Cloud Storage: Bright Future For Industry, Big Opportunity For Channel

The accelerating growth of cloud computing has led to a corresponding growth in the use of the cloud to store data.

That growing demand for cloud storage is pushing solution providers and managed services providers to help customers examine their IT requirements with an eye to what data is suitable for the cloud, and what data is best managed via other technologies.

Successfully managing the increasing amount of data stored regardless of whether it's in the cloud requires a close relationship between the channel and the customer, said Eryck Bredy, founder and chief technology officer of BNMC, an Andover, Mass.-based solution provider and managed services provider.

[Related: Cloud Storage Week 2015: Lots Of Opportunities, Lots Of Questions]

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"Making storage succeed is not about selling storage," Bredy told CRN. "It's getting customers to not think about storage. Customers don't know storage. They know what they need to run their business and make money."

Shifting the focus away from the gritty details of managing storage and toward managing the business is increasingly important as the amount of data customers store continues to grow.

Analyst firm IDC in the 2014 edition of its biannual study on the digital universe estimated the amount of data being stored in the U.S. will reach about 44 zettabytes by 2020, or about 10 times the 4.4 zettabytes stored in 2013.

And while about one-third of data in 2013 was created by enterprises, it is enterprises that were responsible for managing it, Framingham, Mass.-based IDC estimated.

IDC in October also estimated that spending on cloud IT infrastructure will grow at a compound annual growth rate of 15.1 percent between 2015 and 2019, while spending on non-cloud IT infrastructure will fall 1.7 percent annually during the same period.

Research and Markets this year estimated that the market for cloud storage solutions and services will exceed $65 billion by 2020, or over three times the 2015 value of $19 billion. That represents a compound annual growth rate of 28.2 percent, the Dublin-based analyst firm said.

Stamford, Conn.-based analyst firm Gartner in June estimated that 12 percent of enterprises use the cloud as a backup destination, but said that figure will double within the next two years.

Solution providers have a number of possible different cloud storage business models from which to choose, including building private clouds for specific customers, building private clouds they then offer to clients as an alternative to public clouds, and reselling cloud storage that is hosted on public clouds.

Private storage clouds, like public clouds, allow pooled storage capacity to be dynamically provisioned and allocated as needed. The primary difference is that the private storage cloud lies behind a corporate firewall open to trusted users, typically a company's employees and/or partners and/or specific customers. Furthermore, the owner of the private storage cloud is responsible for deploying and managing the storage and other resources.

In a public storage cloud, one organization owns and manages the infrastructure for the cloud and provides use of the cloud to any entity wishing to rent capacity for a fee, without concern for how the infrastructure is deployed and managed.

For solution providers with a history of building storage infrastructure for clients, a move toward building private storage clouds is the next stage in the evolution of their business.

Private storage clouds are how businesses maintain control over the security of their information while finding new ways to more efficiently consume storage resources, said Dan Molina, CTO at Nth Generation Computing, a San Diego-based solution provider.

"Historically, without the cloud, customers look at refreshing their storage every so often to be faster and more efficient," Molina told CRN. "But the conversation, especially among CFOs, has shifted from 'I need to refresh my storage' to 'I need to refresh, but the CFO and [chief information officer] want to look at it from cloud-like financing.'"

Private cloud solutions provide the flexibility of public clouds, but help overcome security concerns while actually being cheaper to use than public clouds, Molina said.

Nth works with Hewlett Packard Enterprise technology to build private clouds, a fact that may cause confusion for some time now that HPE has publicly said it is exiting its Helion public cloud business, Molina said.

"HP continues to offer technology for private and hybrid clouds," he said. "HP is strong in privacy, in leveraging OpenStack technology. It gives control to customers and the ability to provision services to their entire organization, but managed by the IT department working with the security office."

However, Molina said, private clouds need a solid backup and recovery solution, and for this, Nth turns to certain public clouds that partner closely with the solution provider's preferred data protection vendors, including Baar, Switzerland-based Veeam Software; Boston-based Zerto; and Tinton Falls, N.J.-based Commvault.

Such public cloud providers include Houston-based Iland, Seagate's Hybrid Cloud Data Protection and Microsoft Azure. "They have cloud connectors to our applications that allow easy recovery of data from the cloud," he said.

In a twist to the private vs. public cloud models, some channel partners build their own private clouds, which they then make available to customers as if it was a public cloud.

One such partner is BNMC. Bredy said the company hosts a private cloud based on storage and virtualization platforms the company owns, thereby competing with such public cloud providers as Microsoft Azure and Amazon Cloud Services.

"We give customers their own firewalls and separation from each other," he said. "The biggest difference between us and the larger public cloud providers is we wrap managed services around our cloud, like anti-virus, desktop management, and individual user connectivity to the cloud. These are all 'white-glove' services that let us act as our customers' IT department."

Bredy said he knows his cloud can never beat Amazon or Microsoft in terms of storage processes and CPUs.

"They have larger scale," he said. "We don't try to compete on that. But we make sure customers in public clouds know they have to add the cost of the utilities, the path management, all the things they need to run their business that we already provide. That justifies the cost of the raw components needed to run a managed service."

BNMC's philosophy is that someone who wins on price will lose on price, Bredy said.

"At the end of the day, you will fall on your sword if you focus on price," he said. "You have to sell value, not price. If the customer buys you because you're the cheapest, then when someone comes along who's cheaper, you lose that customer."

Paragon Solutions Group also builds its own cloud to serve as a public cloud for customers, said Chris Dye, CTO of the Minneapolis-based cloud services provider.

Paragon uses X-IO Technologies' all-flash arrays for the highest-performance tiers, hybrid X-IO arrays for lower-performance workloads, and low-cost disk-based arrays from San Mateo, Calif.-based Backblaze for archiving, Dye told CRN. Scalability is provided with VMware VSAN, which works with both flash storage and "spinning rust," he said.

The move to provide its own back-end cloud infrastructure for its services instead of commodity cloud space from Amazon or Microsoft Azure stems from the fact that customers want someone to be responsible for their information while making sure that information looks and feels as if it's within their own network, Dye said.

"We partner with multiple carriers and hosted centers, but when a customer spins up a cloud application, it appears to the client's network as if it's sitting just down the hall," Dye said.

Paragon will use public clouds to temporarily help customers quickly ramp up their infrastructure, Dye said. "Right now, we can't onboard some Fortune 500 companies for 30 days because we need to build up our infrastructure," he said. "But with VMware technology, we can spin up fast using the public cloud and then eventually move the customers to our cloud."

For other solution providers, particularly in the SMB market, the journey to the cloud is still fairly slow.

The typical SMB customer of Chi Corp. is more likely to depend on channel partners than on their ability to manage cloud storage, said John Thome, vice president of the Cleveland-based solution provider.

"If you are a really big customer, I get the need for archiving and backup to the cloud," Thome told CRN. "But a really small shop doesn't have IT people. The cloud doesn't always make sense to them."

One type of smaller customer is a big exception, Thome said. "Education has embraced the cloud because schools get a lot of Google stuff for free," he said. "We add networking and security, but not the Google part."

Looking forward, the trend will be toward growth of storage clouds, especially in terms of economies of scale in public clouds, Molina said.

"But a certain set of customers will stay on-premises," he said. "There will be concerns about privacy, and customers will want to invest in secure solutions to protect data. So I see smaller businesses leveraging cloud scale while larger businesses look at alternatives that provide for security and for low latency."