Looking Back on SSPs and Ahead to Storage on Demand

Transcription

1 Research Brief Looking Back on SSPs and Ahead to Storage on Demand Abstract: Storage that is provisioned as a utility did not live up to market hype and led to the demise of most storage service providers. In an effort to survive, SSPs have created a concept of storage on demand. By Adam Couture Recommendations Remaining SSPs should leverage initiatives such as Sun's N1 and IBM's ebusiness on Demand to validate the on-demand model. Users of outsourcing and managed hosting service providers should consider ondemand models as alternatives to traditional purchasing or leasing. Publication Date: 7 May 2003

2 2 Looking Back on SSPs and Ahead to Storage on Demand Introduction Storage that is provisioned as a utility was once considered to be a harbinger of the overall compute utility concept. In the days of the dotcom boom, new storage service providers (SSPs) were springing up practically every month, and even very large service providers such as IBM and EDS jumped on the storage utility bandwagon. Unfortunately for the SSPs, their investors and even the customers they managed to win, storage provisioned as a utility did not live up to market hype. As a consequence, most SSPs have either radically changed their business models, been acquired by other companies or have gone out of business altogether. Even so, many of the remaining SSPs are not ready to give up on the storage utility, and a variety of other service providers are opting to add storage utility services to their service portfolios. Storage Utility Definition Where Have All the SSPs Gone? Gartner Dataquest defines the storage utility as the provisioning of storage capacity for servers on a usage basis. This capacity may be delivered at a user site or delivered remotely via a network or the Internet. An array of storage services may be delivered in conjunction with this capacity, such as administration services, backup of servers and PCs, system and file recovery and restoration services, archiving, data warehousing, and others. Services related to customer-owned hardware do not constitute a storage utility. Gartner Dataquest classifies these as operational or managed services. In early 2001, Gartner Dataquest profiled 21 companies that called themselves SSPs. Almost all of them came to market with storage utility services. Today, only a handful of the pure-play SSPs profiled have remained true to their storage utility roots. As illustrated in Table 1, only eight out of the 21 SSPs profiled in 2001 are still actively marketing storage utility services in Among pure-play SSPs, only three survivors still market on-demand storage, which means only one in five SSPs in the 2001 profile still markets primary server storage as a utility Gartner, Inc. and/or its Affiliates. All Rights Reserved.7 May 2003

3 3 Table 1 Storage Utility Providers Business Status Major Change in Goto-Market Strategies Actively Market Storage on Demand Licensing Software Arsenal Digital Active No Yes No Centripetal Acquired by SkyDesk 1 Yes No No Comdisco Acquired by SunGard Yes Through SunGard No Compaq Acquired by HP No Through HP Yes CreekPath Active Yes No Yes EDS Active No Yes No Forsythe Active Yes No No Hitachi Data Systems Active No No No IBM Active No Yes Yes 2 ManagedStorage Active Yes No No Sanrise (Acquired by EMC and ManagedStorage) Chapter 11 Yes No Did Scale Eight Active Yes No Network-attached storage products Storability Sold service to StorageTek Yes No Yes Storage Access (Changed Name to BluePoint Data Storage) Active No Yes No Storage Alliance Active No Yes No Storage ASP Active Yes No Yes StorageLink Closed StorageNetworks Seeking buyer Yes No Did Storage Provider StorageWay (Acquired by Cable & Wireless) Closed Worldstor Now Vyant Technologies 1 SkyDesk was subsequently acquired by SwapDrive. 2 Through Tivoli product set Source: Gartner Dataquest (April 2002) Chapter 11 Yes Through Cable & Wireless Did Yes No Yes Even StorageNetworks, the company that pioneered the storage utility concept, is out of business. After attempting to reinvent itself as an independent software vendor (ISV), StorageNetworks gave up in March of The company has engaged three investment-banking firms to try to find a buyer. Other SSPs such as CreekPath, Sanrise, StorageWay and Worldstor attempted to take a similar ISV approach often shedding storage utility offerings in the process. Of those, only CreekPath remains in business today Gartner, Inc. and/or its Affiliates. All Rights 7 May Reserved. 2003

4 4 Looking Back on SSPs and Ahead to Storage on Demand A Short History of SSP Evolution What prompted so many SSPs to radically alter their business models? In their short history, SSPs have morphed faster than almost any other category of service provider chronicled by Gartner Dataquest. The original storage utility strategy, as conceived by StorageNetworks, was to build its own storage data centers at six geographic centers (storage points of presence [S-POPs]) in the United States. The S-POPs were to consist of enterprise storage systems and tape libraries connected directly to customers via a private, high-performance fiber-optic network or local Fiber Channel. The concept of the S-POP was to provide extremely high availability and operational security through redundant power; heating, ventilation and air conditioning; fire suppression; tape storage systems; and storage management servers. In fact, StorageNetworks actually built a data center in Houston, Texas. However, just as the company was breaking ground on its first facility, the dot-com frenzy began. Internet data centers such as Exodus (now Cable & Wireless), Level 3 and others provide facilities, network bandwidth, management and other services to enterprise customers, Internet service providers, application service providers (ASPs) and a host of e-commerce companies (commonly referred to as "dot-coms"). StorageNetworks and most of the emerging SSPs surmised that by building S-POPs at established hosting facilities with an environmentally controlled infrastructure and uninterruptable power sources, networks, and fiber trunks, they could concentrate on building storage infrastructures instead of entire data centers. Moreover, colocating at a hosted facility was viewed as a way to provide SSPs with a large number of neighbors that also happened to be prospective customers. By all accounts, dot-coms were ideal storage utility customers. Managed storage services, particularly the storage utility, meshed extremely well with the dot-coms and the investment strategies of their venture capitalists for the following reasons: By leveraging a pre-established up-and-running IT infrastructure, startup companies believed they could go to market sooner than they could if they had to build their own infrastructures and hire their own IT staffs. Purchasing storage as a utility meant that venture capitalist investment dollars could be stretched further because capital investments do not have to be made in storage infrastructure and people do not have to be hired to manage it Gartner, Inc. and/or its Affiliates. All Rights Reserved.7 May 2003

5 For more than a year the dot-com boom seemed to be proving the validity of the storage utility concept, and many SSPs bragged of sales cycles in terms of weeks or even days. When the "dot-com balloon" burst, most SSPs quickly scrambled to expand their horizons to include enterprise customers. This is when the storage utility concept began to fizzle. For most SSPs, enterprise-focused strategies included building S-POPs and installing storage management modules on the customer's site. Many SSPs believed that the reason storage utility services weren't selling at corporate data centers was because enterprises had major security concerns with shared infrastructure and were fearful of losing control of corporate data. SSPs attempted to address these concerns by dedicating storage resources at the client's site. This was often referred to as the "private storage utility" because although storage infrastructure was dedicated to just one customer, it was still billed on a usage basis (although in many instances this was little more than a thinly veiled step lease). Some SSPs, such as Sanrise, went as far as prepackaging storage area networks designed to be dropped into the client's infrastructure. For pure-play SSPs, the private utility simply did not succeed. One major problem was that large companies could leverage deeper storage hardware discounts than tiny SSPs, so the economics of the model could not justify cost savings. Moreover, enterprises had already invested heavily in storage infrastructure and were wont to abandon it. As a consequence, most SSPs tried to reinvent themselves into storage management service providers (MSPs). By using their tools, technologies and methodologies, SSPs believed they could help enterprise customers manage their storage infrastructure as an internal storage "utility." Of course, they also hoped than an incremental advantage of this service model would be that it didn't require the service provider to build infrastructure; thus reducing their capital "burn" rates. In addition to providing storage MSP services, most SSPs believed they saw similar benefits in enabling storage services for other service providers such as telephone carriers, ISVs, managed hosting companies and even large outsourcers. These service providers own their own data centers and storage infrastructure, and some even own metropolitan area networks. Equally important, they also own an established customer base to sell into. In the second half of 2001, most SSPs profoundly shifted their go-tomarket strategies. Some de-emphasized storage-on-demand services, while others dropped them entirely. This was true for the public utility and the private utility. Of course, this does not mean that all SSPs abandoned direct storage utility offerings. For example, Arsenal Digital, BluePoint Data Storage (formerly Storage Access) and Storage Alliance still actively market storage-on-demand services at Internet data centers, and IBM and HP still see potential for the public utility model. However, the majority of smaller SSPs and even some of the big ones largely abandoned the storage utility model in search of more lucrative ventures Gartner, Inc. and/or its Affiliates. All Rights 7 May Reserved. 2003

6 6 Looking Back on SSPs and Ahead to Storage on Demand In 2002, another transformation was taking place among SSPs. As SSPs pursued the storage MSP model, many found that the prospects they talked to liked the concept of managing their own storage infrastructure as an "internal" utility, but were not willing to turn control over to an external service provider. As a consequence, many SSPs moved away from the service provider model and into the realm of ISVs. CreekPath Systems, Sanrise, Scale Eight, Storability, StorageNetworks and WorldStor all announced storage management software. Only CreekPath, Scale Eight and Storability remain in that business. Gartner Dataquest Perspective One of the profound ironies of the SSP market is that the future of storage as a utility is more promising today than when most of the SSPs initially brought the concept to market. Customers of large outsourcing and managed hosting companies such as EDS and IBM continue to be more accepting of paying for storage on a usage basis. Major on-demand initiatives such as Sun's N1, IBM's ebusiness on Demand and HP's Adaptive Infrastructure tout the advantages of shared resources, including storage, that are provisioned, managed and paid for "on demand." Is there much of a future for storage on demand? Gartner Dataquest believes the answer to that question depends on how the storage utility is being deployed. Although Gartner Dataquest believes that the biggest opportunity for stand-alone storage on demand withered with the dotcom bust, the storage utility still has the potential for market acceptance, albeit in several different incarnations than originally envisioned. This does not imply that all service providers should drop storage utility services. It means that primary server storage on demand will remain a major, though often invisible, component of outsourcing, managed hosting services in general, or major solution deployments (such as customer relationship management and supply chain management). The following lists storage utility deployment potential (most to least): Integrated utility as part of an outsourcing or managed hosting engagement Integrated utility as part of strategic deployment (N1, ebusiness on Demand) Integrated into solution deployment Stand-alone utility at enterprise data centers Stand-alone utility at Internet data centers Stand-alone utility over a network Key Issue Who are the emerging Tier 2 IT solution providers? 2003 Gartner, Inc. and/or its Affiliates. All Rights Reserved.7 May 2003

7 2003 Gartner, Inc. and/or its Affiliates. All Rights 7 May Reserved

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