Store of opportunities
Indian SMBs will invest more in storage products and services as they move up the technology adoption ladder
By Faiz Askari
 India’s small and medium businesses (SMBs), are set to invest more than $622 million in storage products and services this year, up 27 percent over last year. Much of this growth will come from small businesses (SBs). SBs comprise 99 percent of India’s SMBs by number of firms.
These findings appear in the latest report by Access Markets International (AMI) Partners. The report says that SBs account for over 50 percent of the overall storage expenses by India SMBs, and that this proportion will rise as SBs move up the technology adoption ladder.
“SBs tend to spend more on hardware-related storage items—such as PC-attached and server-attached storage—to build a stable and robust storage infrastructure,” explains Dev Chakravarty, Senior Analyst at AMI. “By contrast, medium businesses (MBs) are adopting more advanced network-attached storage media such as SAN and NAS.”
MBs also spend more on storage-related services (compared to SBs) because they have larger storage needs. “MBs need to manage substantial quantities of data compared to SBs,” points out Chakravarty. “Moreover, they are on the path of rapid growth buoyed by the nation-wide economic growth. They are gradually scaling up in terms of size, number of business partners, area of operations, geographical spread, etc. This expansion results in a jump in the quantity of data handled; consequently, the requirement for robust data storage also surges. Data archiving requirements due to regulatory bindings and compliance needs are also important drivers.”
MBs’ focus on storage is confirmed by their expressed opinions. In an AMI survey, about 50 percent said that increasing IT storage capacity and deployment of enhanced storage solutions will be a primary strategic focus area for them in the next 12 months.
Looking at the signs, the commercial segment in India is one of the fastest-growing. This segment comprises the emerging business segment as well as the large but non-enterprise segment. According to AMI, Indian SMB spending on IT and telecom will increase at a compound annual growth rate (CAGR) of 15 percent at least until 2009.
EMC has a slightly different perspective. Explains Sonik Porwal, the company’s Director for Channels and Strategic Alliances, “Because we see an increasing potential in this particular segment, we do not use the term SMBs, but instead call them emerging bus-inesses. It is estimated that of the total IT spend in India, 44 percent or Rs 26,100 crore comes from this mid-market segment alone. Exte-rnal storage is the fastest-growing segment within IT, growing at 15.1 percent CAGR for the 2005-10 timeframe.” The eme-rging business segment will go for the latest information infrastructure technologies whether it is for consolidation, virtualization, backup, recovery and archive technology or disaster recovery (DR). Adds Porwal, “EMC estimates that their information solution needs are growing at more than 150 percent annually.”
Market drivers
A vital driver of the storage market, especially in the SMB segment, is the use of business application software such as ERP and CRM, which are quite data-driven. Though their adoption is still at an embryonic stage for both SBs and MBs, “their rate of growth is quite healthy as SMBs appreciate their benefits,” notes Chakravarty. “These benefits include building long-term customer relationships and loyalty (for CRM), and integrating employees, business partners and branches in a chain where they can collaborate and access data from a unique data repository (for ERP). SMB expenditure on CRM and ERP applications is set to rise this year.”
Another boost comes from the deployment of web sites and e-commerce applications. Their use is increasing rapidly among Indian SMBs as they strive to utilize these tools to access customers and suppliers. Another parameter is a focus on security, with more than 50 percent of MBs and 40 percent of SBs citing security enhancement as a key area. “Adoption of security solutions like data backup and DR solutions entail a significant need for storage for SMBs,” Chakravarty says. “More than 10 percent of SMBs plan to adopt applications such as offsite data backup and DR in the next 12 months.”
Tapping the SMB
Many innovations in the IT industry start as complex and expensive technologies aim-ed at large enterprises, but later filter down to SMBs as simplified, cost-redu-ced packages. Storage or backup technology is no exception.
With new solutions that support consolidated network storage and ena-ble cost-effective replication and long-term data archiving, it is now easier for IT managers to manage and optimize their storage requirements. Technologies such as virtualization, tiered storage and DR are increasingly being adopted by Indian SMBs.
Comments Jim Simon, Quantum’s Director of Marketing for Apac, “We would like to tap the SMB market in India because it is growing fast. The majority of SMBs here require efficient data backup systems without compromising on the cost.”
For the SMBs, the functions of the storage system may best be summarized by the term store-retrieve-backup- restore-archive. Attention should be given to the ability of the storage system to scale easily from very small capacity to very large, and also to add storage increments easily. It is always better and cheaper to buy and install storage when it is required, rather than buy in advance because prices are always moving downward and performance always improves. How-ever, the backup and restore architecture must be laid down at the same time as the primary storage, and it must be reliable and scaleable.
About the pot-ential of SMBs, Manoj Suvarna, Country Head of HP’s Storage Works division, says that 30 percent of their total storage revenue comes from SMBs. “SMBs are a healthy market for us. We have registered great business from this segment in the last couple of years.”
Market potential
As per IDC, the market for tape automation in India was around $67.45 million in 2007. Similarly, tape drives accounted for $60.82 million last year. IDC believes that the Indian tape market is growing at 5.6 percent (CAGR 2005-2010).
As far as the technologies are concerned, the traction toward storage consolidation, virtualization, tiered storage and data de-duplication will keep the momentum going in 2008. Analysts are heralding data de-duplication as one of the top 10 technologies that will change the storage industry in the next 3-5 years.
Simon of Quantum indicates some of his strategies. “In FY2008-09, we will be leveraging our leadership in tape automation to expand our disk-based backup (with data de-duplication and replication) solutions and software solutions. We feel good about our technology leadership in this area, and the partnership opportunities it provides, as reflected in our January announcement that a major OEM would be licensing our de-duplication and replication software.”
Adds Vivek Malhotra, VP, General Business, IBM India, “As the storage market continues to grow, we believe the best way to help our partners take advantage of this growth is to support them in becoming technology experts. We have introduced four initiatives for the mid-market segment to help our partners understand the technology. The first is enabling, wherein we have a calendar that schedules training programs for the partners. The second is providing incentives, wherein we encourage partners to focus on solutions for emerging segments. The third would be methods to ease the process of doing business. Under this we have launched a program called Easy Sale. The fourth is communication. Here we ensure effective communication to keep our partners updated on the company’s latest developments and technologies.”
Enabling partners
A strong and well-entrenched partner network will enable vendors to reach out to their customers better and deliver exceptional value to them. Take the case of EMC in India, which has more than 50 partners spread across 30 cities. Porwal explains. “The stress is on coverage. We have put in place a very young and highly-driven sales force across the country. We have about 22 members of this team equally spread among our defined geos—North, East, West and South/Sri Lanka. We have also enabled our current partner community, and are looking at hiring new partners who will help us to spread our reach to new markets.”
Today, all of EMC’s hardware, software and services in India are marketed through partners. Informs Porwal, “Enabling our certified partners to provide consulting and integration services (and the revenues from the same) is a unique value proposition that only EMC offers. We are expecting the greatest momentum in the commercial segment, where partners will play a critical role. We also have separate portals for our partners.”
From a storage perspective, the dynamic business landscape generates three essential issues that vendors are trying to grapple with. The first is the variety of data. Says IBM’s Malhotra, “Companies are dealing with various applications ranging from databases to mail to rich content. Storage devices are expected to exhibit different characteristics based on the workload and data type.” Second, the volume of data comes into the picture as it is undisputable that the data being accumulated by companies has increased dramatically. “Large volumes of data entail deploying better and more efficient storage management while attempting to keep the cost down,” points out Malhotra. Third, the velocity of change becomes a critical aspect for the storage infrastructure. The rapid changes in the business environment force IT to adapt quickly. This causes IT solutions to be rolled out without adequate validations, resulting in poorer user experience.
“We will invest in certifying our partners who have the skill-sets to sell data protection solutions,” assures Simon of Quantum. “At the same time, we will generate end-user demand to pull sales through our certified partners. We think that 2008 offers incredible opportunities for Quantum-certified partners to profit from the sale of backup, recovery and archive solutions even for the SMB segment.”
Advises Suvarna, “Channels should keep an eye on storage developments, partner with vendors who can provide the most appropriate solutions for their end-users, and should not neglect data protection and archival which is critical for their customers. The time has come when partners need to focus on becoming the true and trusted advisors of their customers.”
Storage virtualization
Storage virtualization fits into the information lifecycle management strategy, and can improve storage utilization, decrease time and effort required for storage provisioning, simplify data migration and reduce application downtime.
Leading storage vendors such as IBM have developed storage solutions designed to help clients break through to the advantages of instantaneous data access anytime and from anywhere. Says Malhotra, “Our virtualization solutions can help consolidate storage resources, simplify the IT environment, and lower the total cost of ownership.”
However, tier-2 partners have the most chance as they are the ones targeting the rapidly growing mid-market. Notes Malhotra, “These partners have an amazing opportunity as they are more visible to the clients in these areas than IBM is, and it is in this scenario that partners can provide customized solutions and infrastructures to customers as per their requirements. In order to help these partners succeed, we are collaborating with them in identifying additional markets and have opened offices in tier-2 and -3 cities to provide partners with the support they need.”
SAN outlook
Block-level data consolidation is slowly gaining importance even in small enterprises which have an ERP application running. The advantages of consolidating effectively help optimize the storage resource and ease the management of data. SAN, which is the solution for block-level consolidation, comes in two flavors: FC SAN and IPSAN. IPSAN solutions have evolved tremendously in the last few years because of marked improvement in performance, ease of use, and much lower cost compared to FC SANs.
States Ramani V, Country Manager, Sales and Marketing, Sanat Technologies, “With raid protection, data consolidation, ease of manageability, support of application clustering, and resource optimization, there is tremendous scope for SAN solutions the world over.”
Suvarna agrees, “SAN is becoming popular among SMBs as it has become more cost-effective. People are aware of the advantages of SAN, but it was earlier considered an expensive asset.” |