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Managed storage services which began to gain significant traction in 2006 is likely to hit big time in 2007. Interest in storage service providers has intensified with the entry of big names in the business and more so by the decision of many large companies to outsource their storage management. While it can not still be said that it will emerge as one of the most sought after managed services by business enterprises, a significant number of businesses will definitely be attracted to the benefits of subscribing to the services of a managed storage service provider.

What's Behind the New Coming?
It is a fact that managed storage services and MSSPs have been there for many years now. However, they were never able to make much dent either in the storage market or the managed services market. So what has changed now to drive the growth of managed storage services? Are these services for real? Or is it merely hype being built around them? While the element of hype cannot be discounted, things look different and more positive for managed storage services now because of several key factors.

First, there has been growing acceptance of managed services among businesses of all sizes leading to an interest among many user organizations like any other managed services. In other words, many organizations are now buying or subscribing to managed storage services as part of broader managed services or IT services. This is because there has been a major attitude shift in the way organizations now want to manage their storage or IT infrastructure. For instance, in the past many organizations didn't want to lose control over data management to an external service provider even when they were outsourcing other IT tasks. As stated earlier, even though majority of organizations still prefer to handle their storage on their own, many are finding managed storage or outsourcing storage management attractive.

Several managed service providers now have it as a key element of their offering. Many IT services or solution vendors like IBM, HP, Sun, Wipro Technologies and telecom service providers like Reliance, Tata Teleservices and Bharti Airtel in India have now become more aggressive in the managed storage services space. This has surely created more credibility and interest among prospective customers, especially those who already have some experience in using other managed services. Moreover, a significant push for managed services has come from storage vendors also-many of them now either offer managed storage services on their own or have storage solutions for managed services.

This is quite in contrast to the managed storage services business during the dotcom boom. The lead was taken mostly by start up pure play managed service providers who relied on the presumption that business organizations would prefer stand alone storage service providers for their storage, back up or disaster recovery needs. However, they were proved wrong as most businesses didn't find the idea of taking their storage offsite very appealing. Moreover, most of these start-ups focused on primary storage and weren't into much value addition. What they actually offered was storage and not really services unlike the current set of storage service providers who offer storage plus services.

Growing Complexities
An important factor that is driving managed storage is the hyper speed growth in data volumes and growing complexity of storage management. The spiraling volumes of enterprise data and the simultaneous pressure to manage them more efficiently, and overpowering regulations like Sarbanes-Oxley and Health Insurance Portability and Accountability Act have put many enterprises at a crossroad as they don't really know how to handle their storage or manage regulatory issues and concerns. As storage requirement grows more complex, users are increasingly looking for simplified management of their storage infrastructure. Many of them are looking at consistency and standardization in management of their storage often spread across multiple locations. All this has been driving many businesses to outsource their storage management to managed service providers. Many organizations are also driven by security and disaster management concerns.

Moreover, besides offering the benefit of cost savings on storage management, managed service providers are also good at scaling up and helping customers meet growth in their storage requirements with more alacrity. A managed storage service provider can be less expensive because it mostly shares the cost of storage infrastructure and manpower with multiple clients. Moreover, storage service providers often offer their customers multiple pricing options including a very flexible pay per use model.

Managed service providers now also appear to have a better understanding of their customers' requirements when they had first started.

Stakeholders in the Game
Unlike in its early days when standalone storage service providers mostly fueled the hype, the managed services market landscape is currently dominated by large IT service providers and telcos. Even though there are still several small standalone managed storage service providers in the business, they mostly operate on the fringe offering less complex storage services even as the big vendors offer a comprehensive range of services. An interesting trend that gained more prominence in 2006 was the growing interest of storage solutions vendors in the managed services business. Besides offering solutions for storage service providers, many of these vendors have directly got into services themselves offering a comprehensive range of managed services. Some of these vendors have also acquired other storage companies in order to add more range and depth to their offering.

Despite their many benefits, it may still take some time before managed storage services become an overwhelming phenomenon and majority of the companies, especially large ones, will continue to handle their storage on their own. However, it is definitely expected to gain more traction and acceptability especially among business organizations that understand and appreciate the value of outsourcing and managed services.

Ravi Shekhar Pandey
The author is with Springboard Research
maildqindia@cybermedia.co.in

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