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Outsourcing SANs to cut costs?

By Rick Cook

Storage service providers (SSPs) try to do for storage what ISPs did for Internet presence -- save companies time and headaches by outsourcing the service. The SSP concept offers some strong potential advantages, but the key word is "potential". SSPs are so new that there isn't much of a track record for the idea, much less most of the providers.

An SSP provides remote storage, usually tied to the customer's system using a high-speed link. To the customer, the SSP appears as a remote storage area network (SAN). The large SSPs, like StorageNetworks, use virtual private networks of optical fiber to establish points of presence in the markets they serve around the world. VPNs offer higher speed and better reliability than connections over the Internet.

By centralizing a whole lot of storage, SSPs say, they can offer sophisticated management, better reliability, and provide the flexibility of near-instant capacity expansion. The SSP concept is most attractive to companies whose storage needs are growing rapidly, such as Internet startups or new projects that need a running start. Especially in the case of Internet startups, it offers a way to conserve cash by substituting a monthly fee in place of capital expenditures for storage infrastructure.

The SSP concept is quite new. StorageNetworks, which bills itself as the oldest pure SSP, started in late 1998. By June 2000, the company still had just 73 customers. Most StorageNetworks customers are large companies like Lycos and Merrill Lynch ( is also a StorageNetworks customer). This still amounts to a relatively small customer base and a short track record.

According to Dataquest, the SSP business amounted to about $10 million last year (1999) but should grow to $8 billion by 2003. The very newness of SSPs leaves a lot of organizations with unanswered questions, such as, what happens to the corporate data if an SSP goes out of business?

Nor are SSPs cheap. Although SSPs claim an attractive total cost of ownership, the cost per terabyte of storage can be 40 percent more than in-house storage. Still for some organizations, the benefits of letting someone else worry about capacity planning and day-to-day management may be worth the cost.

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About the author: Rick Cook has been writing about mass storage since the days when the term meant an 80K floppy disk. The computers he learned on used ferrite cores and magnetic drums. For the last twenty years he has been a freelance writer specializing in storage and other computer issues.

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