The End of Outsourcing Storage?

But, then, the new economy went bust, and storage service providers like Storage Networks suddenly had to find a new business model. Did this mean the death of outsourcing storage?

Not necessarily. Outsourcing storage management jobs still has a market, especially among SMBs that are willing to invest in solutions that attack problems from a different angle. Take a look at LiveVault, a company based in Marlborough, Mass., and one of the few companies that does business 100 percent through the channel. LiveVault does data backup and recovery -- the entire process conducted through the Internet and managed via a Web browser. And, yes, it has real clients.

Eivind Sukkestad, a principal owner of LangTech, a private firm that generates about $4 million in revenue annually, uses LiveVault not only for his own backup and recovery, but for his customers' as well. Sukkestad describes his company as a "boutique" operation that contracts IT department jobs for small to midsize businesses. It does everything from procuring IT equipment for clients to strategic planning to telephone help-desk support.

Most important, it uses LiveVault to outsource backup and recovery. Its clients include venture capital firms, architectural and biotech companies, and law firms. Sukkestad explains that LiveVault's services are used in two ways: one, to replace a pre-existing backup system, and two, to provide business continuity and disaster recovery. The whole process is controlled with a few clicks of a Web browser. LiveVault installs software agents on servers designated for backup, and the backed-up data is stored at Iron Mountain, a national company founded in 1951 when a depleted iron ore mine in upstate New York was converted into the country's first underground records storage center to protect vital data in the case of a nuclear holocaust.

With the LiveVault software, policies are put into place so that continuous backups are scheduled throughout the day, with the software only backing up the changed data. "It's a very small piece of software," Sukkestad. says "And by the way, we don't have to be on-site to install it. It can be installed remotely. We reboot the server, and that is all we have to do."

Sukkestad has a couple of theories as to why larger companies are less likely to outsource their storage management. For one, he acknowledges that outsourcing storage can be expensive if a company has a large data set that needs to be backed up. Plus, "the older generation [of storage administrators], in my opinion, are stuck in the old paradigm," Sukkestad says.

The sweet spot for this kind of business are companies with 20 to 75 employees that have one or two business locations. "Right now, [LiveVault] has the best technology solution available on the market for doing outsource backup," Sukkestad says.