Zadara extends cloud storage service to an on-premises model with OPaaS

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1 Zadara extends cloud storage service to an on-premises model with OPaaS Analyst: Simon Robinson 24 Apr, 2014 Move over IaaS, PaaS and SaaS; there's a new kid on the as-a-service block OPaaS. It stands for on-premises as a service, and it's a new option from cloud storage specialist Zadara that is designed to provide a 'best of both worlds' combination of cloud-based storage as a service without data having to leave the organization's own datacenter. Besides appealing to customers with sensitive data, Zadara believes the option will also appeal to organizations with lumpy, project-driven storage requirements, especially those that require performance storage to run in close proximity to compute. The 451 Take We've noted previously that Zadara's overall approach to storage is one of the most innovative we've seen. Cloud storage is mostly thought of as a 'cheap and deep' tier suitable for archives, backups and DR copies, and although some startups are targeting performance storage for the cloud (e.g., SolidFire), Zadara is different in that it is delivering its technology purely as a service, offering an alternative to 'cloud bound' performance storage such as Amazon's EBS. With OPaaS, the company is now extending this proposition into on-premises IT. We think it will mostly appeal to cutting-edge adopters and those already comfortable with consuming cloud-style IT. That is a minority of organizations currently, but we believe Zadara is offering a glimpse into the future of enterprise storage. Copyright The 451 Group 1

2 Business update We profiled Irvine, California-based Zadara in detail last September. To summarize, the company offers primary storage SAN and NAS as a service through a growing list of cloud providers utilizing a facility it calls the Virtual Private Storage Array (VPSA). It initially targeted customers via the Amazon cloud it does so by installing its VPSA software on commodity hardware (from Dell and SuperMicro) in third-party datacenters (e.g., Equinix). This is then connected to AWS compute services via Direct Connect to provide primary storage SSD, SAS and SATA on dedicated hardware. The company isn't revealing revenue, but says sales have more than doubled in each of the last three quarters of 2013, during which its customer base grew fivefold, while average revenue per customer doubled. Although its total customer base remains modest overall at about 50, Zadara says its recent momentum encouraged key investor Toshiba to increase its stake in the company with another investment in February It's not publicly revealing the amount, but it previously disclosed it had received $10m in funding. Headcount currently stands at 20 FTEs, and is expected to continue growing this year. Amazon still drives about half of Zadara's revenue, and VPSA is now available in five AWS regions. It just added support for AWS Asia-Pacific in Sydney, Australia. However, the AWS proportion is starting to decline as it brings other service providers online. Other disclosed service providers to date include Dimension Data, Cloud Sigma, Toshiba (in Japan), CoreSight (Los Angeles) and SerenitaaS (Toronto). It plans to bring multiple additional service/cloud providers online in the coming months, including at least one more major provider. From a workload perspective, Zadara says that file/nas now accounts for 60% of revenue and 80% of capacity, slightly ahead of its own expectations. This is in part due to a paucity of alternatives in the Amazon cloud VPSA is currently the only pure 'as a service' NFS-based offering on Amazon but also because the cloud model is particularly suited to businesses with highly variable storage requirements, which is exactly the case for many file-intensive verticals. For example, CoreSight is targeting media and entertainment companies in the Los Angeles area. Zadara extended its support for file-based workloads in late 2013 when it added support for SMB 2.0 (i.e., CIFS) in addition to NFS support. Zadara's service is priced on two elements; a per-controller/hour basis and per-drive/hour basis. Controller pricing starts at $0.49/hour, and Zadara recently reduced the drive price by up to 51%, depending on the drive type; for example, the pricing of a 3TB drive has been reduced from Copyright The 451 Group 2

3 $0.18/hour to $0.12/hour. It's also now including formerly 'premium' features such as snapshots, clones, remote replication and data encryption as standard at no additional cost. Partners Meanwhile, in late 2013, Zadara announced a 'strategic' relationship with NetApp that integrates elements of Zadara's software with NetApp Private Storage for AWS, an offering that allows NetApp storage to be installed in a Direct Connect datacenter, and act as primary storage behind EC2 compute instance. In the Zadara elastic NetApp Private Storage for AWS configuration, Zadara's cloud and orchestration engine is installed alongside NetApp FAS storage, and provides on-demand provisioning, metering and billing functionality on top, so that customers can scale and pay for their storage in line with their consumption of EC2. Zadara's storage software is not involved in this arrangement, and is an example of how the company is willing to tweak its approach to develop new sales opportunities. Introducing OPaaS Zadara says interest levels in VPSA from many enterprise clients have led to requests for it to deliver an on-premises version of the service. The company is now responding to this with OPaaS, or on-premises as a service. This offering has customers deployed today, although Zadara is working on its first public reference. It is essentially an extension of VPSA from a remote location to one that resides inside a customer's own datacenter. Zadara expects that, as with the file/nas in-the-cloud use case, most interest will come from customers with lumpy, project-based storage requirements, especially those that are also CPU-intensive such as media rendering and genome sequencing where in the past CPU and I/O peaks may have impacted the performance of other applications. The tricky part for Zadara is to find the optimal go-to-market approach for OPaaS. The company has (sensibly, in our view) opted for a highly partner-centric approach. It has initially secured partnerships with three hardware vendors Cisco, Huawei and IBM whose server (and networking in the case of Cisco and Huawei) hardware has been certified to run VPSA. (By contrast, Zadara runs on Dell and Super Micro hardware for public cloud deployments.) Zadara expects Lenovo to continue the relationship once the IBM server divestiture is complete. Although none of these partners is offering a Zadara-specific SKU today, all three will refer leads back to Zadara, both directly and via their reseller partners. Zadara will then work with the vendor Copyright The 451 Group 3

4 and/or partner to offer the appropriate configuration 'baby,' 'basic,' 'boost' or 'blazing' and the system will then be configured by the vendor/partner, and shipped and installed by them to the customer. Zadara says it can be involved in the relationship as much or as little as required, and will offer the partner 25% of the value of the contract in return. Zadara says each customer will be offered the option of replicating their on-premises VPSA to any one of its external cloud facilities. The minimum configuration of VPSA is a two-node system, each housing 35 drives (supporting any mix of SSD, SAS and/or SATA disks). Zadara says the price it charges for OPaaS VPSA will be lower than for its cloud customers up to 75% lower because of the longer minimum contract terms (six months) and because it doesn't have to absorb real estate and energy costs. Competition Although the competitive landscape is essentially unchanged from the environment we discussed in our last report, OPaaS now puts it into more head-to-head competition with the giant incumbents of the enterprise storage business, including specialists EMC and NetApp, and generalists HP, IBM and Dell. In this regard, it will be interesting to see how OPaaS fares in the face of these entrenched incumbents. Zadara says it developed OPaaS in response to customer demand, so that suggests some level of interest in its approach; although most major storage vendors have introduced more flexible 'cloud like' payment arrangements in recent years, Zadara's zero-capex and pure-opex model is still pretty unusual. Zadara itself believes there is growing interest in this type of model in an era when many CEOs are telling CIOs to reduce IT spending; it believes OPaaS offers a way to do this without necessarily shedding staff. On another note, it's worth pointing out that Zadara isn't positioning VPSA (in any form) as a 'converged infrastructure' play, even though its software runs on commodity servers stuffed with disk drives. This means it's not looking to compete head-on against the new crop of 'server SAN' convergence plays such as VMware's vsan, and offerings from startups such as Atlantis Computing, Maxta, Nutanix, EMC's ScaleIO and SimpliVity. Why not? Zadara says these models still need to be proven at scale. VMware's vsan in particular maxes out at 32 nodes, though we'd point out that most alternatives scale well beyond 32 nodes, and some such as EMC's ScaleIO can be deployed as a storage-only system. Zadara also says VPSA has no theoretical scaling limit. Although it has been tested to 256 nodes to date, its largest deployment today is 21 nodes; however, it is working on a deal that would involve 40 nodes. Copyright The 451 Group 4

5 SWOT Analysis Strengths Weaknesses We've noted before that Zadara has one of the more innovative approaches to cloud storage in the market the availability of OPaaS continues that theme. Opportunities Threats With a relatively small proportion of enterprise IT workloads migrating to public clouds, OPaaS has substantially increased Zadara's TAM. The company is still small and has a relatively small customer base. It's going to have to play a clever game to find its way into the enterprise. OPaaS will also bring it face to face with much larger and much more entrenched competitors inside the enterprise datacenter. Copyright The 451 Group 5

6 Reproduced by permission of The 451 Group; This report was originally published within 451 Research's Market Insight Service. For additional information on 451 Research or to apply for trial access, go to: Copyright The 451 Group 6