Three factors changed the customers' views on their storage investments: A sluggish economy, a shift to network-centric storage and a post-09/11 focus on availability. Customers are now much more in control. The purse strings are tighter. It's time for vendors and IT to become more accountable. We're finding [customers] now map their purchases more closely to their needs. They know the problems now, but they don't always know which solutions are best. What was the storage climate like in 1998 when StorageNetworks first began?
Back in 1998 and 1999, CIOs were more worried about things like the Y2K conversion and the Euro conversion. They could conceivably spend without qualms. The customer was wined and dined -- not really making a true business decision -- and was often triple-charged. When we spoke with customers back then about their not being in control, they told us it was okay and that they were getting the money they needed, anyways. Vendors had all the power. Customers lost complete control of their technology and the power to make good storage buys. Gross margins for hardware were in the 60s and high 70s. Storage was growing at 5x earnings growth in Corporate America. That's just not sustainable. By 2046, if it had continued at the rate it was going, it would be bigger than the Gross Domestic Product (GDP). What advice can you share to help customers make the right vendor choices?
Find a vendor that you trust based on either references you've talked to who are using the product or people you meet who would actually do the work for you. Ensure the vendor is sustainable long term. Find out how the company responds in a time of crisis. How do they handle problems? When you're installed and you have a problem, how does the vendor respond? That's where you build trust. At last year's Storage Decisions conference, I told the audience the biggest challenge was getting your trust. Speaking of best solutions, there's a lot of buzz on who has the best storage management solutions to capture the bulk of the market. Your company's own STORos Storage Manager 5.1 software is heavily invested in this space. What's your view on this slice of the market and STORos?
The bet we're making in our business is that storage management software and all related services will be a very big business. Currently, there are around 20 vendors in the market. There's probably only room for 2 or 3. We have 100 customers currently using STORos 5.0. In terms of a heterogeneous environment, we have as many -- if not more -- [installations] than anyone else. Since we started the company, we've deployed a thousand SAN environments. We currently have about 1.5 petabytes [of storage] we still manage. We have all the major storage arrays for the midrange and enterprise qualified for use with our software. Our architecture is all open APIs. If we remain quick to adopt [emerging] standards, it could help our position. Most customers are getting bombarded with messages from storage management vendors that claim their solution is the best fit. How does a customer sift through all the market noise and make a good decision?
If I was on the customer side, I'd wipe away my preconceived notions in how I view storage management. Try to start from a clean slate. Many customers believe "if I just make a few minor changes, the [storage managment] problem will go away." That's not the case. If your storage is doubling each year, you are sitting on a time bomb. What is StorageNetworks' biggest challenge going forward?
It's just what you said earlier. Clearing through the noise in the marketplace. How can a customer become more informed at judging the effectiveness of their storage purchases?
Develop a set of metrics and deliverables that you can measure against at least every quarter. For example, if people want to buy a SAN, I'll ask why. What are the benefits you hope to gain? If you want to take [storage] asset utilization rates from 40 to 60%, develop metrics that will show how your asset utilization rates are doing.
Dig Deeper on Storage management tools
Just months after announcing a strategy shift that will transform it from a pure-play storage service provider to a company that makes selling software its core business, Waltham, Mass.-based StorageNetworks hired former BMC Software executive David Dew to be the company's new chief technology officer. Dew, who has a strong background in software development, reports to Paul Flanagan, who is chief operating and chief financial officer. Dew replaces Bill Miller, StorageNetworks' co-founder and former chief technical officer.
STORos, the software that supports the company's storage management applications, and STORos StorageManager, a policy-based storage management application with integrated backup reporting and administration, are now the company's core products.
These are solid products and a good strategy shift for StorageNetworks, analysts say. But the company faces the challenge of trying to find financial traction in a tough IT spending economy.
Dew doesn't seem daunted by the challenge and, in fact, appears eager to get things moving along. Here he talks with us about how he plans on making this new strategy work.