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Profitability and Focus Matter

So what exactly prompted so many SSPs to radically alter their business models? Schott thinks the answer is really quite simple — they were not profitable.

"The accessibility and efficient flow of data is the lifeblood of any business — and safe storage and protection from unforeseen disasters is a major concern," he says. Simply put, Schott believes that customers don't want to entrust their family jewels to an outsider.

Farajun says the service that the SSPs led with was flawed from the start. Handing over primary disk was too much of a stretch for many customers. The technologies that the SSPs were using were not built for service provisioning, he says, and many had to create their own software band-aid solutions to accommodate a service-based offering.

Farajun thinks SSPs should have started with backup as a service, and supported the incumbent IT admins. "The vendors were talking out of both sides of their mouths and never really supported the SSPs in a meaningful way," he says. "They sold against them behind their backs. So they had no choice but to alter their business models. And then they ran out of money."

SSPs also had to alter their business model because their customers did not realize how they saved money. "The SSPs bought storage by the truckload and sold it by the carload," Farajun says. "But many of the customers they approached were buying storage by the shipload, and so it was more expensive to let an SSP in."

Farajun also believes that one of the fundamental arguments that SSPs were making to justify themselves was that storage was 'really hard to do' and there weren't enough storage skills. "Well guess what? The vendors made managing storage easier, better solutions evolved, and customers figured out they could do this themselves," he says. "The products dropped in price dramatically, and the vendors themselves put SSPs out of business by selling against them, making their products simpler, and dropping their prices."

Could SSPs Make a Comeback?

According to Schott, if outsourced storage services become very popular with customers, the effect on the storage industry could be to concentrate buying power with SSPs. "Vendors would likely respond by creating their own SSPs in order to maintain direct customer interaction," says Schott.

For vendors, Farajun says, it will increasingly matter how customers are buying their products — in the form of a service, or in the form of a solution. This will in turn cause the vendors to introduce features that will make their products more amenable to service providers. "The concept of utility will still matter to customers that are buying a solution because some create internal SSPs," he says. "So 'service-esque' functionality will appear, and this is already happening with some vendors' products."

Storage customers will continue to think about whether they want to buy storage technology as a service or as a solution wholly owned and managed by them. Some enterprises today buy storage products and let outsourcers manage it for them, Farajun notes. So the outsourcers are really playing the role of SSP, they're just not labeling it as such.

What else prompted so many SSPs to radically change their business models? And what does the future hold for storage on demand? We'll address those questions in Part II of this series.

See all articles by Leslie Wood

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