SMB storage explosion

You know storage has made it to the big time when it appears as the centrefold of a stationery catalogue:‘Buy your rubbers, pencils and a terabyte of storage’.

Such was the experience of a vendor in March and it’s just one indication the pace is really picking up in the SMB storage sector.

The storage needs of small to medium businesses (SMBs are defined by Gartner as companies having one to 499 employees) have been largely ignored for years.

SMBs were not seen as a lucrative market, nor as having the same critical storage issues as large corporates.

As a result, there was a lack of storage solutions to meet their peculiar needs and smaller pockets.

EMC researched the local SMB storage market in March and found the sector has historically received pretty ordinary servicing, according to EMC’s general manager partners and alliances, David Henderson.

Another insight from this research is that the storage issues of the SMB customer are exactly the same as those facing corporate enterprise: data integrity, backup, email, and for some verticals, compliance.

Australian SMBs are starting to hear rumblings about the Sarbanes-Oxley ruling in the US and worry about a flow-on effect locally.

Sarbanes-Oxley is an Act that mandates financial accountability, with emphasis on security and the integrity of electronic ‘paper-trails’ to make sure data hasn’t been tampered with after the fact.

Gartner's Sargeant: Managed storage is growing

This has forced some verticals to look hard at their record management processes, especially the legal, health and financial verticals and particularly those that operate across international borders.

Reports of how long data has to be stored vary from seven to 20 years. Local companies are gearing up already -- despite the absence of this legislation in Australia to date -- in the belief that it won’t be long before they’ll have to follow a similar compliance path.

As far as compliance goes, Gartner’s research director for servers and storage Phillip Sargeant says we’re a little way off than the US, where it’s a big thing. "I’d say what’s biting more than the compliance issues here is the security of information.They have to make sure that it’s secure, they have to make sure that they can store it in the event of some sort of failure," he says.

FalconStor’s regional director for Australia & New Zealand, Joel Norton, agrees: "The world revolves around storage. Ensuring data is safe, protected and secure is 60 percent of an IT manager’s core focus today."

Stats from the Australian Bureau of Statistics show that in Australia alone there are 1,300,000 small businesses. And according to Microsoft research, 500,000 of these SMBs have a LAN, 328,000 have at least one server and 80,000 have two or more servers.

Storage providers universally have been talking up the SMB sector, claiming the healthiest growth in storage-related sales for many years, and being equally bullish about the future.

Sargeant says the validity of such claims depends on how you define the storage market. Gartner tracks the local storage/SMB market once a quarter.

"The storage market consists of storage hardware, storage software and the services that go with it. If you look at the hardware part of the storage market then that’s actually very flat.

"In 2005 we expect only about 1 to 2 percent growth in storage hardware from a revenue perspective. If you looked at it from a capacity standpoint, the number of megabytes or terabytes, that’s going up at an incredible rate, 40 to 50 percent."

Sargeant says the healthy growth is in storage software and storage services. This encompasses things like backup and recovery software, email archiving, and archiving in general.

"The storage vendors are putting together products and services around storage solutions as distinct from storage hardware alone.The ramifications of this are that a lot of the storage players need to gravitate to the storage software and services in order to make money. In the hardware space, the growth of one vendor really has to be the expense of someone else," he says.

Cortex's Chang: Software industry has been slow

Globally, we can expect more growth in storage for SMBs than enterprise.The top three ranked storage hardware providers in Australia are HP, IBM and EMC, Sargeant says.

These three are also the big players in storage software as well, but they vary in the services arena.

"EMC came back with a vengeance last year probably at the expense of HP [which was] the biggest provider of storage hardware in Asia Pacific last year but lost market share to the likes of EMC and IBM.

"They’re still number one but they’ve gone back a bit. Some of the reasons for that is that the focus of the market is on solutions, rather then simply the hardware. And these vendors vary in their ability to address solutions rather than just hardware," Sargeant says.

Network Appliance has been in Australia for seven years and the company’s director of marketing and alliances, Mark Heers, says it’s in ‘heavy growth’ at the moment.

"In recent market share numbers that came out, we are one of only three companies that grew market share in the past 12 months," Heers says.

"Why? It’s starting to become a specialised market, and the companies that grew were specialised storage players rather than server vendors that sell storage, and I think that’s starting to become important."

Linus Chang, managing director of distributor Cortex IT, says the company has been doing well because they’ve focused on storage software.

"While storage hardware manufacturers have been working to make SMB backup devices more affordable, the software industry has been slower to follow, keeping the prices of overall solutions high. This has led many resellers to turn to BackupAssist as their choice in software, he says, enabling them to deliver reliable backup solutions to their clients at an affordable price.

Chang says there was a 24 percent increase in worldwide internet (Google) searches for SMB backup software from March 2004 to March 2005. And Cortex IT had a 110 percent increase in sales of BackupAssist in the past six months.

LAN Systems’ Wendy O’Keeffe says the market size for SMB storage in Australia has been estimated at $144 million.

LAN Systems' O'Keeffe: Resellers are trusted advisers

"SMBs have lots of pain-points just like larger companies. By providing a solution for key pain points in the business -- for example backup, recovery, compliance, archiving, disaster recovery and cost infrastructure -- resellers act as a trusted advisers to SMBs which often don’t have dedicated IT resources."

Statistics from Access Markets International (AMI) Partners, predicts the worldwide spending on storage software will increase at a compounded annual rate of 25 percent between 2002 and 2006, far eclipsing the expected singledigit growth rate for storage hardware.

Between 2002 and 2006, worldwide spending among SMBs on storage hardware, software and services will increase a total of $15 billion (with a CAGR of 40–50 percent) eclipsing spending among large businesses which will increase by a CAGR of only 5 percent.

Verticals driving significant demand for storage include imaging and document management, data mining,multi-media, ERP, CRM, and imaging.

FalconStor has 600 customers in 13 countries and grew 87 percent as a company last year, FalconStor’s Norton says.

"In Australia we’ve gone from having two to three reseller partners to 20 in the past 18 months, and that’s because of demand in the marketplace for the products that FalconStor is delivering."

Adaptec, historically known for RAID and its traditional card business, has been getting into the external storage market through strategic acquisitions and is all the better for it.

"We have a broad range of external storage products that cater into the DAS, NAS and SAN market, primarily for the SMB market, and the entry level to mid range," says Adaptec Australia’s country manager, Demetri Christodoulou. "That’s where we see the growth areas," he says.

Making storage simple is a big catchcry among vendors. Cortex IT’s Chang says the company has made a significant imprint with local SMBs by simplifying storage.

‘Something that was previously rocket science, we’ve made it suitable for the average Joe user. Previously it used to be very difficult to schedule the Windows backup program, or setup a rotation schedule, and the monitoring side of it used to be complex. Some of the bigger companies’ products don’t do some of the notification and monitoring as well as we do, and they can cost five times as much," Chang says.

Some of the bigger storage vendors are not used to dipping their toes in the wading pool with the small fry. However, now they’re busily buying up other storage suppliers so they can offer products that specifically meet SMBs needs and budgets.

Adaptec last year purchased Snap Appliance and has built up its product line to offer flexibility and power at lower cost to SMBs.

"You can now get up to 3TBs of storage with very powerful software that gives SMBs functionality only previously available for 10 times the cost," says a company spokesperson.

Nexsan Technologies -- an ATA/SATA-based storage specialist -- acquired AESign Evertrust at the end of March, giving them new strength in the ‘information lifecycle management’ (ILM) space.

A statement from Nexsan says it will integrate Evertrust’s ILM, content addressed storage (CAS) and compliance capabilities.

"The combination of Nexsan and Evertrust will enable Nexsan to offer ILM, including scalable low priced disk storage, as a single integrated system," Nexsan says.

Quantum has also been shopping. "A month ago we bought another company Certance. Certance was Seagate’s tape drive division spinoff. The Certance acquisition now makes Quantum the largest tape drive manufacturer in the world and the largest supplier of tape automation solutions in the world," says Quantum’s A&NZ country manager, Craig Tamlin. "We position ourselves as data protection, backup, recovery and archive hardware providers."

Gartner has been keeping its eye on the recent spate of mergers and acquisitions, and Sargeant believes it’s not the last of them.

Quantum's Tamlin: Scoping storage needs is not a trivial process

EMC is gobbling up other companies primarily in the software and services arena to bulk up their storage portfolio.The acquisition of Legato and Documentum are prime examples. EMC also bought Dantz.

"Dantz addresses the backup and restore for SMBs. EMC previously bought Legato but Legato was primarily associated with enterprise so there was a gap in their portfolio in the SMB space. Suddenly they go and buy Dantz to plug that [gap]," he says.

More of those kinds of acquisitions can be expected. With Symantec buying Veritas however, that surprised Sargeant and it surprised the market, he says. "Veritas to me was always a major player in the storage software arena, and to suddenly have a security vendor buy them up…they obviously saw the synergies of product there without too much overlap.

Sargeant expects strategic buy-ups to continue; however, maybe not on the same large scale as Symantec and Veritas.

As for what the implications are for local channel partners following the Veritas/Symantec melding,Veritas is staying mum.

"All I can say at the moment is that our two companies are separate. We’re currently going through regulatory approval for the merger, so it’s not appropriate for me to talk about differences to our channel programs and going to market model," says Veritas’ regional alliance and channel director Archie Wilson.

"All I can say is that the companies have obviously got to look at the integration at some stage and look at harmonising the [channel] programs between the two companies as a combined entity," he says.

Which storage?

With acronyms galore, it’s no wonder SMBs have a hard time sorting out what they mean, let alone which to apply to their business.

Veritas' Wilson: Email archiving is a huge issue

Gartner’s Sargeant says it’s horses for courses. "NAS addresses a part of their need and SAN addresses another part of their need. You don’t generally just buy one to address it all."

He says NAS has grown up over the past two or three years and it can do a number of things it couldn’t then. Two or three years ago SMBs looked at SAN and said ‘It’s too expensive for me, all the infrastructure, all the storage arrays; it’s out of my league. But now costs have come down, SMBs can seriously look at SAN solutions, Sargeant says.

"And now particularly iSCSI as a technology has grown up and it offers another option, but it may not provide the total solution so I see organisations having a mixture," he says.

NetApps’ Heers says there’s no real rule of thumb as to whether you use SAN versus NAS versus iSCSI. "The main thing today is to try to get people weaned off server-based storage and make sure they go to network storage which allows them improved scaling.Whether they do SAN or NAS or iSCSI, it’s not important so long as you get away from dependency between servers and storage."

Companies are looking more closely at their IT spending and want to get more out of their existing storage hardware infrastructure. Sharing storage is the way to go, says José C Goldmann from SLI Consulting.

"If you have two or more servers and we need to expand storage on those servers, then a DAS (Direct Attached Storage) SAN is more effective then attaching storage externally the traditional way," he says.

Quantum’s Tamlin says scoping clients’ storage needs is not a trivial process. "A few years ago, people were out there deploying NAS products all over the place and now I don’t see a lot of it. They’re buying NAS products more for quick-and-dirty storage, but companies that do it properly are buying true fibre channel SAN solutions for centralised management, good performance, and because they’re more affordable now," he says.

The question of whether backup solutions are best disk to disk (D2D) or disk to tape (D2T) is guaranteed to get conflicting responses, but if it’s distilled down to its simplest form, it really is dictated by how fast an organisation needs to recover their data.

"If they need to recover their data within seconds or minutes then D2D is really the only option," says Sargeant. "But if they can afford to recover their data overnight or in 24 hours, then from a cost perspective D2T might be fine.

"As a general observation, many SMBs have gone to D2T because of the cost reasons. As their information holdings grow however, they’ll suddenly discover it takes a heck of a long time to recover their data. That doesn’t mean to say that tape is disappearing.Tape becomes the final archive of data," Sargeant says.

Tape has been in use for decades and is cost effective and reliable. Peridata Communications’ MD, Divo Cipriani, says some call tape archaic, but it’s familiar to SMBs; they know how to use it, it hasn’t let them down.

"A significant number of SMBs place a great deal of reliance on hard disk to hard disk backups. This is nothing short of false reliance and can scarcely be defined as backup. Utilising mirrored hard disk to hard disk offers no security or protection against virus -- which is neatly transferred from hard disk to hard disk -- or fire, theft or natural disaster."

"Tape backup offers a range of benefits over HD to HD. It offers higher storage capacity; speed of backup can be upwards of 160GB per hour; automated tape libraries still offer the lowest cost per Gigabyte; media is interchangeable; data backup on tape can be easily stored off-site; it has a claimed shelf life of over 15 years," he says.

D2D versus D2T is very much dependent of the business model, says SLI Consulting’s Goldmann.

"A very effective means to do back-up and restore is with local D2D, it’s very fast in restoring data. Then have a second level of backup for business critical data sent encrypted electronically to a remote site via the internet. This allows us to retrieve corrupted, lost, or deleted data very quickly from our D2D appliance and in worst case (fire, floods, earthquakes, break-ins) to retrieve businesscritical, encrypted data from our secured remote site anywhere in the world."

Goldmann says 1GB of disk space -- enough space for financials, company reference data, templates, customers addresses -- can be stored remotely for less then $200 per annum. "That works out to be less then $17 per month and we have piece of mind that we are able to retrieve company critical data any time, any place with any device which can connect to the internet and download data."

Basically it comes down to what the customer’s expectations are about having access to that data, and secondly how much they are prepared to spend. If they want everything available real-time, then they have to be prepared to pay for it.

There aren’t many SMBs that need a fivesecond recovery of files, says Quantum’s Tamlin. "Vendors are pushing backup to disc, backup to disc, when in reality it’s not an appropriate solution for many clients."

There is no doubt the SMB storage market is growing faster than the enterprise segment. Partly because it’s had less attention in the past, but also now that their information is growing, they’re starting to see the pain points that some of the big boys saw a few years ago.

One of the areas causing most angst to SMBs is email growth. Sargeant says SMBs now have to address email growth and something they haven’t tended to worry about too much in the past -- security of their data, backup and recovery.

"There’s been a lot more focus by vendors in that space because they see the growth potential," he says.

Email is the lifeblood of many SMBs, with email communications sometimes forming the only contract between them and their business partners.

Email is getting out of control and they’re getting to the point where they need well managed email systems so they can retrieve their data quickly.

Quantum’s Tamlin cites a study that showed 60 percent of corporate intellectual property is stored on email systems.

"Therefore correct email management is very important application for clients; applications which can archive to tape so you can retrieve data later but can keep searchable indexes online," he says.

Some applications that do that are amalgamated into the backup software products, and others are external products that you can buy, he says.

Email archiving might not sound very glamorous, but it’s a hot area particularly if you’re a financial organisation. From a business compliance perspective, full, indexed access to all of your emails may be required because they form part of the business record of your interaction with your client, says Veritas’ Wilson.

"Email archiving is a huge issue and we’re inundated with business opportunities around that. We’ve got more resellers wanting to get into that space than we’ve got the capacity to support at the moment, so that’s a very very high growth area," he says.

Another thing storage players are keeping a keen eye on is iSCSI. Although iSCSI has been around for a little while, it has recently been ratified by the IEEE as an industry standard.

FalconStor’s Norton says this means organisations can now deploy SANs or solutions that enable them to consolidate and centralise their storage without having to use fibre channel.

"They can use ethernet, they can use their existing LAN architecture, they don’t have to get people that are skilled in fibre channel or SANs and they can use their existing competency," he says.

"It’s a very attractive option for SMBs. It enables them to basically plug and play solutions, and most of the major storage vendors are now coming out with iSCSI solutions. iSCSI is becoming the defacto storage standard. The next three years we’ll see iSCSI as the prevalent storage platform," he says.

EMC is excited about iSCSI, not just because it reduces the cost of the SAN and you don’t require the fibre connection, but because a lot of channel partners are more familiar with the network environment than they are with the SAN environment.

"It opens up a new cost bracket for us and opens up our market segment. It also offers a new range of partners who are thinking, 'OK, I understand iSCSI, I understand networks and I understand where it all fits'," says Henderson.

The feeling storage is getting out of control has spurred a number of vendors’ renewed interest in the managed storage space.

"They manage the storage for you, back it up, secure it. The major vendors and service providers will do that, but we’re also seeing some of the smaller ones taking over storage management on behalf of companies. Managed storage is growing, I wouldn’t say it’s big but it’s growing," Sargeant says.

A lot of the manage storage services are on the SMB’s own premises because they don’t like to let their storage out of their sight. "They like to have it there so they can put their arms around it a bit."

Sargeant also says the concept of storage on the end of a wire or being remotely managed is in its infancy but also growing.

SMBs need to choose their storage partners wisely says Peridata’s Cipriani, and preferably someone with local support and services.

Peridata's Capriani: SMBs rely on hard disk to hard disk backups

"SMBs have become increasingly frustrated by box-loads which are dropped off at their doorsteps with do-it-yourself notes attached…They need the convenience of local service and the satisfaction of human, timely response.What they don’t need is some [one] on another continent…trying to support them. Simply put, the SMB wants one hand to shake or one neck to break."

Channel partners have to constantly make decisions about how to position their business. There are a thousand technologies out there, and EMC’s Henderson feels for them.

"Partners have to place a bet and make an investment. Storage has a long way to go, and it isn’t just storage anymore, we see it as a manager of information which has so many dimensions in it. There’s a future of at least five to seven years for partners in it," Henderson says.

But success won’t come without labour. "It’s not a matter of just servicing a demand for the customer, it’s about creating demand also. If the customer says, 'My mailboxes are full', you’ve got a couple of options. You can just go in there and just put another half terabyte of storage onto the network and walk away with a $5000 dumb device."

However, that same job could have been a $50,000 opportunity. "The IT provider needs to take the time and effort to understand the customer’s problems -- now and in the future -- develop a solution for it and present that rationale to the customer."

Henderson says there are about 5500 resellers in Australia, and approximately 300 to 400 of them that are capable of installing a simple SAN.

"So that leaves 5000 plus partners out there who are taking very simple solutions to what could be a more effective solution for the customer. They’re just sticking on JBODs and walking away and that’s the problem. The customer might be happy for the moment, but have you actually added anything of value? Are you doing them justice? If you don’t, someone else will."