Storage may not be the sexiest market in the industry, but it just might be one of the most profitable for resellers. Philip Sim reportsHere's a quiz for resellers focused on the small and medium enterprise market. Which market is growing at 80 to 100 per cent annually, is absolutely critical to the running of almost every business, provides potential for resellers to up-sell intelligent software solutions and also creates a strong services opportunity thanks to a chronic shortage of specialist skills?
No, it's not one of the sexy, newfangled e-business or Internet markets. In fact, it could be the most sexless of all IT sectors. It's the storage market.
While everyone is busy trying to work out how they can grab their piece of the e-business pie, the storage market is quietly going through the roof on the back of the e-business phenomenon.
"The e-business market is putting great strain on user organisations having enough storage and also being able to manage it," said Graham Penn, IDC's Asia-Pacific director of storage research.
As businesses move towards the paperless offices and increasingly move their processes and record keeping online, all that information needs to be stored.
It's critical to the business so it needs to be backed-up and be capable of being restored at short notice. Under law it must also be retained for seven years.
Storage requirements are also increasing as businesses make their corporate information available to customers via the Internet, according to Dale Townsend, Seagate Technology's country manager for Australia and New Zealand.
"As small and medium enterprises embrace the Internet as a way of doing business, they are putting their sales and marketing information, their catalogues and so forth, online and to do that of course requires storage," he said.
What's more, in the past, data has mostly been restricted to text and numbers. However, today new data types like images, sound and video are increasingly being incorporated into the work environment and are well-known storage hogs.
Networks and the Internet also increase the ability of end users to replicate data all over an organisation, saving it to multiple drivers, e-mailing it to co-workers who might in turn save it to multiple drives and so on. E-mail, in itself, is a major reason why firms need to dramatically increase their storage requirements.
"Storage really is where the computer and telecommunications meet, because all the data that is coming through those wires has to be stored somewhere," said Penn.
In Australia last year, disk storage subsystems totalled 1.7 pedabytes (PB) or 1716 terrabytes (TB). According to IDC, this is just the tip of the iceberg.
This figure will explode to 3400TB in 2000 and 30,700TB in 2004.
"That compound annual growth rate is simply staggering," said Penn. "This is a market that simply cannot be ignored."
Demand is across storage devices with users demanding bigger desktop and server hard disks, RAID disk systems, tape back-up devices and so on.
Also proving increasingly popular, particularly in the small and medium enterprise market, is the new breed of Network Attached Storage (NAS) servers.
These are essentially "storage appliances" that attach to the network rather than directly to a server.
"Network Attached Storage is definitely the simplest method of adding storage for smaller enterprises," said Townsend.
"You don't have to go in and reconfigure your servers just to add extra storage. It's a very friendly technology."
NAS servers work like a dedicated Windows NT or Novell file server, except they don't require the server OS licences. To the user, they look and operate exactly like another dedicated file server.
While they don't quite deliver the same performance as a dedicated file server, they are very easy to configure and manage so are perfect for small business users and workgroups who need to share files amongst each other.
Quantum, for example, boasts that users can have its SnapServer up and running in five minutes. Simply plug the Ethernet cable into the SnapServer, power it up and the device automatically detects 10 or 100 Megabit Ethernet LAN with no user intervention, and receives automatic IP address assignment from a DHCP, BOOTP or RARP server, if one is available. Up to 120GB of storage can be added to a user's network in this way.
NAS is also an attractive solution to enable data to be offloaded from a main server without having to take it down, and it also makes file sharing among heterogeneous network clients painless.
The next step up from NAS is Storage Area Networks or SANs. Rather than sitting on the existing local area networks, SANs are independent networks, usually fibre channel, dedicated to moving data to and from SAN storage devices.
Currently, SANs are more of a large enterprise technology but some storage vendors are tipping they will quickly commoditise and become more relevant to the broader market.
"SANs will definitely come down to the level of at least the medium enterprise," said Townsend.
Grant Smith, Tivoli's manager for the Australian and New Zealand storage business unit, said his organisation had already seen a number of smaller organisations piloting SAN technology.
"Really, the issues small and medium enterprise customers have in relation to storage are no different to the issues of larger organisations."
According to IDC's Penn, SANs are most likely to find their way into smaller organisations through the emerging breed of storage service providers (SSPs).
In the US right now, companies like Storage Networks are offering outsourced storage services, whereby they extend their fibre-channel SAN networks into the customer's premises.
While this is a potential opportunity for larger resellers, it also represents something of a threat to smaller resellers who may lose their slice of the storage action to these emerging SSPs.
It's not just in the hardware arena that resellers stand to profit though. Today's storage market is just as much about software and services as it is disks and tapes.
With users owning increased amounts of storage, managing it all is becoming a major issue, said Penn.
"Software provides users with the smarts you need to manage all this data," he said, adding that it was becoming an increasingly important part of the picture. Storage king EMC, for example, now derives 20 per cent of its revenue from software sales, Penn pointed out.
Tivoli's Smith said any storage solution required four components, all of which had to be working together.
Firstly, there is obviously the hardware; secondly the processes that ensure sure all the data is backed up; thirdly, there is the people who are to administer it; and finally the software that ties the hardware, people and processes together.
Today's storage management software, from the likes of Veritas, Legato, Computer Associates and Tivoli delivers important functionality like availability, reliability as well as economies of scale.
"Users want availability, often 24 x 7, so they need to have the software that enables you to do live online backup and recovery," said Smith.
"The other major thing they are looking for is reliability. They want to have the confidence that they can restore their data within an appropriate time frame. They want to know that they can handle a disaster, so they want the ability to be able to backup to an off-site location."
The other thing running a storage management system does is centralise the backup processes.
"Rather than having every owner of a machine have their own backup processes you want a standardised approach so that no matter what machine you have problems with, you know the process you go through to restore that data."
Intelligent storage management systems also generally enable different servers to share the same tape library and drives. This allows users to achieve economies of scale and "handle growth more cost effectively", said Smith.
There is also a real shortage of people who have the skills to manage and administer storage systems, according to Penn. This is going to be increasingly problematic for Australian SMEs, he said.
"I think there is a real danger with any company outside the top 500 in Australia, that they are going to have a problem coming to terms with the amount of data they have in their organisation.
"There is this huge growth that somebody has to manage and that's going to be a problem because smaller companies won't be able to find or afford the people that have these skills."
Storage administration isn't one of the more desirable jobs in an IT department.
"The management of storage has to date been something of an unheralded part of the market and people tend to migrate out of it as soon as they can, so it has become very difficult to find someone to occupy these positions."
Penn said there was more to the day-to-day administration and maintenance of data storage than most people realised.
"It's a huge job and a thankless one. As soon as the storage administrator starts asking users to start deleting their files, they're suddenly the most unpopular guy in the office because people don't have time or the inclination to do it."
As a result, there was a massive opportunity for resellers to offer their services in storage administration.
"There are a whole bunch of services a reseller can offer here," said Penn.
"The skills are not likely to be available in-house, so it's up to the channel to become that source of expertise."
These include an initial needs analysis, SAN design, migration and staging, hierarchical storage management, ongoing support and health checks.
"If your selling a storage solution you should certainly also be selling the customer on a service and maintenance contract," Townsend said.
Townsend added that having the skills and knowledge to implement storage solutions was a necessary piece of any reseller's armory today.
"The channel today is moving towards being a solution provider," he said.
"Resellers needs to provide their customers with and full solution and service and that definitely includes the storage element.
"Being the storage provider means you cement an ongoing relationship with the customer because they're coming back to you for additional storage requirements, service and support.
"Storage may not be seen to be as sexy as the latest Intel processor, but the demand is certainly there for the continuous supply of faster and more reliable storage solutions."
Storage has certainly been around for a long time, but it has never been more important. The increasing impact of the Internet and e-business solutions is dramatically expanding the amount of data that needs to be stored. As more data is stored, the challenge to manage all that data and make it continuously available and protected becomes greater. New technology solutions are coming to market to solve these problems, but it looks to be falling squarely into the laps of resellers to determine a user's needs, find the right hardware and software solution and then deliver the services that ensures it all keeps running smoothly.
That's a big responsibility because nothing is more important than a user's data, but it's also likely to be a very profitable one.