Data Wars

A combination of the Internet explosion and the increasing importance Middle East companies are placing on customer services has been fuelling the region’s storage market for the last 18 months. And as the region’s companies get to grips with the benefits of storage solutions, vendors are jostling for marketshare and customer accounts.

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By  Zoe Moleshead Published  November 26, 2001

Rapid Growth|~||~||~|A combination of the Internet explosion and the increasing importance Middle East companies are placing on customer services has been fuelling the region’s storage market for the last 18 months. And as the region’s companies get to grips with the benefits of storage solutions, vendors are jostling for marketshare and customer accounts, while waging a price war and proclaiming that only they can offer the complete solution from hardware to software and services.

In light of these events, the Middle East’s storage marke has undergone significant development in the past 12 months and all the main storage players have recorded large growth curves. Veritas and EMC have also opened regional offices as they continue to commit resources to the region.

As the vendors have increased their profiles in the region, the end user community has also expanded its knowledge of storage solutions and its need to effectively manage data to enhance customer services.

“Storage is growing rapidly in the Middle East,” says Bosco Moraes, product marketing manager, enterprise storage, Compaq, Gulf & Levant. “We are finding more and more people coming to us this year with specific requests for having a smarter way to organise their storage. “We have deployed about 30 SANs in this region.”

The move towards storage can, in part, be attributed to the increasing focus on customer relationship management (CRM) in the region. Businesses are realising that to stay ahead of the competition they must develop a CRM strategy, which will be based on its ability to manage and analyse customer information.

“It [storage] is about managing information — and information is critical in everyone’s business at the end of the day. You cannot run your business without information,” explains Naji Robehmed, business development manger, network storage solutions organisation, HP, Middle East. “This is the way to look at storage solutions — how we can protect the customer’ information and give him the best way of accessing and managing his information. The customer needs to have access to information because information gives him knowledge and knowledge gives him control over his business.”

The need for storage solutions has also been sparked by the increasing presence of the Internet and the growing role of e-business in the region, as well as the more general move towards IT infrastructure deployment.

“The [market growth] could be attributed to the rapid development of the IT infrastructure in the region,” says Didier Trassaert, vice president of Maxtor, EMEA region. “The Internet revolution is causing businesses to rethink every interaction with customers, suppliers and partners.”

||**||Heterogenous Offerings|~||~||~|The vendors have also changed their strategy when it comes to storage. It is no longer about disk space — all of the players are looking to build software and services on the back of the hardware sale. Vendors are expanding their product portfolios with a host of partnerships, acquisitions and product developments to ensure they can compete from entry-level to high-end storage. The competitive nature of the market is forcing storage players to address issues of heterogeneous storage and openness.

“Today you cannot be a player in the storage market if you do not offer heterogeneous support,” says Robehmed. “With our FSAM (federated storage area management) strategy we’re trying to deliver to the customer the ability to look at all his storage environment, be it from HP or non-HP, as one logical storage unit, to manage it and to integrate it for his applications and servers.”

HP is also making moves to establish itself in the mid-range market with its Virtual Array, which Robehmed claims “has brought in the high end technology to a mid-range market.”

Compaq is claiming its Enterprise Virtual Array will “change the way people use storage internally.” According to Moraes, the aim of the Enterprise box is to allow businesses to use their storage more efficiently and “visualise storage from different vendors.”

“When its deployed on a SAN it will get storage from different storage vendors, so [users] can have an EMC box, or an HDS box, and it will go and look for storage wherever it is and present it to [them] as a pool. Probably 50% of storage [in a SAN] is utilised today. With virtualisation you can achieve up to 80-85% of storage,” claims Moraes.

EMC and Sun have both been criticised in the past for the proprietary nature of their storage solutions, but both have been taking steps to address these issues with the expansion of product lines and partnerships. Both vendors are looking to join the likes of HP, Compaq and IBM with their heterogeneous solutions capable of managing other vendor’s storage.

EMC’s recently launched a host of products under its Automated Information Storage (AutoIS) programme. The solutions make up the core elements of EMC’s strategy to build its software portfolio and expand the vendor’s market beyond hardware.

“We have had a significant focus on software for quite a long time. I think for the last five years 65-75% of our investment has gone into software, it has been a core part of our strategy,” claimed Jim Rothnie, EMC senior VP & CEO, at the European launch of the products.

With Compaq’s Moraes adding that it believes “about 67% of customer investment will be in the software area,” EMC seem to be taking steps in the right direction. Moraes explains, “It is not enough to just have storage accessible quickly, [users] need to manage it. [Businesses] need to be able to access it in a quick and efficient manner and for that you need software tools.”

Sun is playing catch-up in the high end storage market but its partnership with Hitachi Data Systems (HDS) has allowed it to fast track its way to a more open, heterogeneous platform in the shape of the StorEdge 9900. The deal has enabled Sun to quickly begin shipping a high-end solution to the region. “It’s a digression away from our traditional approach, which was to run storage services as part of the server architecture and part of the network architecture,” says Mark Fryer, product sales & marketing manager, data management solutions, Sun Microsystems, Middle East.

“Analysts cannot say to us now that we don’t have mainframe storage, this storage will attach to OpenVMS, or Unix including Tru64, Solaris, Linux, Windows NT. The [9900] is a solution we’ve [come] to market very quickly with. We’re getting orders for 20-30 terabytes of these solutions where previously customers would have gone away to mainframe storage vendors,” claims Fryer.

||**||Partnerships & Acquisitions|~||~||~|Alongside the product expansion, the vendors have also been developing their professional services and support channels to ensure that customers are provided a one-stop-shop for all their storage requirements.

HP, IBM and Compaq have all been working hard to develop their consultancy and services channels. Each vendor is touting its respective services capability as an integral part of their storage offering.

In a bid to enhance its professional services Sun recently teamed up with EDS, and is also committed to providing joint support with HDS for the StorEdge 9900.

“We’ve [HDS & Sun] developed a joint mission-critical support centre, which means that Sun and HDS engineers are co-located in the same physical building, on the same course, with the same objective of applying their resources to maintain the customer’s uptime,” says Fryer.

However, the ability to manage other people’s storage cannot be achieved without openness and co-operation among the vendors when it comes to technology.

Recent weeks have seen EMC announce agreements with both Dell and Compaq, while IBM and Compaq dissolved their reseller agreement. HDS has partnerships with both HP and Sun, while Veritas’ partners include Compaq, Sun, HP and EMC.

“EMC has started opening up and they are offering APIs. We have signed an agreement to share APIs with EMC, hopefully that will allow us to develop products to manage different vendor’s products as one entity. Users won’t need different management tools for an EMC box and a Compaq box in the same organisation,” says Moraes.

Aside from providing greater platform openness, these partnerships also allow vendors to quickly expand both their product portfolio and customer base.

“The recognition of the benefits entailed in leveraging technologies from both companies and combining expertise creates financial and operational synergies. [This results] in further enhanced R&D and high-volume production,” explains Maxtor’s Trassaert.

“In an increasingly competitive environment and [with] the drop in storage prices, the likely outcome will be a transformation in the nature of the storage industry, leaving fewer players in this arena, as a result of the move towards consolidation,” adds Trassaert.

With such vendor movement in the market, consolidation is inevitable as the larger players buy smaller companies for the technology to build their respective storage portfolios. HP added a storage software arm to its business following the purchase of StorageApps, and earlier this year Sun strengthened its storage offering by obtaining HighGround. According to IBM’s Jeff Maslen, storage sales manager, Middle East & Pakistan, “acquisitions are a natural shakedown of players in any industry.”

These acquisitions also enable vendors to buy into smaller, more specialised companies with a niche market, and as such many of these smaller companies are likely to be become subsumed into the consolidated storage market.

“You can see a point in three or four years where storage will continue to grow but the number of people that can supply it will be much, much smaller. The big global customers will probably only go to the likes of Sun, IBM, and EMC,” predicts Fryer.

||**||Price Wars|~||~||~|Fierce competition and market consolidation is inevitably driving down the price of storage solutions, and in spite of all the partnerships and claims of openness the vendors are reportedly fighting a intense price battle in all markets, including the Middle East.

“We are definitely seeing some very aggressive pricing wars going on in the Middle East & Africa — loss-making type of deals where you have to walk away from it,” says Sun’s Fryer.

EMC has taken stiff criticism over its high pricing policies in the past, but it remains confident that it can win any battles on the total cost of ownership (TCO).

“There are prices all over the map today, depending on who the buyer is, and what the characteristics of the deal are. Our challenge is to convince the customer that EMC storage will give them the better deal. It is in fact not hard because the TCO that surrounds our storage is worth hundreds of times more,” says EMC’s Rothnie.

This is a view backed by EMC’s regional manager, Thierry Louesse, “EMC has actually adjusted its pricing structure to address different levels of the storage market. More importantly, EMC customers focus on three issues that are more important than price alone — lower total cost of ownership, business value justification and business opportunity cost.”

However, the nature of Middle East customers also seems to be adding fuel to the price battles with companies making decisions on price alone and ignoring the benefits of the technology and overall solution. “I think the Middle East is renowned for its focus on pricing, and there is a danger that focusing on price for the short term is not going to give the long-term solution that users could get by spending just a little bit more,” explains Mike Hynes, regional sales manager, Veritas, Middle East & Africa.

Veritas and Sun are trying to educate the market as to the importance of long-term investment and total solution, and move the market away from what they see as a ‘lose-lose’ situation. At the same time IBM, Compaq and HP are expanding their service models to ensure better support.

In a bid to move away from the traditional pricing models, storage providers are introducing the concept of storage or capacity on demand into the region. Storage on demand enables customers to ‘turn’ on additional storage provided in their solution, as and when they need it.

“It’s a new concept in terms of actually being delivered, but its something we’ve been talking to our key customers about for a long time,” explains STME’s sales director, Andrew Calthorpe.

“We work with customers to ensure that there is always additional capacity delivered with their system, which they don’t have to pay for until such time as they turn that capacity on. Then we’re working with them to back fill so there’s more capacity for the next demand.”

Sun has been able to capitalise on HDS’ ‘Just In Time’ storage solution, and with the StorEdge 9900 system Fryer believes it has the perfect vehicle for such a concept.

“It’s easy to do with the 9900 because the frame is so big and you can put so much storage inside it. The 9900 there is an additional software product that you can add on that allows the customer to physically add some additional capacity,” explains Fryer.

However, the main stumbling block to such a concept is actually being able to predict what your future storage requirements are going to be.

With so much activity and overlap in the storage market the customer may be justified in feeling a little confused, but with all the main players reporting substantial growth over the last year it appears there are more than enough customers in the current market.

||**||STME solution boosts Emirates’ CRM plans|~||~||~| Effective storage and data management has become a crucial part of Emirates airlines’ CRM strategy. The airline’s data capacity is expanding rapidly with flight schedules, cargo data, customer data and its frequent flyer programme all containing critical information relating to the airline and its customers.

“As the aviation industry becomes increasingly competitive, one of the most important ways in which Emirates differentiates itself is creating customer services based on the information we collect about our clients. CRM is going to mean a vast explosion in information that has to be managed,” says Hugh Pride, director information technology, Emirates & director of Mercator.

“Emirates’ storage strategy enables us to store, manage and analyse tremendous volumes of customer data to help us retain our competitive advantage,” Pride explains.

The airline has turned to established storage player STME for a solution that will scale to the airline’s growing storage capacity, as well as providing an efficient, manageable and easy-to-access solution.

For Emirates, the choice of STME extended beyond just its capability to deliver the technology. “We look at the bigger picture, including support, commitment and the ability to deliver the solution. STME has demonstrated its ability to deliver on all of these, not just the technology,” says Frank Zenke, technical development manager, Mercator.

The STME solution incorporates both backup and recovery, with the backbone of the solution provided by EMC’s Symmetrix system. The EMC box enables the airline to consolidate data from various locations and systems in one simple solution.

“Whether we are storing data that comes out of our mainframe or storing data coming out of a Sun box, an NT box, or even a PC, we have one big storage farm, which gives us economies of scale,” says Pride.

Emirates also became the first company in the Middle East to incorporate ‘storage-on-demand,’ which essentially provides the airline with additional storage capacity and enables them to turn that capacity on as its storage requirements grow. The solution enables Emirates to store up to seven terabytes of data, but Zenke is predicting that the airlines’ data volume will more than triple within the next twelve months.

“Emirates needed a certain amount of capacity and we’ve delivered a system with much more than that. So when they need that extra capacity they will switch it on and they will pay us for that,” says Andrew Calthorpe, sales director, STME.

“We [STME] will be watching them, seeing what they are doing, and as they switch that [additional storage] on and pay us, we’ll probably get some more capacity and put it in the box ready for the next time they are going to switch it on. They are always ahead of the game,” Calthorpe explains.

According to Emirates, the implementation of the storage solution provides them with a more efficient way to store and manage customer data, as well as enabling the airline to focus on its critical business needs with the confidence that information will be available around the clock.

“From a business perspective the solution offers the high availability [24x7] of critical operational systems on which the airline depends. This allows [us] to focus on the business issues instead of IT availability,” adds Zenke.

Emirates is expected to go live this month following the completion of its initial testing and configuration work. The second phase will include “the implementation of SAN/NAS technology to cater for the rapid growth of the company,” says Zenke.

The second phase will step up the airline’s CRM strategy ensuring that customer data is accessible to all relevant departments.

“The second phase is [about] managing the vast data storage for CRM, not only to support CRM, but for the departments as well because CRM has to be out in the field, everybody must have access to these huge repositories,’ explains Pride.
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