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StorageNetworks' software enters EDS data centers

Kevin Komiega, Assistant News Editor

IT Services juggernaut Electronic Data Systems Corp., has turned to storage service provider StorageNetworks Inc., Waltham, Mass., for help in centralizing and managing a mammoth amount of data storage.

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StorageNetworks reports 2001 earnings
StorageNetworks Inc., Waltham, Mass., released its fourth-quarter and year-end results on Thursday, stating that revenue in 2001 grew 156% from 2000.

The company reported revenues of $31.6 million for the fourth quarter ended December 31, a 49% increase over revenues of $21.2 million in the fourth quarter of 2000 and equal with the third quarter of 2001.

StorageNetworks' managed services revenue for the quarter was $30.8 million. The company reported total revenues of $123.6 million for the year.

"We entered into new customer and partner relationships and we restructured our balance sheet, both of which will enable our company's future success," stated Peter Bell, chairman and chief executive officer, StorageNetworks.

In addition to selling storage management software

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and services through the STORfusion offering, StorageNetworks' offerings include STORbackup, a managed service around data backup, protection and recovery.

Late in 2000, StorageNetworks focused its sales and marketing efforts on selling software and services to large enterprise organizations.

"We are using less cash to run the business," said Paul Flanagan, chief financial officer. "We are no longer required to make hardware infrastructure purchases."

He said a greater percentage of revenues will come from STORfusion partners based on the storage services they offer their customers.

Flanagan said the revenues will be smaller than those StorageNetworks saw under its former business model, but that they will be more profitable.

StorageNetworks also made public the resignation of Roger Marino from its Board of Directors. Bell said Marino resigned to concentrate on projects related to his newly formed production company, Revere Pictures.

This is a huge win for the storage service provider, which recently shifted its strategic focus more toward software and consulting.

EDS, headquartered in Plano, Texas, said it intends to use StorageNetworks' software to improve storage administration and heterogeneous support processes, like provisioning, service initiation, billing and service level reporting to manage up to 13 EDS data centers worldwide.

EDS said the terms of the software agreement allow EDS to pick which StorageNetworks' technologies will be integrated for EDS use.

"EDS' investment in storage is not new," said Doug Delay, a spokesperson for EDS. "[We] manage over 8 petabytes of storage and counting. The StorageNetworks software will work in synergy with EDS' storage solutions," said Delay.

StorageNetworks will initially provide both primary and backup storage management software for three EDS data centers. Once the EDS staff is shown the ropes and is proficient in using the technology the software will be rolled out to 10 more EDS facilities.

Specifically, StorageNetworks will provide EDS with its STORos operating system and other storage management applications that will be integrated into EDS' enterprise management framework.

David Hill, research director of storage and storage management for the Boston, Mass.-based analyst firm the Aberdeen Group Inc., said EDS is considered a big-league player by enterprises and has to use only "industrial-strength" products.

Hill said EDS manages the storage of some of the largest companies in the world through service level agreements (SLAs). In order to guarantee its SLAs are met, EDS must first qualify any products that it uses. He said StorageNetworks has received EDS' seal of approval.

"If I were an IT manager, I would be more likely to use StorageNetworks software now that it has been 'endorsed' by EDS,' said Hill.

Hill said StorageNetworks has a solid product suite, but many other companies have, or are developing, capable products. The challenge for enterprises will be figuring out what set of functions and features best meets their needs, said Hill.

Companies like SANrise Inc., Storability Inc., Creekpath Systems Inc., have similar software strategies, but Hill said StorageNetworks will see overlap competition from a wealth of other companies like EMC Corp., Hitachi Data Systems Ltd., InterSAN Inc., DataCore Software Inc., Netreon Inc., and Computer Associates International Inc.

As part of StorageNetworks shift towards a software and consulting focus, it plans to close nine of its Storage Point of Presence (SPOP) data centers and downsize another four, bringing the total to 35 remaining SPOPs this year.

Peter Bell, chairman and chief executive officer, StorageNetworks said new customers will be referred to a STORfusion partner and existing customers will be assisted in migrating to a partner's facilities.

"We work with existing customers," said Bell. "We don't want to disrupt anyone's infrastructure. We have already successfully migrated existing customers to STORfusion partners."

"Clearly we've all seen a slowdown and a shift from ping, power and pipe to software and services," stated Peter bell, chairman and chief executive officer of StorageNetworks. Bell said his sales force is in the process of retooling for the change of product focus and that the company's management software is in the process of being made into a set of stand alone, off-the shelf products.

Let us know what you think about the story, e-mail Kevin Komiega, Assistant News Editor

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