Online Storage Poised to Take Off, IDC Predicts

Restrictions on IT budgets and staffing are causing more companies to consider online backup, archiving, and replication services

November 18, 2008

4 Min Read
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The growth in online storage services will outpace conventional storage architectures for the next several years, fueled in part by the inability of IT departments to gain larger budgets or more personnel, according to a new report on storage as a service (SaaS) by research firm IDC .

IDC says SaaS capacity will grow from 174 petabytes in 2007 to more than 2.1 exabytes in 2012, a growth rate that will beat the sales growth of conventional storage technologies. Still, companies will continue to buy disks and tapes; IDC predicts the growth of hard-disk drives will continue at better than 50 percent annually.

But the continued growth in the amount of data that is being created and the longer periods of time that organizations and consumers want to retain that data will fuel a boom in online storage services for backup, archiving, and replication, Brad Nisbet, program manager for storage and data management services at IDC, told Byte and Switch. The current economic woes are a contributing factor as companies look for ways to cut costs.

IDC surveyed 812 firms and found that 59 percent of small businesses are currently evaluating SaaS, as are 44 percent of mid-sized companies and 33 percent of large companies. "It really trails off for very large companies, many of which have their own online storage services between multiple data centers," Nisbet said. "The sweet spot for these kinds of services is small and medium-sized companies."

Several factors have converged to help drive the growing interest in online storage. Companies are looking for a low-cost alternative to on-premise systems as their storage needs continue to grow. IT budgets and staffs are not growing and, in some cases, are shrinking. In addition, floor space in data centers often isn't available for more systems, and companies are becoming increasingly aware of how much power data centers are consuming to power and cool computing and storage systems.At the same time, technical advances have helped to make SaaS more attractive. More bandwidth is available on the network side; service providers are able to buy standardized high-capacity modular storage systems and build large-scale facilities from which they can offer relatively inexpensive services at a profit; and sophisticated software now is available to monitor and manage massive file systems.

Companies still have reservations, Nisbet said. Some organizations question whether the cost savings will be large enough for them to risk giving up control of their data to a third party. And some companies are convinced that no cost savings are worth the risk that comes with storing crucial business information in another location that is under the control of others. "It is still a concern for many organizations," he said, "but I think there have been advancements in areas like encryption and backend management to ensure increased security and data protection."

Companies looking into online storage services are seeking an experienced and tech-savvy vendor that can provide a complete set of services. "They are looking for a one-stop shop, which isn't something that every vendor can do today. They are looking for someone to do it all for them," he said.

This current growth spurt is focused on secondary storage, but there may be a second boom in online storage once Cloud Computing becomes more popular, Nisbet said. "Once more companies have applications sitting in an off-site data center generating data, it makes sense to store some of that data in the same location," he said. "Companies will want to leverage the app in the cloud and off-load even more or all of their storage needs."

The consumer market is expected to embrace SaaS even more quickly than business, according to the IDC report. Around 10 percent of consumers surveyed already use online backup services, 2 percent are implementing it, and 24 percent are considering it. Some 44 percent said they want to protect against losing their data to a disaster and 31 percent said they want to be able to have access to their data over the Internet from any location.In addition, some 68 percent of those surveyed said they keep work files on their home PCs, so they have a great interest in some form of secure backup.

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