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Storage utilities attract New Economy companies with "pay-as-you-go" service.


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Dermot McCormack, chief technology officer, Flooz.com

After launching more than 200 Web sites and helping lead three prominent Internet companies through the start-up phase, Dermot McCormack knows a few things about how to make it in the New Economy. One of his favorite rules: Focus on your core competency and outsource the rest.

McCormack, the chief technology officer at Flooz.com, the premier purveyor of online gift currency, put that tenet to practice most recently in the summer of 2000 when he led his company's investigation into the new world of storage service providers (SSPs).

Built on the popular application service provider (ASP) model, SSPs are springing up around the country, offering to take on the hassle and responsibility of monitoring, maintaining, and scaling data storage needs for their clients. Their services range from simply providing additional storage capacity on an as-needed basis, to archive and retrieval services, to application-specific data enhancement services.

These services are driving the emergence of the SSP market, industry analysts say. According to Adam Couture, senior analyst at Dataquest Gartner, in Lowell, Mass., this market barely existed 18 months ago. Total revenue for storage utilities in 1999 was a mere $10 million, Couture notes. That figure is expected to grow to $7.3 billion in 2003.

Why now? Several pressures in the IT arena are driving the market, says Couture. "Combine the boom in data levels across the board with the shortage of storage expertise in the workforce," he says. "Then add in the confusion and lack of standards surrounding some of the most advanced storage architectures, like SANs [storage area networks], and it becomes clear the time is right for this model."

Many SSPs are positioning themselves as "storage utilities"--in other words, as a "plug-in-the-wall, take-it-for-granted, bill-me-monthly" service akin to telecom or electricity utilities.

Storage on Demand

New York-based Flooz, like the vast majority of companies these days, is experiencing massive data growth. And while its staff is growing at a rapid clip as well, "I knew it was time to think about the opportunity costs [associated with managing] all our data storage in-house," says McCormack. "Sure, we could invest five or six engineers into designing, building, and maintaining a new storage infrastructure, but then we'd be taking talent away from some other core project."

Instead, Flooz chose to ink an agreement with StorageNetworks Inc., an SSP headquartered in Fremont, Calif. "At the time we began looking, it was clear that StorageNetworks was far and above the leader in what they do," says McCormack. "There simply weren't many offerings in this space, though I understand that there are now."

At a Glance: Flooz.com
The company: New York-based Flooz.com, a purveyor of online gift currency, has 90+ employees.

The challenge: Find a way to ensure that this rapidly growing business has access to a top-quality, highly reliable data storage infrastructure, without expending exorbitant internal resources.

The solution: Outsource storage services to StorageNetworks Inc. at its co-location site with Exodus Communications Inc., where Flooz servers currently reside.

The StorageNetworks facility housing Flooz's data is located in Weehawken, N.J., co-located at an Exodus Communications Inc. Internet datacenter, which hosts Flooz's Web and data servers. "Our storage is in a cage right next to the cage where the servers are, and where we'd have put the SAN if we had had to do it ourselves," explains McCormack of the set up.

There's an obvious advantage to the SSP of sharing the same site with the datacenter: It doesn't have to lay lots of fibre between the datacenter and wherever the SSP is located. The datacenter, too, has an advantage. It can offer the SSP model as another attractive feature of its service. And don't forget the customer, who tends to feel that it's neater and more manageable to have it all in one place. You don't have to worry about any line breakages between the servers in one place and the storage in another when everything is co-located.

In return for a monthly fee, StorageNetworks houses Flooz's data in a massively parallel and redundant SAN. In addition to providing them with high availability and reliability, StorageNetworks allows utilization of best-of-breed technologies from EMC Corp. and Sun Microsystems Inc., backed by a "four 9s" (99.99%) service level agreement (SLA).

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