Wednesday, April 24, 2024

When ‘Pay As You Go’ Storage Service Pays Off

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The Storage Service Provider (SSP) market may be getting its share
of bumps and bruises, but the pay-as-you-go model is a good match for some
enterprises — especially those pursuing new business opportunities
and needing to focus on core competencies while limiting capital spending.

A case in point is ChartOne Inc., an 18-year-old company that manages patient charts for hospitals and healthcare facilities. The
company has more than 1,900 health information management specialists
who work with more than 1,400 customers, handling 5 million patient
charts annually. When the San Jose, Calif., firm in April introduced
its latest application, a virtual file room called vChart, the
company opted to partner with IBM for storage services.

The reasons were simple, says Peter Henderson, ChartOne senior vice president of marketing and
strategic planning: “They’re storage specialists, we’re health care

Henderson also notes that the pay-as-you-go SSP model matches the
subscription model that ChartOne offers its customers. “Our revenue is
variable, so we also need our costs to be variable,” he says.

Customers of the vChart service pay to have ChartOne digitally capture
patient records into the vChart system, where they’re stored in a virtual
file room. Authorized users have real-time access to fully indexed, on-line
patient charts. The automated file-capture system replaces the practice of
managing paper-based patient records, which, according to Henderson, is a
cumbersome task at most medical facilities.

Yet, despite the burden of manual record management, health care providers
aren’t about to turn over sensitive patient information to just anyone.
ChartOne knew it needed a reputable storage partner and a system that was
secure, scalable, and reliable. “I have to tell my customers that the storage
of their files isn’t under my direct control. That’s why I went with a
top-name partner,” says Henderson.

The company began evaluating its storage needs in July 2000, bringing in
several potential partners, including IBM, EMC, Storage Networks and Sun
Microsystems. Ultimately, says Henderson, IBM showed it could
“blend our applications with storage services to make a seamless match.”

Seamlessness A Key
Seamlessness was a key project objective. ChartOne executives wanted
a connection to a Storage Area Network (SAN), with use of the SAN functions
to be transparent. Other criteria included security, scalability, a 24-by-7 infrastructure, and redundancy. With the help of IBM, the SAN solution, including integration, was fully implemented in April.

IBM manages the storage and deploys its Shark storage system at a facility
based in San Jose. ChartOne specifies the service levels. The company
also co-locates its vChart products at IBM’s facility.

Sharad Patel, executive vice president and CTO at ChartOne, says the company
opted to house its servers next to the storage to reduce communications
costs and improve access times. The further away the SAN is from the
servers, the greater the latency and the higher the bandwidth costs.
“Customers want to retrieve patient records quickly,” he says.

ChartOne turns to another managed service provider, San Jose-based Euclid
Inc., to manage the ChartOne infrastructure, which includes about a dozen
Sun servers, Cisco routers, and databases.

Euclid provides ChartOne with a network operating center and software.
Patel is responsible for managing the vChart services from a company
location about 20 miles away, as well as managing the managed services
providers. ChartOne customers can also view the vChart infrastucture
via a portal offered by the company.

The option to outsource storage management makes good financial sense to
ChartOne. If the company were to assume the costs for the physical
infrastructure, network infrastructure, manpower to monitor and manage the
storage, as well as maintain the systems, the up-front capital expense
would be too high. Henderson estimates a cost savings of about 60 percent
as a result of the IBM partnership.

ChartOne signed a long-term, renewable 3-year contract with IBM and has the option of increasing its storage at any time. The company made an initial commitment to two terabytes of storage and
expects to add three to four terabytes of storage every quarter.

Both ChartOne and IBM reps meet once a month to discuss storage
requirements and any problems, as well as to review plans.

SSP Market Close-up
According to industry analysts, the issue of managing enterprise storage is
resonating in corporate data centers as utilization rates increase. However,
with many businesses looking for ways to reduce spend rates, expensive
storage systems aren’t in the cards.

And that’s where the SSP market makes sense. “SSPs can help IT shops get
more capacity without making additional purchases,” says Adam Couture,
senior analyst at the Gartner Group.

Regardless of its benefits, the SSP proposition currently is a slow-moving
model. In fact, Gartner has been scaling back on its SSP market projections
all year. Most recently, the IT market-research firm slashed its forecast by
20 percent, to $6.1 billion by 2004, compared to an earlier forecast of $7.8
billion. Last year revenues were about $176 million.

With SSPs trying to reduce their burn rate, many have pulled back from
building infrastructure. Some are also shifting their business models from
managing data at the SSP’s central site to managing customer’s data at the
customer’s site.

Backup and Retrieval
The shakeout in the market is doing little to boost customer
confidence, especially when it comes to primary storage management. The
bottom line is that businesses are reluctant to send the corporate jewels to
players with short track records.

Where the SSP market is seeing gains is in storage backup and retrieval
services. Turning to SSPs for backup and retrieval is attractive for a couple of
reasons: the value proposition of using someone else’s infrastructure, as
well as getting the data off-site.

Doceus Inc., a 6-year-old provider of e-business solutions and software,
helps organizations identify ways of moving onto the web using Internet
technology. Not only does the Washington, D.C., company help its
customers build Web sites, it also hosts, manages, and maintains them. In
April, Doceus partnered with WorldStor Inc. for storage backup and retrieval

Doceus currently backs up about 400 gigabytes a month, and CTO Harry Schechter
says he expects storage requirements to grow 30 percent to 40 percent annually. By turning
to WorldStor, he says, “I no longer worry about our data being backed up, and
it’s done off-site.”

The company began outsourcing storage backup and retrieval about 18 months
ago with another provider. However, Schechter says its first SSP wasn’t
a very good fit, and the companies parted ways when the service provider
couldn’t support Windows 2000.

Prior to using SSPs for storage backup and retrieval, Doceus backed up its
data manually, which required someone driving a couple of hours to change
tapes twice a week. At a billing rate of $200 per hour, the cost of the
six-hour job quickly added up.

Today, the company pays WorldStor a few hundred dollars per month, depending
upon the amount of megabytes transferred.

Like many customers of managed services, Schechter says that his top concern
is the viability of his provider. “We did our homework,” he says, adding
that the company checked out the finances of WorldStor, as well as its
market position. “We can’t risk our clients data.”

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