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Take the case of Tom Fristoe, founder of a brand-new Internet-based channel marketing organization called TenToe Inc. Based in Pleasanton, Calif., TenToe was incorporated in March 2000 and is currently about half way through its product development process. One of Fristoe's key decisions during start-up was how to spend his seed money most wisely. In April, he signed a contract to outsource his storage management to StorageWay.

Lessons Learned About SSPs
What to consider when choosing a storage service provider:

Infrastructure: Does the company have a completely installed, well-architected physical presence at a reliable and convenient co-location site with your Internet data service provider?

Management: Will the company be managing the storage of your data using on-site staff, or will it monitor the facility remotely?

Security: What kind of security is in place? What kind of encryption is being used? Will your data share equipment with other companies?

Cost: What is the cost per terabyte to manage the storage? What level of service does that cover? What reliability guarantees are in place?

Contract: What is the typical length of a contract? If it's longer than 12 months, what concessions will be made to you as the cost of storage media continues to drop?

Exit clause: How will the transfer of data be managed if you decide to switch SSPs, or take your data back in-house, or if your current SSP goes under?

Source: Dataquest/Gartner and Datamation reporting

"Our data storage needs at this point are unknowable," says Fristoe. "But we do know that when we go live in [late October or November 2000] we'll need a 100% guarantee that a bigger block of storage will be available instantly if we need it. We can't afford to make a mistake that scares off our own customers right out of the gate."

StorageWay was attractive in part because of its co-location at an Exodus Internet datacenter, Fristoe says. Indeed, Internet datacenters are themselves the most enthusiastic supporters of the SSP model. Many have signed on as partners with SSPs either as customers themselves or to resell storage utility services.

Alltel Information Services, for instance, is a Little Rock, Ark.-based provider of infrastructure services to Web-based companies. According to Susan Rodgers, senior segment manager, when parent company Alltel Corp. launched its Internet datacenter business unit earlier in 2000, it signed with one of the newest entrants in the SSP market, Arsenal Digital Solutions Inc., to provide capacity-on-demand and other data storage services to its own customers.

In September 2000, "we deployed the service to one of our first customers," says Rodgers. "It's a typical B2C [business-to-consumer] start-up that didn't have or want all the expertise in-house. By hosting with us, they've killed two birds with one stone. It's less of a headache for them and it makes our service that much more attractive."

Know Your Provider

In such a new industry, choosing the right SSP requires close attention to several critical details, the early adopters say (see "Lessons Learned About SSPs"). Scrutinize the contract closely, they advise. The rapid pace of change in the storage industry and the dropping cost of storage equipment mean short-term contracts are the most attractive, says Dataquest's Couture.

Companies should also scrutinize the financial stability of these new businesses, advises Flooz's McCormack. "There's so much fluff and vapor out there," he says. "You do have to look under the covers." SSPs ought to have clear answers to questions about where and how data will be migrated if the company goes under, or if the customer chooses to move its data.

"Above all, you have to be very clear in talking with your SSP candidates about what level of service you require from them," says Steve Prather, vice president of network services at ViaWest Internet Service Inc., based in Denver. "It's more than 'what capacity can you provide?' You have to know what kind of response time and reliability levels are acceptable for your business."

ViaWest, a regional ISP operating in four states, signed on in March 2000 with MSI, a spin-off of StorageTek. The company evaluated other SSPs, including StorageNetworks and CreekPath Systems of Boulder, Colo. MSI currently provides ViaWest with managed back-up service at its co-location site in Denver, though talks are underway to expand the deal to include capacity-on-demand services and customer-specific storage solutions.

Besides being able to provide competent answers to reliability and service questions, MSI's corporate lineage was important to ViaWest. "There is only so much storage expertise out there," says Prather. "It's better for you if you know who has it."

So what does the future hold for storage service providers? "SSPs promise a true utility, so in theory the Internet datacenter should be able to provide a place to plug in, and the customer shouldn't care who the provider is," says Steve Duplessie, senior analyst at the Enterprise Storage Group in Milford, Mass. "In reality, though, with all the branding that is going on, the SSP will be in the mix for the foreseeable future." //

Stephanie Wilkinson is a freelance writer specializing in business and technology. She can be reached at stephw@cfw.com.

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