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Remote Storage – A Way Out of the Data Jungle?

Article by:- Andy Chudzik, Managing Director, Posetiv

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Editor's intro Long time readers of STORAGEsearch will know that I started expressing doubts about the business models of many web storage companies almost as soon as the market segment began in 1999. Many of those models were based on consumer advertising or other aggregation schemes which seemed unrooted in reality. Since then, most of the fly by night companies in this market sector have disappeared. Those which remain have serious business models aimed at the needs of genuine B2B users. To redress the balance from my negative views about the market, I'm publishing this article from a UK based SSP , and letting them speak for themselves.

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Wherever the company, whatever the business, one word is on the lips of every IT director – data. Whether it's sales figures, stock prices, or customer information for marketing purposes, information is everything. But how do IT directors find their way through the data jungle?

With industry analyst Forrester predicting that most companies' storage requirements will double every 12 months, a new type of network service provider is emerging that promises to save customers a significant amount of time and money in obtaining the right storage facilities. The Storage Service Provider (SSP) works by selling storage as a utility over a remote network, linked to storage facilities offering terabytes of space. Rather than building internal storage facilities, companies save space and money by contracting for storage via a remote network.

Although the SSP market is still in the making, and few companies are yet to offer remote storage, many businesses are taking the leap by offering an array of storage services that can be delivered remotely via a network. These services include administration, back-up of data-servers and PCs, and archiving data.

The reason behind the emergence of remote storage (the huge and increasing demand for storage capacity) is not hard to see. GartnerGroup Dataquest projects that what amounted to an embryonic $10 million business in 1999 will grow to an $8 billion business by 2003. Business on the Internet, as well as the increasing use of rich media in electronic communications, is creating a demand for storage that doubles every year, and if companies do not have a tremendous knowledge of storage systems, it can be a real problem.

With the cost of data management steadily rising, analysts like Dataquest estimate that the cost of managing a terabyte of data is five to seven times the cost of purchasing it. The historical approach to storage – adding a new server to the system every few months – can no longer sustainably accommodate these kinds of growth levels. With remote storage, companies can now let someone else bear the burden of providing for the increasing demand for storage capacity.

The SSP bases its existence on the fact that demand for storage has radical peaks and troughs. With companies now downloading and sending rich content (ie graphics, avi files, streaming media), storage requirements may be high one day and low the next. Also with the recent surge in Internet banking and online trading, businesses find their storage requirements in a constant state of flux. With SSPs, however, businesses are able to meet this kind of storage demand without building the infrastructure itself. It is also much easier to scale, and companies do not have to purchase extra storage servers as data increases. By removing the issues of managing critical business data, remote storage is the obvious solution to taming the data jungle.

The SSP is also an incredible budgeting tool, enabling businesses to plan for the next financial year, as they are aware of exactly how much additional storage will cost. By outsourcing storage needs to an SSP, businesses are also eliminating the need to recruit and train storage specialists in addition to IT specialists, saving cost and increasing the ROI on a storage solution.

But how does this affect the direct end-user? Remote storage has the ability to store large amounts of data, spanning many years' worth of archived data. An SSP will archive data, such as emails, that are 90+ days old, saving huge amounts of hard drive storage space. Specifically to the accounting and legal sectors, remote storage is priceless, as accountants, lawyers etc. need to store data for many years. While this would normally take up vast amounts of storage space and a large proportion of the IT budget, remote storage allows this data to be stored off-site, thereby reducing the cost of purchasing expensive floor space for hosting large hardware systems.

This may sound like a win-win situation, but despite the seemingly bright future for remote storage, with the good comes the bad. Currently, no SSP governing body exists. This creates not only third party security scares but makes companies closely question the financial stability of an SSP. If the SSP goes bankrupt, no watchdogs currently exist to protect the data of the end-user.

Another barrier facing the SSP is that the market is in a state of flux due to the economic slowdown and the failure of many dot-com companies, many of which were early adopters of the SSP model. The market downturn is forcing SSPs to rely on mostly corporate companies that lack the staff and budget to effectively manage the explosion of data.

In the end, the SSP market is still an unknown quantity in terms of growth and size, despite the predictions of analysts. For many storage providers, there is the question of when they should start to offer the SSP model, when customers will start to demand remote storage, and how to separate storage of critical data from non-critical data to overcome many of the security concerns being raised. Another question for new and existing SSPs is which markets to target, and which ones will see the most growth in demand for their services. For example, sectors such as finance, retail, media, and companies that keep extensive records as part of their services (e.g. legal companies and accountants etc), will likely see a large demand for the services of SSPs.

With storage forecast as one of the most lucrative areas of IT over the next five years, it is clear that outsourcing your data storage and its management is not a decision to be made lightly. Given the uncertainty of the market and the risks involved, organisations looking for a reliable and secure SSP service should ideally look to companies that offer a range of storage services, so that the SSP provision can be properly integrated into the company's overall storage strategy and management process.

Recognising the need to adopt a storage strategy is the easy part; choosing a specific model for individual needs is the challenge. Many companies look to storage consultancies, such as Posetiv, to help them decide which storage strategy will benefit them the most. Regardless of the solution, however, the growing mountain of data can no longer be ignored. A surefire SSP model can take on the burden of storing and managing the ever-increasing levels of data and clear a path through the data jungle.

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