Small Businesses To Be A Huge Storage-As-A-Service Opportunity

The acceptance of storage-as-a-service by small businesses will grow as they get used to the idea that much of their business data is already being handled by third parties, said Doug Chandler, director of storage software and services for IDC's Information Infrastructure group.

And that will remain an indirect channel play for a wide range of storage providers, Chandler told an audience of end users at this week's Storage Networking Conference in San Diego.

Small businesses are already storing a variety of data outside their own IT infrastructures, such as bank accounts, insurance information and legal information, said Chandler. In addition, they are already outsourcing many of their business functions, including human resources, payrol, and financial information. "An awful lot of data is already being stored and managed outside smaller businesses now," he said. "So there is a certain comfort level with it."

There are two basic areas in which small businesses can take advantage of storage-as-a-service, said Chandler.

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The first is discrete services, such as remote backup and recovery and hosted e-mail archiving. Worldwide, said Chandler, businesses spent about $100 million on hosted e-mail archiving last year and more than $200 million on managed backup and recovery services. In both cases, he said, small and midsize businesses accounted for about half the spending.

Growth in managed storage services in this area is limited by the challenges of marketing to customers, who prefer to get such services from their storage vendors whether those vendors offer such services or not, Chandler said. Packaging and pricing are also still too complicated for most small businesses, he said.

The second area for storage services is in integrated storage, said Chandler. For many of the services that small businesses use, such as e-mail services, online photo services, banking, payroll and outsourced human resources and finance, storage is already a part of the service.

While providers of discrete outsourced storage services such as IBM and Hewlett-Packard, specialized service specialists such as Arsenal Digital, telcos such as AT&T and Sprint, as well as ISPs and solution providers, scale is important, said Chandler.

However, such service providers have yet to show that they can scale to reach small businesses, leaving the door open to providers of Web services with integrated storage capabilities, he said.

In either case, the concept of "service provider" when it comes to storage is no longer limited to traditional companies, but must be expanded to include nontraditional players from small solution providers to companies as diverse as Microsoft, Oracle and SAP, Chandler said. "This really is an indirect model," he said.