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June 24, 2008IDC: Web-based storage services on the riseSee why analyst firm IDC says the online storage market is poised for tremendous growth.By Doug Chandler, IDC Research Director, Infrastructure Services
June 2008 IDC forecasts that the worldwide online backup services market will increase at a compound annual growth rate (CAGR) of 33.3% between 2006 and 2011. This emerging market is being driven by unprecedented growth in the creation of digital data, much of it in the form of consumer-based, unstructured data types such as photos, video, and music. This market also is being driven by businesses that increasingly find it difficult to effectively back up and protect their server- and PC-based data using traditional backup and recovery methods and technology. The following questions were posed by AMD to Doug Chandler, research director for IDC's Infrastructure Services research group, on behalf of AMD's customers. Q. What are Web-based storage services, and why is the market poised for tremendous growth? A. There are four models IDC would define as Web-based storage services — online backup, online archiving, online replication, and something we call "cloud storage." The first three areas take a process or a function that customers have been doing internally and turn it into a Web-based or online service. With online backup, for example, you typically install backup software on your server or PC that lets you back up files to a remote datacenter. You can also manage the process — designate backup times, select particular files and amounts of data you want stored, and so forth — as part of the service, and payment is typically on a subscription basis. In the corporate market, this is often called electronic vaulting, which takes the physical tape vaulting process and turns it into a backup of data over a network to a remote site. The data may or may not ultimately be put on tape, but the idea is to get away from the "tapes on trucks" process that many businesses use today for tape vaulting. Online or hosted archiving typically involves an application such as email, where your email server has all messages archived back to a remote site, which is managed by a service provider. You can then designate how long you want the files to be kept for retrieval. We're also starting to see additional types of archiving, such as for medical imaging. Online replication is the same sort of service, but it involves real-time capture of the data and is fairly expensive at this point. We define "cloud storage" as a service company that offers raw storage capacity over the Internet, usually part of a broader service that provides compute power as well. Customers can use this service as a direct extension of their own computers — as though it were their own hard drive. So it's more than just for backup; combined with compute power, you're getting a complete utilitylike service. There are several facilitators of market growth for Web-based storage, including cheaper broadband service and increasing comfort overall with Web-based service models. Then there are market drivers such as the massive growth of data, both personal and business, and the challenge of managing and protecting mountains of information while mitigating regulation and litigation risk.
Q. What are the key business benefits of Web-based storage services? A. The first big benefit is that companies can offload responsibility for backup processes to an experienced service provider. Customers typically tell us that the reason they're doing online backup is because they could not get their backup process to work themselves or because they have a limited number of IT people, and they want them doing things considered more valuable than managing the backup process. There's also the benefit of having a kind of ready-made plan for disaster recovery, especially for smaller companies that cannot afford to build or rent a second site they can back up to. Similarly, the company gets the benefit of advanced storage management and security technology that it otherwise may not be able to afford to buy for internal use. Q. What kind of customers are adopting Web-based storage services today, and how do you see adoption evolving? A. Larger businesses have been slower than smaller businesses to adopt online backup services because bigger companies tend to have dedicated IT departments, even dedicated people for storage and backup. They've made bigger investments over time, with higher service requirements. It's a major changeover to outsource that service — the larger the enterprise, the larger the decision. That's why we're seeing adoption happening from the bottom up, so to speak — from the consumer, small business, and some midsize businesses. Which isn't to say that larger companies aren't interested in the model; some are even testing it. But it will take longer for larger companies to adopt. Most smaller businesses don't have a dedicated IT staff, or if they do, the staff is spread thin across all kinds of tasks such as managing applications and servers. Ensuring that tape backup processes are working correctly is typically far down the priority list, usually because of time pressures. Thus, for many of these firms, the decision to outsource the process can be a relatively easy one. Regulatory compliance, eDiscovery matters, and corporate governance (consistency) are big factors for backup and archival storage, especially in certain industries. Regulations require some firms, regardless of size, to have retrievable data for a certain number of years, which puts an immediate liability burden on companies. For example, Rule 26 of the Federal Rules of Civil Procedure (FRCP), an amendment that took effect about a year ago, mandates that electronic records are "discoverable," leading businesses to apply more stringent data retention policies across their organizations. Q. What should IT decision makers look for in an offsite data protection and storage service? A. The long-term viability of the service provider is very important to customers — especially business customers that may be used to procuring data protection and storage technology from large OEMs. They want a similar feeling of security with the service provider, so a company that's been in the market for a while, with a track record and references, has an advantage. Also, customers not only need to back up or archive data with a service provider but also need that data to be actively available, in the event of litigation, audit, or other event. Therefore, providers that can make that happen and provide support around this will be in demand. Another thing to look for is tiered levels of service because one size doesn't fit all. You want choices of performance levels, which should give you pricing choices tied to those levels. Also, you should look at the security available, both physical security of the datacenter and security of the network handling the data, such as whether the provider uses encryption. Obviously ease of use is important, too, but beyond that, how easily you can monitor and manage the process. In other words, how easily can service levels be adjusted, such as backup frequency? Is there a portal, for example, that you can use to manage and monitor the processes?
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