Download the authoritative guide: Enterprise Data Storage 2018: Optimizing Your Storage Infrastructure
Storage Networks, the company that pioneered the storage utility concept, is out of business. And only a few surviving SSPs still primarily market storage as a utility: Arsenal Digital, BluePoint Data Storage (formerly Storage Access), and Storage Alliance.
One problem with their business model was that customers were hesitant to give up control of their data. And storage vendors responded to the SSP threat with storage that was cheaper and easier to manage.
Eric Schott, director of product management at EqualLogic, Inc., Nashua, NH, says that customers want on-demand provisioning of storage capacity, but they don't want to relinquish control of their data, making the outsourced storage utility model unattractive.
Customers have spoken, he says: the benefits of SSP services do not outweigh the loss of control and autonomy over their data and operations. "This has created an opportunity for enterprising storage vendors to sell easy-to-use, self-managing storage arrays into the kinds of businesses that may have considered outsourcing," says Schott.
With the advent of lower-cost alternatives to expensive and difficult-to-mange Fibre Channel SANs — including the growing number of iSCSI-based solutions available today — mid-sized companies can afford to create their own scalable storage utility in-house, he continues. "You no longer need to be rich or a rocket scientist to install and manage a single, company-wide pool of storage," says Schott.
Vendors, SSPs Had Competing Interests
Eran Farajun, vice president of business development at Asigra, Inc., Toronto, Canada, thinks that storage vendors viewed Storage Networks and others as just 'big customers,' or distributors of sorts, and didn't change their licensing or pricing models for the SSPs, for the most part. While the SSPs were trying to gain traction, their vendors were busy competing with them for the same customers, trying to convince the customer to buy products directly from the vendor. "So the entire vendor/SSP relationship was skewed from inception, as they both had opposing incentives that we not aligned," says Farajun.
The fundamental service that SSPs were trying to sell — primary disk by the TB — was not something that customers were ready for, and still aren't.
"Look at the traditional outsourcing companies," Farajun says. "They had been doing the management for storage for their enterprise customers for years before SSPs came around and they are still doing it today." But the difference is that the customer 'owns' the technology and the service is sold as part of a wider Service Level Agreement. "At the end, it hasn't affected the vendors at all," he concludes.
As far as storage customers go, Farajun feels they are shy about giving ownership of their primary disk to anyone but themselves or as part of a larger outsourcing contract. However, he says, customers are not shy about letting others take care of their backup/restore problems, only because this is such a problematic issue for customers that they can't ignore it.
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.