Storage as a managed service is a fast-growing niche of both the storage and the managed services markets, and it's wide open for service providers and solution providers looking to expand their offerings with a minimum of investment.
It is still a small market, worth a mere $250 million to $300 million in 2005, according to research firm IDC, but one where the holy grail of the channelrecurring revenue for a service that is fairly easy to implementis available to those who see beyond its size.
Maturing software and turnkey data backup service operations from several technology developers have combined with double-digit growth to make the business viable for solution providers of almost any size.
It may also be a fragmented market, with three or four relatively well-known companies and a number of startups, said Doug Chandler, program director of storage software and services at IDC. However, that fragmentation has made it a good market, Chandler said. Customers, especially small and midsize ones, are looking at ways to improve their data backup and are being forced by issues such as compliance to make sure they can retrieve their data once backed up.
"A lot of customers frankly don't know where to go if they are interested in backup as a service," he said. "That leads to a lot of interest in the channel."
Managed storage as a service today is primarily focused on automating data backups and offering SLAs about the ability to recover the data when needed. For solution providers, there are three primary ways to offer managed backup services: host the backup infrastructure and provide the service, offer the service using backup infrastructure owned by other technology providers, or resell a turnkey service provider's offerings.
Several solution providers are experimenting with building a full service offering. Marketex Storage Solutions, Santa Clara, Calif., for instance, cooperated with the University of Miami, which was looking to provide a laptop backup service to its students based on the LiveBackup Software from Atempo, Palo Alto, Calif. Russell Schneider, Marketex president and founder, said Marketex worked with the university to set up a system whereby any changes to data saved by students working online are instantly copied wirelessly to the university's data center so that if a laptop or desktop were stolen or dropped, the students would not lose their data.
The problem, said Schneider, is whether students will sign up. "They will pay $140 for an external drive they don't use," he said. "Will they pay $40 a year for automatic backups?"
Nexus Information Systems, Plymouth, Minn., which last year formed a storage division mainly to develop a managed storage service, is in the final stages of finishing its offering based on software from CommVault and Symantec, said Keith Norbie, director of that division.
Like Marketex, Nexus made the decision to invest in an open platform instead of developing proprietary software, Norbie said. While many MSPs use proprietary technology to lock clients into their service, Norbie said that could lead to problems including lawsuits as customers start storing data with retention periods of up to 10 years. "Some folks might brush off the risk," he said. "But for many VARs late to the game like us, the best way is to offer an open solution where you can add real value with less business risk."
Many solution providers focused on small businesses are working with companies such as Atlanta-based eFolder, Houston-based Terian Solutions and Chennai, India-based Vembu Technologies, all of which allow them to provide managed backup services, either by offering their own hosted service, using the technology provider's hosted platform, or reselling their partner's services.
Network Management Group likes to resell eFolder's storage service because customers can contract for a certain amount of space without paying extra for portioning that space between multiple PCs, said Steve Harper, president of the Hutchison, Kan.-based solution provider. Network Management bundles the storage service with other services, or offers it as a stand-alone. "By bundling it, we get more customers," Harper said. "Customers start at 10 Gbytes. But they probably need 20 Gbytes. So they buy 10 more. It's like giving away the razors to sell more razor blades."
EFolder is one of a handful of backup storage service providers that were started by a solution provider, a factor in Network Management's decision. "I like buying VAR to VAR," Harper said. "He let me have the branding, his pricing is competitive and his technology works."
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