The once-promising storage service provider (SSP) market has fallen on hard times. SSPs initially thrived by handling the storage needs of businesses, often dotcoms that had no interest in building a storage infrastructure let alone educating staff to run it. When the dotcom bubble burst, SSPs, which tend to be young companies that run on venture capital, shifted their business models and turned their focus to large enterprises.
But big companies aren't using off-site storage either, says Adam Couture, an analyst at research company Gartner.
"There's still a bias in large enterprises to keep primary storage in-house," says John Clavin, executive vice president of sales and marketing at StorageNetworks, a leading American SSP.
IT managers simply aren't comfortable shipping critical corporate data over a network to a third party, especially a startup whose future is by no means assured.
Moreover, analysts say corporations tend to have extensive storage facilities that are not only run well, but are also deep into the depreciation curve; writing off such a massive investment makes no sense for many companies.
In addition, storage costs are so low (and still falling) that there's no budgetary reason not to own disk capacity. "The cost of round, brown memory keeps dropping," says Dan Tanner, a senior analyst at Aberdeen Group.
Enter managed storage
Hence, we're witnessing the birth of the managed storage provider (MSP) industry, wherein an SSP manages an enterprise's data storage on the customer's premises. Young SSPs such as StorageNetworks and ManagedStorage International, as well as big-name vendors like Hewlett-Packard, IBM and Compaq have established storage management programs.
But in such a young market, how do you decide if managed storage is right for your business?
By outsourcing the management of its storage, a business leverages the value of its existing infrastructure, keeps priceless data under its own roof, benefits from an enormous gain in storage efficiency which can translate into lower capital expenditure, and eliminates the need to hire expensive specialists to create and manage network-attached storage (NAS) and storage-area networks (SAN).
But even with those benefits, managed storage may still be a hard sell.
"We've got 1100 stores and they all need local backup," says George Ellison, an engineering manager at Kinko's in the US.
If you've got the expertise and infrastructure but your storage environment is sprawling, heterogeneous and growing more complex, it may be wise to license a product and do it yourself.
Kinko's considered managed storage but instead chose software from Legato Systems. Ellison says the company was leery about outsourcing storage management for the Windows NT servers at each of its retail branches.
"We have a mixture of NT, Novell and Unix systems, and four separate clients in the field, and we were more comfortable doing it ourselves with Legato," he says.
But vendors remain hopeful and are conjuring visions of dramatic results. Large enterprises with direct-attached storage typically use only 40 to 50 per cent of their storage capacity "because they create these huge buffers, just in case", says Renie Craft, IBM's director of managed storage services. She claims that in some cases, IBM has driven that utilisation rate as high as 89 per cent by introducing a SAN and managing storage more efficiently.
Data stays at home
Storage management engagements begin with an assessment of the customer's infrastructure, along with a discussion of its business strategy and anticipated future storage needs.
Under managed storage plans from vendors such as StorageNetworks and Storability, the customer's data resides on its own storage infrastructure, often a jumble of products from multiple vendors, direct-attached storage, SANs and NAS.
The storage management vendor installs on customer premises a physical device: a black box that serves as the vendor's primary access device. Storability calls this device its AssuredStorage Communications and Operations Module; StorageNetworks' device is dubbed S-POP Manager.
Compaq's model is slightly different. For each customer, the company creates what it calls a Private Storage Utility; the customer then pays for only the storage it uses. "If they use 10TB one week and 20TB the next week, that's what they pay for," says Richard Avis, vice president of storage networking solutions at Compaq's Enterprise Storage Group.
The vendor's hardware device resides on the customer's premises, within the SAN, and thus doesn't connect to an enterprise server. The hardware device serves the following two functions:
It lets the provider see what's going on in the enterprise's storage system by compiling and repackaging in-depth information about capacity, performance, availability, uptime and trending even from heterogeneous storage environments.
This information is relayed through a browser-based interface to the provider's remote operations centre. It's also available to the customer's IT staff to view, but not to control.
The device allows the provider to manage the customer's storage, performing functions such as provisioning capacity, allocating capacity to various hosts, executing a backup schedule, performing those backups (both scheduled and on demand) and replicating storage remotely across different data centres.
MSPs are well aware that security is IT managers' number-one objection to storage outsourcing. "When you outsource, you're putting your crown jewels in the hands of a third party," says Aberdeen's Tanner.
Vendors take extensive measures to ease IT managers' worries. Firstly, the customer dictates the actual network link between the enterprise and the provider, which is either a virtual private network or a frame-relay connection. Storage providers also stress that under the managed-storage model actual customer data doesn't flow from the customer to the provider. Rather, what the vendor sees is metadata information about the information.
In another security measure, that metadata is then encrypted. Some providers, including Storability, are audited by a third party to assure customers that the provider's security and encryption measures are up to scratch.
Taking the leap
When does managed storage make sense?
There are few role models in the nascent managed-storage market, but analysts, vendors and users agree that you may be a candidate for the service if: you have an extensive storage infrastructure but struggle to remain fully staffed - SAN and NAS experts are hard to come by; you're feeling pressure to keep capital expenditures down - managed storage can forestall hardware purchases by more efficiently using existing equipment; or you like the idea of outsourcing wherever it makes sense, but you're unwilling to park your data under somebody else's roof.
The managed-storage market is young, but some large businesses have taken the plunge. Merrill Lynch has contracted with StorageNetworks to build then manage its SAN. Chris Corrado, chief technology officer at the New York-based financial services firm, recently said that by outsourcing he expects to save 20 per cent on the SAN's total cost of ownership.
But many IT organisations that are wary of SSPs in general are hesitant. Large enterprises tend to have significant experience and talent in the storage area. Even Compaq's Avis acknowledges that "some of these enterprise customers really are better at managing data than the [storage management] centres".
Several MSPs, such as Storability, offer the option of licensing their software. StorageNetworks doesn't do so now, but the company has said that it might in the future.
Darren Mace, IT director at HomePortfolio.com, says he has mixed feelings about outsourcing storage. Earlier this year, the US-based home design company selected Storability's AssuredRestore service for data backup. But Mace decided not to have the MSP manage HomePortfolio's primary storage needs. "We don't want to add that layer of bureaucracy and complexity," he says.
At one level the business case for managed storage, cost savings and fewer hiring headaches, is appealing. But then so was the case for SSPs, and large enterprises have roundly rejected that model. Vendors face the burden of convincing IT managers that managed storage is right for them.