Sidebar: A Comeback for Managed Storage Services?

Managed storage service providers (MSSP), which store customer data at their own facilities, were one of the high-profile victims of the dot-com bust. But as the need to cost-effectively store and retrieve data grows, those providers are getting another look.

A 2003 Gartner Inc. survey of about 120 IT managers showed that 20% were using an MSSP, another 29% had used one in the past, 9% planned to use such a provider, and 42% had no interest, says Gartner analyst Adam Couture. By last year, 50% were using an MSSP, 34% planned to use one, 10% had used one but dropped it, and only 6% had no interest.

Ease of recovery is one major reason market research firm Synovate Americas in Chicago stores 25TB to 30TB of data using an online storage management service from Sun Managed Enterprise Services.

When a customer or researcher needs an old research report or an executive needs to restore data to his notebook computer, "we don't want to spend 48 hours getting a tape and loading it," says Prabhakar Sonparote, senior vice president and IT director at Synovate.

Iron Mountain Inc., a physical records management services firm in Boston, jumped into the MSSP market with its acquisitions of Connected Corp. (for backup of desktop and laptop data) and LiveVault Corp. (for backup and recovery of server data). Revenue from those services is expected to rise from $90 million in 2005 to $140 million to $150 million this year, says John Clancy, executive vice president of Iron Mountain Digital.

But Doug Chandler, an analyst at IDC, estimates that MSSPs sold $215 million in services in 2005, less than 5% of the overall market for backup hardware, software and services, and that by 2009, the market will have grown to only $450 million. Chandler says the largest, most sophisticated customers will still choose to handle storage themselves, while smaller companies willing to outsource storage will buy it as part of a service package from an established vendor rather than from a relatively unknown MSSP.

He's also skeptical that stand-alone storage providers are large enough to achieve the economies of scale that would let them provide services at lower costs than in-house storage managers could.

MSSPs can be less expensive when a customer considers all the costs of maintaining storage staff and hardware at multiple locations, says Steve Siegel, vice president of marketing at Arsenal Digital Solutions Worldwide Inc. in Cary, N.C.

Sonparote says he's saving 30% to 40% on capital expenses using an online service, and 100% on expenses such as labor.

But Couture warns that many MSSPs price their services differently.

"Some of them charge you for the largest backup you made in a one-month period; some of them charge you for the amount of data you're protecting on the server; some of them charge you for every [gigabyte of storage] you've written to or from," Couture says. He recommends asking competing MSSPs how much it would cost to protect a given amount of data to get "an apples-to-apples comparison."

Special Report

Storage: New Wrinkles 2006

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Copyright © 2006 IDG Communications, Inc.

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