than 60 per cent on hardware acquisition within a year.
IT managers are becoming more educated and using software to assess stored data.
StorageTek marketing manager, Joan Tunstall, said many found they were using less than a third of the files they keep. This high redundancy, together with insatiable demand for more space, has seen the intelligent management of data become the biggest headache for IT managers and chief information officers (CIOs).
“The traditional answer has been to throw more disks at the problem but, while the cost of disks is cheap, management becomes a challenge,” Tunstall said. “Organisations are finding they can’t sustain problem fixing and are having to step back from it to take a more holistic approach.” Mixing it with the big boys
Senior services analyst at IDC, Phillip Allen, said the market was still dominated by big hardware and software vendors that included services as part of a package with channel partners operating around the edges.
While the industry is certainly growing, many potential customers are still putting their heads in the sand and finding ignorance is bliss.
“Vendors are talking up solutions but customers are not aware they’ve got a problem yet,” Allen said. “At this stage they can throw on more hardware and keep it under the surface.
“The difficulty of winning funds for storage-related projects, that may not be considered mission critical, will remain challenging [for IT managers]. Organisations will only spend on storage services that answer a business issue, typically emerging from two main concerns — data volume and access.
“But given the complexity of storage environments, and the lack of standards that have been accepted by the industry, customers will increasingly seek external assistance in planning, building, managing and supporting their storage infrastructures.”
These are good times to be plying your trade in the storage channel but it takes a lot more than delivering and installing boxes to make the business model work.
“People are starting to understand that capacity is not what storage is about today. It’s about problem solving,” EMC’s Gold said.
“Local resellers that don’t provide a full service can’t survive in this market but those helping customers to realise the value of information lifecycle management can compete against the global pricing of multinational players.”