How to Sell: Storage - Part 2 - Management issues
In the second part of How to Sell: Storage, Ken Young looks at how the growing storage management software market is attracting many resellers, in part because of a new emphasis on email protection and security.
Storage management is an area of IT that most users take for granted, but the increasing pressure on IT departments to cope with new levels of security, such as disaster recovery, email overload and data compliance, have put storage firmly back on the 'must-have' map in the past two years.
Despite the stormy economic climate, research firms are generally upbeat about storage sales prospects, and some predict that the global software market is on the way to recovery.
In March 2003 analyst Gartner Dataquest predicted that the software industry would return to positive stabilised growth in 2003 with end-user spending growing by 3.5 per cent on 2002 figures.
This would make the market worth $76bn. Compared with a drop of one per cent last year, fellow analyst IDC considers it the worst year in history for the high-tech market.
IDC reports that storage product sales grew by 24 per cent last year and predicts a rise of 20 per cent this year.
Although it didn't report on figures for storage management software separately, it said that the drivers for technology spending in the next six months would be cost reduction and productivity improvement.
EMC and Veritas share the top slots in the storage management market, according to Gartner Dataquest, with 30.4 and 19.8 per cent respectively.
A whopping 90 per cent of firms said that they were dissatisfied with current provisioning capabilities. Seventy per cent reported ordering more storage capacity than they needed, and 72 per cent were interested or very interested in a single storage area network (San) management platform.
Understandably, a key customer concern is interoperability. Storage management is moving out of a proprietary world into one of greater co-operation, with some vendors showing clear signs of more openness.
EMC and Veritas, for example, have agreed to exchange a wide range of application programming interfaces for storage system and storage software technologies.
Meanwhile, standards compliance moves on apace. In March the Storage Networking Industry Association laid out a timetable for the introduction of its interoperability standard, the Storage Management Initiative (SMI), formerly known as Bluefin.
Version 1 has been published and interoperability kits should be available by the third quarter of 2003, with SMI-compliant kit from member vendors due by mid 2004. The timetable is ambitious, but the aim of interoperability is welcomed by most.
However, according to resellers, it is clear that, although such initiatives are welcome, it is the ability to attract new investment today that is uppermost in their minds, as well as how to leverage changes in technology to attract new spending.
Currently distributors and resellers report a wide range of concerns. These include:
- How competitive will things remain, and what will happen to prices?
- To what extent will vendors go direct, and how will that affect the channel?
- How readily will hardware vendors move into software sales?
- What kind of incentives and support will vendors offer?
- What is the potential impact of Sans, network attached storage (Nas) and IP Sans?
- What are the prospects for storage resource management?
- What about application performance management?
- What is the future for disk or tape back-up?
Most report that there is increased pressure on pricing and that sales cycles are no longer an issue because firms are drawing up more comprehensive shortlists and taking longer to make final decisions.
Some cite problems with the current economic climate and the situation in Iraq, while others are upbeat because of what they call 'pent-up demand' and year-end budgets coming through.
There is also widespread agreement that storage area management will continue to grow faster than other areas of IT because of the potential for centralised management and the administration of storage resources.
However, cost remains a factor, meaning that the trend may be to combine San and Nas devices to keep within budgets. The new iSCSI attachment protocol is touted by some as helping to increase Nas/San options.
According to Ian Lockhart, project manager for the infrastructure design practice at Ideal Enterprise Solutions, the security debate goes against the push for Sans.
"The security debate is driving sales but it also negates the need for a San because it is too insecure," he explained.
"Resellers are realising that there is a need for storage audits, but they don't know how to sell the idea to customers yet.
"There is also a trend towards looking at leasing and rental to keep spend away from capital expenditure. This frees up the budget.".
Meanwhile, Lee Perkins, sales director of the enterprise solutions group at Enhancement Technologies, believes that the San issue is connected to capital expenditure.
"We are currently seeing growth in both server-attached and Nas, but our resellers are still concerned that the larger San projects are slipping," he said.
"Part of the issue is limited capital expenditure budgets. However, more significant is the fact that during the past three years a number of organisations have been sold significantly more storage than they physically need as part of a total cost of ownership sales proposition by vendors.
"The reality is that many are now simply filling redundant storage space that they already own. Combine this with the fact that a number of Sans don't fully use their existing capacity, and storage management rather than physical storage is more likely to be where companies will invest."
Richard Althorp, managing director of IT solutions provider Sol-Tec, is more upbeat. "There is growing evidence that Sans, where storage is handled independently of server processors, are now a practical choice for the larger businesses," he said.
"The storage industry expects Sans to be its most significant revenue earner this year, meaning that there are huge opportunities for the channel to expand revenue streams.
"A San represents a significant investment for any business, but standards are far from open and interoperability between systems is still some way off.
"This means that San systems are complex to deploy and research has shown that most companies are looking for the one 'guru' who can understand and manage this entire environment."
For some resellers the deluge of email facing most companies is a key driver for selling more sophisticated software. Graeme Rowe, marketing director at Posetiv, believes that the biggest driver for storage sales is email.
"The sheer volume of email has made it the hottest topic. Companies now have to think hard about archiving and the lifecycle of email. Email management is a big issue," he warned.
Paul Hammond, vice president of professional services at BI-Tech, agreed. "Email is one of the biggest problems for customers. They have to deal with the sheer volume, compliance and data protection issues," he explained.
Posetiv and Fujitsu Softek recently carried out research among 1,000 UK IT managers in which 70 per cent of respondents cited email and other messaging applications as the key drivers for increased storage.
Corporate Internet has developed Cryoserver, a product designed to meet this new need. Michael Decker, the firm's chief executive, said: "IT managers deciding on their storage needs are increasingly having to accept very long periods of retention for email traffic," he said.
"Regulators have been ramping up their demands following all the corporate misgovernance issues of recent years, and the advice today is to keep everything.
"Server technologies need to be able to protect stored material, track any interference and be able to deliver forensically sound audit trails and documents.
"Storage is moving into a new level of complexity, driven by a myriad regulatory issues, and forensic compliance software is one way to stay ahead."
Predictably, vendors are upbeat on this year's prospects and are keen to attract more partners with competing incentive schemes and marketing support.
Darren Gross, channel manager for northern Europe at Legato, insisted that the key for its resellers is to focus on new areas of opportunity in the management of SAP and Oracle data warehouse databases.
They should aim for revenues through:
- Hardware sales (both servers and storage)
- Software licensing and consulting services (either their own or Legato's)
- Implementation/integration services (either their own or Legato's)
- Ongoing software maintenance and support
Gross maintained that Legato is unique in offering the last two. "Most of our competitors in the software arena are happy to use the channel to fulfil product. However, typically they will sell any subsequent years' maintenance and software support direct. With Legato, this is not the case," he said.
Helen Wood, UK commercial channel manager at Veritas, said that her company is in the final weeks of its '99 Reasons' promotion.
Under the scheme, its EMEA registered resellers earn points for each product sold, which are then used to bid for rewards. Wood claimed that resellers such as Softcat, Civica, Nexus, Trustmarque and Insight are all doing well against their European counterparts.
Veritas is extending the promotion to its Select (SME) resellers for Q2 to help them participate without its Large Account Resellers, which tend to be Microsoft Large Account Resellers and recognised storage players.
The vendor explained that its channel partners have achieved excellent sales with version 9 of its Backup Exec for Windows Servers in Q1.
EMC, although primarily a hardware vendor, now has a stated aim of making software 30 per cent of its business revenue in a few years.
Chief executive Joseph Tucci is said to be "betting the farm" on the company's new Symmetrix data storage system, which includes software compatibility with earlier platforms.
Tucci predicts that the firm will grow faster than any other vendor this year. But to do so it must reverse last year's trend of losing share to its main rivals, Hitachi and IBM.
Hewlett Packard (HP), for its part, seems to be taking a more exclusive approach to future development.
In April it was due to release software designed to give IT administrators the ability to consolidate disparate storage systems under one management console, regardless of the hardware on which the storage resides.
This will be done under what it calls the HP Federated Storage Area Management strategy. The new software will be available as tools under the OpenView brand.
Nas market leader Network Appliance, which partners with software vendors Legato, HP, Veritas and Computer Associates (CA), emphasises the importance of keeping things simple for customers.
Tim Pitcher, vice president for northern Europe at CA, said: "The marketplace is conservative and buying decisions are being delayed. Customer buying patterns have shifted and they now want one storage pool to make more of internal assets.
"The challenge of managing that data has got worse and more complex. It's about helping them to save money and introduce simplicity."
For many resellers the tight budgets during the past year have meant a reappraisal of accreditation costs with some reducing the number of vendors they partner with to focus on one or two accreditation programmes.
Nick Pugh, storage and technology specialist at Fujitsu, said: "The biggest problem is the high cost of accreditation. It's a tough market and we are all fighting for the same business. The name of the game is fulfilment."
Paul Sangster, managing director at Hammer, is upbeat about the market's prospects. "This is a great time for vendors and VARs because last year was defined by hardware investment, and San is now maturing. We have noticed pent up demand," he explained.
Hugh Gamble, executive at Star Computers, added: "Most firms are coping with their overspend in 2000. Veritas does most of its support through distributors, CA's products are just not as good as those from Veritas and EMC is not having an impact at the SME level."
So what of the future? Storage management software will increasingly be dealing with a more complex array of problems.
It must take into account how up to date data is and the need to manage storage in a wide range of devices, while considering the value of the data.
It is trying to weigh up the cost of storage and seeking to incorporate the idea of charging departments according to use.
It is also trying to handle the fact that while storage is getting more complex, the number of people charged to manage it is decreasing as their skill levels increase.
While technology can help fill that gap, suppliers must ensure that it is easy enough to operate so that cost of ownership remains low.
As storage hardware increasingly becomes a commodity, hardware vendors are trying to co-operate to survive. They also aim to get closer to the software market without disrupting the channel.
CONTACTS:
EMC (0870) 608 7777
www.uk.emc.com
Hammer (01256) 84100
www.hammerplc.com
Ideal Enterprise Solutions (020) 8286 5000
www.ideal.co.uk
Legato Systems (01628) 511 811
www.legato.com
Veritas (0870) 243 1080
www.veritas.com/uk
Network Appliance (08000) 718 191
www.netapp.com
ALSO IN THIS SERIES:
How to Sell: Storage - Part 1 - Space odyssey
How to Sell: Storage - Part 3 - Continuity announcement