NETWORK STORAGE: On A Roll

Increasing data volumes, challenges of compliance and data storage costs
are forcing large businesses, and even small companies, to look at
some form of network storage management. Network Attached Storage and Storage
Area Network are slowly edging out Direct Attached Storage, as storage
consolidation becomes the byword.

Bring out the champagne.The network storage in dustry is on a roll. Vendors
unanimously state that their business has been growing in double-digits. Network
Appliances India for instance saw its APac revenues grow by 75% last fiscal and
hopes to keep pace at a 40% year-on-year. Hitachi Data Systems too is optimistic
about growing at over 50% for the next few years.

Talking of the bull-run in the network storage market, DR Bhaskaran, Regional
Manager Middle East & India — Iomega Pacific said, "Iomega's
revenue for 2004 was $328.7 million worldwide. Fourth quarter 2004 revenue was
US$89.6 million. Revenue during fourth quarter 2004 was $4.4 million in Asia, or
5% of total revenue by region."

EMC closed the year 2004 with the total consolidated revenues of $8.23
billion, registering a 32% growth over the previous year. Net income for the
year 2004 grew 76% to $871 million compared with $496 million for the full 2003
fiscal year.

The
prime driver for growth in network storage is the fact that the IT industry
itself is growing rapidly and there was a ripple effect across all product
segments. New companies are opening offices in the country and there is an
organic growth in existing ones. A lot of transition from DAS to network storage
is also evident, which is spurring business. Sonik Porwal, Director, Channels
and Alliances, EMC India & SAARC sums up the propellers for business growth
as robust customer demand for its expanded software portfolio, tiered networked
storage systems and partners offering professional services. "Looking at
the growth rates, we have revised our earlier investment plans of $100 million
in the country to $250 million, by 2007," he added.

Significant Trends

Several trends were evident in the network storage space in the last fiscal.
Increasing data volumes, challenges of compliance and data storage costs
are also forcing large businesses, and even small companies, to look
at some form of Information Lifecycle Management (ILM). Noted Avijit Basu,
Country Manager, StorageWorks Division, HP India, "In the SMB space, there
is a tangible movement towards networked storage and adoption of
automated solutions for back-up."

The market has also matured from earlier days, when storage largely meant
storing information on a machine. "Customers are realizing that storage
purchase is not an afterthought and plan well in advance. They are also looking
at implementing advanced solutions for infrastructure simplification, business
continuity and information lifecycle management," said Shailesh Agarwal,
Country Manager - Storage Solutions, IBM India.

Newer technologies are finding acceptance, especially I-SCSI and IP SAN, and
lots of customers are shifting to it as data volumes are increasing rapidly. The
relationship between network and storage technology has also become closer,
which has led to a lot of cost effective price performance solutions for open
systems.

"Businesses generate lots of data and are therefore consolidating
existing applications while deploying new applications to further improve their
productivity. It calls for lot of data consolidation and better storage
infrastructure in the enterprise," noted Ashish Gupta, Sales Manager-India
Subcontinent, BakBone Software KK.

KV Ratna Sarma, Director, India Development Center, CommVault Systems feels
that the most visible trend in this business is information classification and
action-based on value of information. "Penetration of disk-based systems
into backup and archive market due to availability of cheaper disks like SATA,
SAS is one other trend. Though there is a lot of talk about disks replacing
tapes, tape will continue to play a role in near-line and offshore
storage," he predicted.

What's Storage Consolidation

In today's demanding business environment, organizations need reliable
storage systems that can effectively manage and protect critical business
information and are able to scale quickly to manage anticipated data growth.
Direct Attached Storage (DAS) models were unable to do so and as a result,
organizations are now consolidating and managing the ever-increasing amount of
enterprise data through networked storage-Storage Area Network (SAN) or
Network Attached Storage (NAS).

A
networked storage infrastructure enables any-to-any connectivity between
heterogeneous server and storage systems. This allows more efficient use of
storage capacity by consolidating widely distributed or underutilized disk space
onto centralized storage arrays, each of which is accessible by all servers
across the SAN.

For instance, storage capacity can be shared among any number of servers.
This ubiquitous connectivity model greatly improves storage utilization over the
DAS model. "In fact, most organizations find that consolidating storage
onto SAN increases utilization from about 50% in DAS environments to
approximately 80% in SAN environments," explained Sonik.

Networked storage also allows storage to be added in a non-disruptive fashion-reducing
system and application downtime. In addition, centralized storage is easier and
cheaper to manage and maintain. Companies in verticals such as BFSI, telecom and
manufacturing are going for storage consolidation as these segments require data
to be available on a 24x7 basis, have to comply to regulations and are more
focused on data recovery and business cycle management.

Consolidation Gaining Acceptance

In the enterprise space, storage consolidation is gaining acceptance as
companies seek to consolidate their decentralized storage
investments with a view to improve efficiency of their existing
infrastructure and achieve ease of manageability. "Large enterprises
with significant storage investments are looking at the islands of storage that
they have created and now intend to consolidate the same to achieve better
efficiencies in terms of performance, Return on Investment (ROI) and
manageability," said Avijit.

The business verticals that have gone for storage consolidation already are
financial institutions and telecom companies, as their data keeps increasing
rapidly. As the volume of data increases, it's not physically possible to keep
adding hardware to accommodate it, which is what typically happens if the
customer replies on DAS.

"The biggest drawback of DAS is that it is not highly scalable. At the
same time, customers can't afford downtime and want a non-disruptive system.
Storage consolidation is an accepted norm in enterprises, especially in
verticals like telecom and finance. Now even SMBs are evincing interest in
it," said George Thomas, Country Manager, Network Appliances India.

B Chandrashekar, Country Manager, Intransa India stated that the phenomenon
of storage consolidation is not new in India. "To achieve storage
consolidation, SAN is required and the FC-SAN was not easy and costly to deploy.
So storage consolidation was not considered by many organizations, though merits
of SAN for storage consolidation are many," he said. Now with IP SAN,
companies having in-house skills for managing TCP/IP networking are deploying IP
SAN to achieve storage consolidation for comprehensive data management covering
for all applications.

Has Regulatory Compliance Helped?

As Indian organizations go global, the need to comply with different
regulations, and in turn ramp up of IT infrastructure to meet these issues is
severely felt. For instance, according to different regulations such as the
Sarbanes-Oxley and Health Insurance Portability and Accountability Act (HIPAA),
every company has to archive its information for a specified period.

Securities and Exchange Board of India (SEBI) mandates that all Indian
institutions today should have a data recovery plan in place. The Reserve Bank
of India (RBI) has decided to convene a meeting of banks to assess implications
of implementing of the New Basel Capital Accord (Basel II) by December 2006. RBI
in consultation with banks will evaluate the new framework and plan for the
transition of Indian banks to Basel II. This implementation is likely to force
banks to adhere to global standards and thus create a level playing field with
common practice.

Additionally, in the current business scenario, many organizations need to
keep backups of critical data as a matter of business policy or regulatory
compliance. Hence networked storage has become an integral part of the process,
not only for the business to function but also to help it grow in the future.

"But the existing storage infrastructure may not be structured to
automatically move older information into backup and archival servers-critical
information into disk-based backup, and less important information to relatively
cheaper tapes. This is where ILM can help," clarified Sonik.

ILM strategies permit an organization to align the various classes of
critical applications and data across the business to an appropriate level of
access, availability, and protection. It allows an organization to manage
information in a manner that is based on its changing value to the business over
time. It means that the organization can map the value of information and the
resources to align it to the goals of the business-all at the right time.

Avijit feels that regulatory compliance has been one of the major drivers for
growth in storage investments, especially in the BFSI segment. "As the
Indian economy integrates a more definite directive (like SEC guidelines
and legislations like SOX) on data retention compliance is likely to
fall into place for other industries as well," he noted.

George however argues that companies are looking at compliance as something
that they have to be geared for, rather than implementing it right away.
"This is because it has not been enforced across all business verticals as
strictly as it is in the US. But this will happen in the future without
fail," he noted.

George Thomas, Country Manager, Network Appliances India Avijit Basu, Country Manager, StorageWorks Division, HP India Shailesh Agarwal, Country Manager - Storage Solutions, IBM India “Storage consolidation is an accepted norm in enterprises, especially in verticals like telecom and finance. Now even the SMBs are evincing interest in it”  “Enterprises are looking at the islands of storage that they intend to consolidate to achieve better efficiencies in terms of performance, ROI and manageability” “Customers are looking at implementing advanced storage solutions for infrastructure simplification, business continuity and information lifecycle management”

Tying the global perspective into the Indian scenario, Karl Schubert, CTO,
Xiotech Corporation, noted that compliance continues to be a significant driver
of the storage market as companies, government, education and healthcare
institutions struggle to meet their legal requirements. "Most importantly,
we are beginning to see a backlash against complex storage systems, especially
in the mid-market. This market can't afford to manage and maintain complex
systems, as a result many of them are actively planning on switching their
storage vendors," he added.

Dropping Prices? Who Cares

Prices of network storage hardware have been going down though deployments
have increased. Like Avijit pointed out, the overall market is growing
and there is revenue and margin opportunity for vendors and solution
providers, through value additions in terms of services.

That prices are going down are a business reality. Partners know and
acknowledge that. Therefore vendors like Network Appliances ask them to look
beyond selling hardware. "We pass on technical skillsets, which will
distinguish them from other players in the industry. We are rolling out our
global certification programs in India as well in the near future, which will
give partners the accreditation that they require," he claimed.

Srikant Chakrapani, Consulting Director, Hitachi Data Systems opined that
hardware is a small, albeit important, component in networked storage
deployment. "Almost all surveys show that cost is not in the hardware
alone, but in management of the data and aligning the business needs/processes
to make use of the availability of the data," he pointed out.

He elaborated that typically, in a medium to large environment, the hardware
costs will not even be one-third over a three-year period. Also, business
solutions like archiving, management platforms, data migration, backup and
restoring solutions are being considered by customers and all storage vendors
and partners provide an integrated solution to the customer thereby increasing
the scope of offerings, value-add and also the revenues.

Srikant Chakrapani,Consulting Director, Hitachi Data Systems Sonik Porwal, Director, Channels and Alliances, EMC India & SAARC K V Ratna Sarma, Director, India Development Center, CommVault Systems “Most surveys show that cost is not involved in the hardware alone, but in management of the data and aligning the business needs/processes to make use of the availability of the data”  “Most organizations find that consolidating storage onto a SAN increases utilization from about 50% in DAS environments to approximately 80% in SAN environments” “Penetration of disk-based systems into backup and archive market due to availability of cheaper disks like SATA, SAS is a significant trend. Tape will continue to play a major role in near-line and offshore storage”

While agreeing that hardware costs are falling at 30% per annum, Shailesh too
voiced the popular opinion that the value in storage solutions is shifting from
storage hardware to storage software and services. "Services could be basic
implementation and installation services to higher solution providing,
consultancy and post implementation services for higher availability. Partners
need to focus on offering complete solutions to obtain higher revenue growth and
profitability," he

advised.

Understanding that margins in selling hardware are dropping as the prices
come down, EMC has devised ways and means to offer value to its partners beyond
just hardware selling and implementation. It has enabled its partners to provide
services under its Velocity Partner Program, helping them build bottomlines
through generous margins.

Key Challenges Partners Face

Devising and selling solutions in a dynamic business brings about its sets
of challenges for partners. Typically, these exist in the form of customer
mindset towards IT priorities, perceived complexity of installation and
management and perception of high cost of acquisition.  

According to Sonik, the biggest challenge a solution provider face is to
change the institutional thinking that server equals storage. "Storage is
not at all simple, and it is not about JBODs (Just a Bunch OF Disks). We along
with partners want to educate the market that servers have been created for
running applications (which is processor intensive) and not for storing
information (which is I/O intensive) through its lifecycle," he noted.

Price is another challenge, as partners have to convince customers it is now
available at affordable prices with increased functionality. They also have to
establish storage as a specialist function that requires solutions and services
that are best of breed and from a pure-play storage specialist like EMC.
"Till now Indian storage market has been dominated server vendors and it is
a challenge for partners to convince customers to move away from generalist to a
specialist just like any other segment such as networking," Sonik
elucidated.

According to Srikant, the biggest challenge faced by storage partners is
whether to sell long-term (TCO) or short-term (cheaper) solutions. Though the
latter is faster and perhaps easier, the drawback could be disillusionment to
the customer (when the storage solution is incapable of taking care of customer
organizations changing business needs over time) and thereby to the partner too.

How Vendors Enable Solution Providers

Pointing out another challenging aspect, Shailesh opined that network
storage solutions are characterized by long sales cycle times. This is a key
challenge to sustained interest from the partner. "IBM conducts sales and
product trainings; help out with demo equipment and proof of concepts so that
purchase decisions are expedited. We also use a variety of financial selling
tools such TCO calculators that help customers overcome budget hurdles and sign
on the dotted line," he added.

With a view to simplify storage, HP has a program targeted at SMBs with
little or no IT expertise called Simply StorageWorks, which involves extensive
channel training and enablement through a consultative approach. "Under the
Simply StorageWorks program HP also out with solutions and product bundles that
are simple, reliable and affordable for SMBs," Avijit stated.

IP SAN: WHAT VENDORS HAVE TO SAY ABOUT IT HP India: In mid-term, both fibre channel and IP-SANs are expected to co-exist. In the longer run, customer needs of reliability, performance and cost-effectiveness will become dominant. However it is advisable that mission critical application storage should continue to be deployed on pure fiber channel SAN environments while IP SAN should be considered for non-critical storage, while the latter goes through its maturity cycle. IBM India: IP SANs will grow fast in the near term to fulfill the need for low-cost SANs. However, it suffers from the inherent technology and performance limitations of the IP network. Widespread adoption of 10 Gb LAN is a must to increase adoption of this technology. Similarly support of popular OS and clustering software is a must for its adoption in any segment other than the lowest end. Hitachi Data Storage: Currently, fiber channel SAN has a distinct advantage over IP, in terms of guaranteed performance management and better data protection. So majority of customers prefer it. IP SAN is logically cheaper as the cost of connectivity is lower because of Ethernet cards, though management costs could go up. When it becomes more secure and can guarantee high performance, it will become more commonly deployed in business environments. Intransa: IP SAN is the only way to integrate service oriented architecture in data center with superior data management as fiber channel has fallen short on innovation, standards, and volumes. Market forces have made TCP/IP ubiquitous with robust innovation, expanding standards and reduction in price points. So IP SAN is the logical choice to integrate the best of SAN features with TCP/IP network to ensure that storage is on real network. This will ensure that with IP SAN network storage directly gets the advantage of industry backed networking innovation. EMC: It is not viable to invest in fiber channel network for all servers because of costs. IP SAN helps centralize the storage infrastructure and provides total consolidation to the storage infrastructure by connecting stranded servers. It is not a competitive technology to traditional fiber channel SAN, but a complimentary technology. It is fit for low-mid tier organizations or could help in consolidating existing SANs at high end while, traditional fiber channel SAN technology can't be replaced for high-end applications by IP SAN as it is not as robust and secure as a fiber channel SAN.

Network Appliances educates its partners that while providing network
storage, integration of the hardware to the existing system is very critical and
they should be equipped to achieve this. "Therefore we choose common
partners who are into providing complete storage management of other vendors
like Veritas," George

revealed.

Bakbone offers enterprise-class data protection solutions protecting all data
in all types of storage infrastructures. "Our solution also offers both
horizontal and vertical scalability to address diverse business needs,"
said Ashish.

Since customers want standards-based storage solutions, which can scale
and leverage their existing networking skill sets, Intransa has rolled out
IP SAN, which uses TCP/IP as the true network for scalable network storage
architecture. "We are training partners to understand customer's data
management pain areas, which can be effectively addressed by Intransa IP SAN
solutions without partner having to overhaul his existing business and team,
providing services and solutions to his existing customers," Chandrashekar
claimed.  

Hitachi enables its partners in selling right to a customer so that he not
only gets more than what he wants today, but also protects his investments over
a reasonable period of time. "This involves commitment to educating
partners and customers and we have no doubts that this will benefit all
concerned — vendors, partners, customers - over a period of time,"
Srikant added.

Service Opportunities For Solution Providers

To leverage on the growing market for networked storage solutions, channel
partners should develop skill-sets to be able to address the needs of
end-customers through a consultative approach. This would open up services
opportunities such as storage consulting, installation, management and support
services.

The services opportunities in demand are in the areas of consulting,
designing, implementation services, advanced integration services, professional
services like performance and capacity management, recovery requirements,
storage economic assessment, maintenance, data migration, data assessment
service, etc.

As Karl pointed out customers, especially in the mid-market, don't want to
be storage experts. "It's expensive and time consuming to build and
maintain those skills in-house. Therefore there is a lot of opportunity for
partners to provide services that eliminates this need and make storage
easy," he noted.

Chandrashekar suggested that solution providers can provide total data
management integration services to ensure that the customer's growing
data has complete and superior data management attributes including constant
data availability, fast backup and restore and data recovery for policy-based
recovery protocols. All vendors agree that there are a plethora of services that
solution providers can build around the hardware for a client's storage
requirements.

NAS or SAN: What Will It Be?

With the pie share of DAS shrinking in the external storage business, the
big debate is which will emerge as the clear winner-NAS or SAN? Both solutions
are much sought after amongst the business organizations in India. Bhaskaran
quotes the latest Gartner reports that state that SAN will account for 49% and
NAS 32%, of the storage revenue pie in India by 2005. According to industry
estimates, SAN and NAS are growing annually at roughly 70%. "Large
organizations such as banks, telecom and healthcare companies, where data is
critical, can be seen opting for SAN or NAS solutions to ensure dependability
and reliability of the information. The trend is very much likely to catch up
with even smaller organizations that are striving to create a niche for
themselves in the marketplace and need to have an edge over their
competition," Bhaskaran stated.

SAN at the back end and NAS at the front end is the latest trend that is fast
catching up with these organizations looking at adding NAS flexibility to their
SANs, on which mission critical applications like ERP, databases and CRM run.
Avijit added that any business with the need for file level data repository with
the ability for seamless multi-protocol file sharing across the network can opt
for a NAS solution.

"For price conscious SMBs or a remote office deploying file, print,
and/or Exchange, NAS is ideal," he mentioned. The benefit of SAN is that it
provides high-performance and highly scalable storage environments. So
enterprises with high data volumes that need scalable and block-level
storage for applications like databases, SAN is preferred.

Shailesh agreed with Avijit and noted that any online transaction processing
environment will see a SAN while NAS is typically good at web serving. "NAS
suffers from performance and scalability limitations that force users to use
multiple NAS boxes as they scale higher," he added.

Karl felt that NAS was successful initially because it was easy to do and
administrators felt comfortable working where they traditionally worked at the
file level. "SAN was way too esoteric and difficult," he added. But as
storage requirements, driven by compliance, regulatory and commercial needs have
burgeoned, businesses have been forced to look at SAN more closely.

Srikant contradicts these theories and said that it is incorrect to
differentiate between SAN and NAS as both have their own advantages.
"Hitachi's premise is still consolidation and we will allow data to be
provided to high-performance, critical applications through SAN switches and
file-sharing, low cost applications through NAS gateways. The data still resides
on the same storage and what changes is the way it is made available to
applications using headers or gateways or switches," he explained.
Revenue-wise, most of Hitachi's current business is in the areas of SAN,
though it has some combined implementations of SAN and NAS.

Ultimately, selection of either NAS or SAN depends on the customer's
viewpoint of what they require for their storage needs. SAN and a NAS are not
interchangeable, and have not been developed to replace one another. Each has
specific strengths and is used for specific purposes. Sonik explained that
customers who value their information as mission critical and demand performance
will adopt a SAN solution but those who would place more emphasis on file
sharing and are not using high-performance applications would adopt a NAS
solution. NAS and SAN are complementary because they clearly address divergent
business needs.

A trend that is fast catching up in the storage market is that customers are
moving towards an environment where both NAS and SAN co-exist. Intransa and EMC
have already introduced solutions, which have a common platform to host both the
NAS and SAN protocols. This solution is ideal for customers who do not want to
replace their SANs (on which mission critical applications like ERP, Databases,
and CRM's run). At the same time, they would like to add NAS like flexibility
to their SANs. Ergo, a common platform is more prudent that investing in
independent technologies.

All in all, the network storage business will continue its robust growth. And
this only heralds good times for solution providers, who can capitalise on their
skillsets to devise the right solutions for a demanding customer base out there.

VINITA BHATIA in
Mumbai with inputs from PRIYA PADMANABHAN in Bangalore, GOPI KRISHNA
in Chennai and SUNITHA NATTI in Hyderabad.