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Enterprise Cloud Storage Market: Key Drivers

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Approximately 65% of business data remains on-premises on flash, disk, and tape. However, IT is moving more (and more) data to cloud storage – especially as businesses learn how to buy cloud storage. This is driving big growth in the cloud storage market. This key trend was aptly captured in Enterprise Storage Forum’s recent survey of data storage professionals.

How big is the cloud storage market? According to a forecast by cloud market analysts Stratistics MRC, the global cloud storage market is engaged in a massive growth surge: from a 2015 total of $18.9 billion to over $112 billion by 2022.

The Interop ITX 2018 State of Infrastructure Report survey asked their respondents what they felt was driving most of the change in their computing infrastructure. Over half of them chose growth of storage and data. Even more respondents indicated that their year-over-year data increase was topping 10% – a heavy growth that is clearly boosting the cloud storage market.

Key Cloud Storage Market Driver: Financial Concerns

While there are several factors driving cloud storage, financial concerns are primary: considerations of both capital savings (Capex) and operating savings (Opex). In general, cloud storage pricing is advantageous.

Capex

High scalability at a reasonable cost is cloud storage’s sweet spot. To create the same level of scalability in the data center, IT would need to spend massive capital investment in new storage. Specifically, it would need to invest in linear scaling technologies for performance and capacity, frequent data migration onto new storage, and continuous upgrades on massive infrastructure. It’s much cheaper to simply use the cloud.

Opex

The argument for saving on operational expenses is a bit murkier. The cloud certainly offers operating cost savings, but strong data growth will significantly raise cloud storage and management costs. For example, the more data you store on the cloud the more you will pay for capacity, data movement, customized SLAs, data protection, and customer support.

Additional Cloud Storage Market Drivers

Most of the data growth in the cloud is from secondary workloads. That is, large data sets that require longer term storage. By far the largest percentage of cloud storage data types are secondary/long-term data storage.

Primary data – smaller data sets, in constant use - often lives in "cloud" filesharing environments like Box or Dropbox accounts. (Not all of them are enterprise accounts. Many enterprise users prefer to use consumer accounts to share their business information – which management isn’t always happy about.)

Taking a more specific view, three additional drivers for growth of the cloud storage market the following:

Backup and Recovery

Backup is a major cloud storage use case. Many businesses migrate on-premises to cloud backup. Some use a traditional backup application that retains backup on a backup server, tape, or a backup appliance. They retain this data on-site for several weeks or months, then migrate aging backup to cloud storage.

More businesses are using cloud storage as their primary backup, using cloud gateways to backup directly to the cloud. Some of these direct cloud backup applications include an option for IT to keep a copy of high priority data on-premises for immediate recovery as needed.

Cloud-to-cloud backup is also a significant use case. Many organizations do not realize that few cloud providers will automatically backup SaaS data. SaaS providers and their cloud hosts are concerned with durability and availability of their systems, but long-term backup is not in their basic plan. SaaS users need to invest in a premium service or a third-party backup to protect their SaaS data.

Recovery is as big an issue as backup. The challenge with recovering from the cloud is ensuring that your provider observes your corporate RTO (recover time objective) and RPO (recovery point objective). Yet many well-known cloud providers offer their boilerplate SLA, and prefer not to customize SLAs for each customer, let alone by customer application. SLA customization is usually a premium service that will add to your costs, but it is money well spent for ensuring RTO and RPO.

To minimize the complexity of managing cloud backup and restore, many companies are moving to MSPs (managed services providers) that offer backup and recovery as a service. Ideally your MSP will offer you several options for backup software and cloud hosting, so you can decide what works best for your applications.

Disaster Recovery

Disaster recovery also impacts cloud storage and its costs. Application and data failover require continuous replication to your cloud provider. This will grow your storage footprint in addition to paying for failover services. Despite the cost increase, cloud-based replication failover services can ensure that you reach your application availability goals.

As with backup and recovery, many companies are working with MSPs and disaster recovery as a service.

Archival

Archival stores less active data in economical storage tiers, and enables users to transparently access the data from their applications. So-called active archives are built for frequent user access while saving costs by economically storing the data.

Cloud-based active archives may not offer the performance that users need, thanks to serious latency issues between the cloud and end-users locations. Cloud providers and backup/archival software makers are investing into WAN acceleration techniques, and encouraging customer to buy more bandwidth for cloud storage and computing efficiency. This will enable cloud-based active archiving to grow as a use case.

Future Growth in Enterprise Cloud Storage Market

While the factors mentioned above have been major factors in the growth of the cloud storage market, several additional factors will drive still move growth – if they can be worked out sufficiently.

  • Security: Security is not the major concern it used to be, and more organizations trust their cloud provider to secure their data. Nevertheless, users need to do their due diligence for cloud provider security. Understand encryption offerings, key management, user access control, and multi-tenant security architecture.
  • Compliance: This another cloud storage concern that, when it worked out, will drive huge cloud growth. Sign with a cloud provider who proves that they comply with regulations, and remember that you still own the responsibility for that data.
  • Cloud complexity: Even if you partner with just one cloud storage provider, you’re probably running a variety of subscriptions, servicing a variety of workloads, managing different SLAs, and using different management portals. You might also have a multi-cloud portfolio. Working with different cloud storage vendors is a smart decision, since it allows you to maximize your cost savings and optimize workloads. You also avoid vendor lock-in and data migration issues. However, the multi-cloud does add to the number of cloud providers and services you manage.
  • Costs: As mentioned above, businesses migrate to cloud storage for cost savings. However, IT practices a false economy if they go with money savings over everything else. It’s a good idea to budget for additional services like customizing SLAs for RTO and RPO, replication and failover services, and third-party backup for SaaS data.
  • WAN speeds: Wan speeds are another crucial challenge for companies who want to grow their data footprint. Latency impacts the speed of backup, restore, archival, and failover services. Both cloud providers and software backup manufacturers do provide WAN acceleration techniques, and it’s important to take advantage of those. However, many organizations need to bite the bullet and invest in higher and more expensive bandwidth.

Above all, enterprises should understand their data storage requirements for the cloud, and locate the best cloud providers to fill those requirements. They should strongly consider a multicloud strategy and working with MSPs for expert support in the promising yet complicated world of cloud enterprise storage.

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