Still at your service
Still at your service
Storage service providers have evolved to offer new and varied types of solutions.
Outsourcing the storage of corporate data has been done for decades, and will be done for decades to come. The concept of the storage service provider (SSP), devised at the height of the Internet craze to serve the needs of virtual businesses with exponentially expanding storage needs, was a new twist on the old service.
To read the doom and gloom merchants in the US analyst community, the whole sector has been wiped out, along with the demise of the dot com boom which gave it its original impetus. Then again, these are the same analysts who evangelised for the sector in the first place, like IDC which said the SSP market would reach US$10 billion per year in 2005.
An American company called StorageNetworks pioneered the concept of outsourcing storage: using the application service provider (ASP) model and simply applying it to storage. The SSP owned and managed a network of storage devices in all of the various NAS and SAN configurations, sold an outsourcing service to corporate and government customers with a service level agreement, and left the customer to concentrate on their core business. The analysts raved, the venture capitalists liked what they heard, and a dozen startups got funded overnight.
The reality - in the US at least - was that the most willing customers for this service were the dot com companies, who promptly went bust. Many of the SSPs hosted their equipment at ISPs like Exodus, in order to make it easier to connect to these dot com firms, but Exodus and many of its ilk also went bust, thus robbing the SSPs of a ready-made market.
That was the story in America. In Australia, the challenges were significantly different, although just as tricky. Jon Pope, storage technology consultant for Adelaide-based company StorageCorp, said that the approach that worked was to allow users to keep control over their data, instead of taking it away from their premises."Very early in the piece - we got in when StorageNetworks did - we identified that there wasn't going to be the take up that people were projecting there would be. We decided to change our entire business model, and that's exactly what we did," said Mr Pope.
"We didn't go into the traditional SSP model, the concept of utility-based pay-as-you-go storage, or storage on demand. Instead, we looked at value adding, not as a pure SSP but more as a technology business that did value adding for storage."
The plan which StorageCorp came up with was the reverse of the SSP model: instead of outsourcing storage to external locations, StorageCorp would act as an integrator to install a remote backup and offline storage infrastructure within the user's own extended network. In effect, StorageCorp's customers are now their own SSPs."If you look at who we were selling to, most of the medium to large businesses in Australia had large infrastructure already, and they usually had good pipes in that infrastructure. What they would tend to do is keep it inside," said Mr Pope. "Where we provide the most substantial value is in helping set up their storage infrastructure. That is a complicated job. If they get a vendor to come do it, they'll get the vendor's view of the world, which might not fit their business."
StorageCorp now has eight clients, mostly in the public sector. The company also has entered into a joint venture with international company Infinity, called Infinity IO, which is a certification training provider.
Another local success story in the sector is Redmap Networks (recently renamed from being SureVault), based in Brisbane, but with ambitions to expand around the world. Earl Woolley, managing director of Redmap Networks, said that his company had modified the standard SSP business model by having two divisions: one Canberra-based solutions division for normal storage integration, and an SSP-like outsourcing division which went into joint ventures with bandwidth-provisioning companies, especially internationally.
"In Manila we have a joint venture with Ayala. We just opened in Malaysia with another supplier, it's being signed off now. We will have our own location for Europe, in Frankfurt. We are just about to commission two in the US - one in the west coast, one in the east coast," he said.
The scale of the company's current expansion, which includes branches in Indonesia, Singapore and Hong Kong, certainly shows that their customer base makes this worthwhile. Woolley said 80 per cent of Redmap's business was with small to medium businesses, but its high end customer list scaled to a 6300-seat installation, and included Schweppes, Cottees, food manufacturers FAL, Leighton, Gillette, Horwath in Hong Kong, Moralco and the Singapore Department of Education.
"The strength of our business is increasing dramatically, but we never looked at ourselves as an SSP. We don't host applications, just information. That is where the value is. People can get that information anywhere in the world," said Woolley.
Redmap continues to develop its own software in its R&D labs in Denver, Colorado, where Woolley himself is based these days. Woolley said the company supplied open APIs, and had already completed work in integrating its software with major CRM and accounting platforms. EMC and Network Appliance are key equipment partners, and the company is "working closely" with scanning companies, according to Woolley.
One of the major potential pluses in using a specialist provider is vendor agnosticism. Evan Penn, managing director of SecureData Group, said that his company had experience gained from its previous integration work with systems from EMC, NetworkAppliance, Compaq, Hitachi Data Systems and Legato Systems, amongst others. "We are literally like a glue that joins all different kinds of storage infrastructure together, and manage it from one central console," he said.
Penn said that after 36 months of preparation time, SDG was "in the throes of building a network operations centre" in the inner Sydney suburb of Ultimo - an area which, due to its proximity to the major Sydney Telstra exchange, has become a hub for data centres.
"The data centre is not the big issue," he said. "The fact of the matter is we're being quite prudent. Where a lot of SSPs fell into a hole is that they spent too much time and money on their data centre without enough analysis on what their customers wanted and needed."
SDS has recently cemented a deal with Ernst & Young to provide consulting on storage projects, including analyses of business imperatives.
In retrospect, it was inevitable that the established storage specialists would encroach on the SSP industry. After all, who knows more about handling storage hardware and software than the companies who make the products? Most of the hardware vendors also have existing service divisions who are very experienced, and not just at installing their own vendor's products.
"The SSP is not a solely Internet-driven opportunity. That was what happened in the US. The business model implied that the storage was all in one location. That model didn't work in the US, and it certainly won't work here, given the cost of network access," said Terry Carter, manager of marketing for IT services at Fujitsu.
"It went off in one direction and got dotcommed," said Andrew Fox, vice president and general manager for Australia/NZ at HDS. "The original market concept - used by StorageWay, StorageNetworks, Sanrise, a whole bunch of them - was to build network infrastructure. The thought was that they can install it in Internet data centre and they will come. Those who came for hosting applications at the data centres were largely dotcoms. When the crash came, their revenues disappeared. Most of them have restructured."
Fujitsu overcame the most significant problem of existing storage vendors becoming SSPs - lack of hosting infrastructure - by buying the 7,000 square metre Sydney data centre set up by failed ISP Exodus. Carter said that the data centre was being used very differently to how Exodus ran it.
"We are a mature outsourcer, we already do service provision," he said. "We looked at the US, where telcos had been seduced into buying large capacities without a customer return. In the Australian environment where their bandwidth became available to us, we could look at [setting up an SSP operation]."
Other hardware vendors have sought partnership with local telecommunications companies. EMC's service division has contracted with Telstra to lease facilities for its own SSP activities. Hitachi Data Systems is another vendor that has set up an SSP subsidiary, called hojo8. While hojo8 has been using HDS's existing facilities for charge-per-gigabyte SSP activities, the company would have an agreement with a telco in place by the time you read this, according to Fox of HDS.
"Our view was that the SSP market was going in strange directions," he said. "I personally did not believe that independent Internet data centres had a future. They had to be run by major telcos. The ability to provide fibre connectivity to end user premises is paramount and only telcos can do that. Our investments in the local level were only going to be in partnership with telcos."
Fujitsu's services division was already the fourth largest in Australia, according to Carter, so the company is able to offer a "fully managed service" which might incorporate many different functions, such as remote backup, disaster recovery, outsourcing, Web hosting, and also straight SSP activities.
"The facility we've taken on is much wider than storage. Our customer might also use it for its processing capacity, or its network capacity," he said.
HDS had operated managed storage facilities for companies looking for disaster recovery and business continuity before the advent of the SSP business model. Fox said that many of hojo8's clients were existing HDS customers that moved a "stable workload" of data to be stored remotely, with their flagship client being the Queensland Department of Education and Training.
"Security is the biggest issue, that's the number one question. What hojo8 brings is a history in managing those environments. Customers know they're not putting their data into a start-up company that might not be there in two years' time," he said.
One issue where customers might ask questions is whether the vendor-sponsored SSPs are tied to their parent companies' product lines. Fox said that hojo8 did generally follow the usual product set used by HDS, but that hojo8's adoption of the TrueNorth standardisation initiative started by Hitachi meant that its systems were open enough to integrate other hardware and software configurations.
One type of SSP concentrates less on the storage aspect and more on the service: telecommunications companies. Many of these telcos and Internet service providers built huge data centres with thousands of square metres of serviced space to house the equipment of the dot com boom ventures. Now that the tech wreck has cleared out a lot of the detritus of the Internet start-ups, these telcos and ISPs have a lot of empty floor to fill.
Macquarie Corporate Telecommunications (MCT) is one of the telcos who have moved into the SSP arena through its intellicentre division, which launched in December 2000 and went live in March 2001. Glen Noble, general manager of intellicentre, said MCT usually included its SSP function as part of a packaged deal with voice, data, and other carrier-level services.
"We didn't set up to be a SSP," he said. "We set ourselves up to serve our corporate clients' requirements, those of them who didn't have the economies of scale to do it themselves."
Most of MCT's 1600 clients are medium-to-large organisations. Mr Noble said the "bottleneck" in the takeup of SSP services in Australia was provisioning of telco services, the so-called last mile between the provider and the customer.
"We are at the mercy of geography. If the [client] is on the street next to you, then it's fine. If he's in Liverpool [and the SSP is in the Sydney CBD, as MCT is], then you have a problem," he said.
Mr Noble said that as a carrier-level SSP, he did not come up against the pure play providers like StorageCorp or Redmap, and outsourcing specialists would actually be complementary since, he claimed, they concentrated on applications and would leave the infrastructure to someone like MCT.
"For really big customers, the EMCs and Hitachis would be trying to sell their hardware directly to them. The users would want to in-source their storage," he said. "We're comfortable with that. We'll provide the voice and data services, and ask if we can be assistance with any SSP needs."