IBM enters storage outsourcing arena

Posted on November 01, 2000

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By Richard R. Lee

IBM's Global Services division recently announced that it was entering the "hosted and managed storage services" game with a wide range of on-demand storage and storage management services. The program is designed for users looking to reduce the chaos associated with explosive data growth and management requirements.

IBM hopes to capture a significant piece of the storage service provider (SSP) market, which is expected to grow from about $150 million this year to more than $8 billion by 2004, according to International Data Corp. IBM plans to leverage its 175 existing data centers around the world, along with adding 65 new sites over the next 18 months. These sites will support hosted storage and Web services, along with application hosting services. In addition, IBM will provide these same services on-site at customers' data centers if desired.

IBM is betting that the much-touted "IT-on-demand" business model will become more viable in the coming years as end-users embrace a network that delivers technology and services on an as-needed, pay-as-you-go basis, at low costs. IBM believes its storage services are well ahead of others in the market and is targeting customers who are moving beyond internal storage networks to a hybrid model that includes outsourced storage. All of this has been done with an eye on reducing storage management costs, which IBM predicts will grow to more than 90% of total storage costs in five years if users do not embrace a new business model.

In delivering storage services, IBM will work with its existing outsourcing partners, such as AT&T, KMPG, and Qwest. IBM also plans to work with a host of startup storage and services providers.

IBM's storage services will focus on high availability, disaster recovery and business continuance, backup and archiving, etc., across heterogeneous platforms.

The programs, referred to as Managed Storage Services, have been designed to help both new and well-established companies meet ever-changing capacity and management requirements with the latest in storage architectures, including network-attached storage and storage area networks. Costs will generally range from $25 to $75 per GB per month, depending on the particular services provided.

Analysis

IBM has taken a very rational approach to building a successful SSP business model. Much of the rest of the SSP market has deluded itself into believing that enterprise customers are going to simply turn over their most precious asset to a startup, hoping that it will save them money. Instead, what is needed is an approach that leverages outsourced storage services already utilized (such as disaster recovery mirroring sites and

hot-backup sites) and builds on these platforms to provide a more comprehensive end-to-end services program. This will allow for maximum end-user comfort while delivering on the utility value of the outsourcing business model.

IBM announces SAN financing

By Richard R. Lee
IBM's Global Financing arm, in conjunction with its Storage Systems Division (SSD), has rolled out a range of financing options for users planning to deploy storage area networks (SANs). These options are designed to offer a means for IT organizations to overcome the high-cost barriers to SAN deployment. The lease-based financing is available to qualified users who purchase some type of IBM SAN hardware, along with either SAN software from Tivoli or professional services from IBM's Global Services group.

According to Jill Kaplan, director of marketing for IBM's SSD, "SANs create reductions in total cost of ownership, and IBM's financing vehicles offer the opportunity to reduce costs even further".

IBM cites a survey that it sponsored recently by IT Centrix, which found that storage management costs range from 40% to 60% of all storage expenditures.

By creating "SAN islands," end users can see these costs drop below 30%, with future "enterprise-class" interconnected, virtualized SANs reducing this even

further to about 10% to 15%. Reductions in administrative personnel requirements can also be coupled to major increases in data availability due to the effects of centralizing storage administration and adding "policy-based" tools (availability rises from 96% to more than 99.5% in many cases), thereby increasing return on investment.

Originally published on .

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