Surviving the Economic Downturn

Even in a slow economy, storage is a must-have solution that companies spend money on, according to Lilien Systems. The integrator specializes in enterprise systems and network management for both small professional organizations and Fortune 500 corporations. Lilien has been involved in storage solutions since the mid-90s.

Initially, storage solutions drove 10 percent to 20 percent of the company's hardware business. That number has increased to between 30 percent and 50 percent, says Dhruv Gulati, Lilien's executive vice president.

Storage spending has slowed down as IT managers rein in their budgets, but Gulati still expects the percentage of Lilien's revenue coming from storage to grow for the next three to five years. Customers "are more likely to invest in storage than anything else right now,' he says. "That need doesn't go away. It's become like gasoline: It doesn't matter what the economy is like, companies have to store what they need, and they need access to it.'

And just as important, storage has captured mind share from the CEO or the CFO,' Gulati says. "They've all got this data,they don't purge it,and they want to keep it forever. They know it's valuable.'

The technology for storage solutions is ever-changing and complex. Because of this, Lilien Systems president Geoffrey Lilien gave the go-ahead to invest substantially in training.

Average annual training costs for the staff of 10 engineers run from $25,000 to $30,000, Gulati says. They participate in training programs run by company partners Hewlett-Packard and Cisco Systems.

Most companies that Lilien works with are looking for a consolidated storage system. The sophistication of the solution, Gulati says, depends on the type of information stored and how much money the customer can spend.

Because of the economic downturn, Gulati feels it's critical to find customers the most cost-effective storage solution. "The clients would like not to hire extra staff, which is why you need to give them software tools so they get the biggest ROI possible,' he says.

Enterprise storage systems that include redundant components can range from $600,000 to more than $1 million, Gulati says. Those systems include memory caches, so if a disk drive is lost, the information is still stored.

Other solutions include magnetic storage online, which usually consists of an intelligent disk array. Lilien also offers a near-line storage solution, made up of an optical jukebox. A robot grabs the medium and puts it into storage drives. "If you need hundreds of gigabytes of storage, but you don't need to get to it right away, this can be more cost-effective,' Gulati explains.

Network area storage, or NAS, solutions are best suited to companies that don't store documents that require processing a transaction, such as financial applications, Gulati says. By contrast, a storage area network, or SAN, which uses a Fibre Channel network is more expensive, but is often better-suited for documents that require transactions.

The upcoming iSCSI standard, due out in about a year, is likely to bring down the price of building storage networks because it will allow them to be built with equipment designed for IP networks instead of Fibre Channel technology, Gulati says.

Back to Part 1

Part 2: Betting on VoIP
Part 4: Getting Up To Speed