NETWORK STORAGE: Dawn of a Software Era

Storage was perhaps the sector least affected by the overall economic
slowdown in IT in India in FY 2002-03. While a substantial portion of the Indian
enterprise storage market is still limited to disk-based storage (be it direct
attached or server-based), the year saw India Inc. moving more towards
network-based storage such as NAS and SAN. In addition, the rollout of disaster
recovery and business continuity solutions, coupled with a host of RBI and SEBI
guidelines, acted as catalysts for the Indian storage market, which grew by 15.7
percent to reach Rs 700.21 crore. While the storage hardware segment grew by
only 6 percent to reach Rs 629.17 crore, the software counterpart showed a more
spectacular growth of 65 percent to reach around Rs 71.04 crore.

The
total size of the Indian storage market in terms of volume was around 2,900 TB,
a growth of over 70 percent over the previous year. The cost per megabyte of
storage may have dropped drastically to about Rs 2 per MB, but the demand for
storage is growing increasingly. However, a substantial drop in margins on
storage hardware forced most of the vendors to look at the storage software
market to bolster their revenues. While traditional storage hardware powerhouses
like HP, Sun, IBM, Network Appliances took the software route, the pure-play
software vendors like CA, Veritas, EMC, Quantum, Legato made rapid strides. Even
new players like Bakbone made their entry into the big league while storage
consultancy market witnessed massive growth, with leading SIs like Apara
Networks recording 50 percent growth with a slew of turnkey projects.

Increasing NAS/SAN adoption

The year 2002—03 only substantiated what many had predicted–a record
high acceptance of NAS and SAN by the corporate India. While around 30 percent
of enterprise storage was still limited to DAS, SAN accounted for 49 percent of
the storage revenue pie. NAS accounted for 32 percent. But there was no specific
pattern in the migration from DAS to NAS or SAN. With NAS moving to gigabit
Ethernet, it matched SAN on network speed, but at the same time SAN technology
shifted to 2Gbps. However, NAS still had bottlenecks at the server level that
did not allow it to take full advantage of even the 1 Gbps offered by gigabit
Ethernet. Though some vendors like NetApps tried hard at pushing the concept of
unified storage with technologies like iSCSI, they failed to make much dent into
the market, save some large customers like GE, Kotak Mahindra Bank, ICICI, Texas
Instruments, Motorola, Cisco and Infosys.

Drivers for Market Growth

Storage consolidation was a crucial driver for the growth of the storage
market, as data sharing between disks and tapes became complicated and backups
difficult to administer. With RBI and SEBI guidelines making it mandatory for
banks and financial institutions to move towards a policy-based periodic backup
schedule, the BFSI sector was involved in large-scale consolidation of their
storage, be it tape libraries, or SAN or NAS to a central location. Most of the
big banks like ICICI and HDFC worked towards storage consolidation in 2002—03.

The total market for tape-based storage grew at 20 percent with tape-based
storage solutions undergoing a change and moving towards automated tape
libraries and linear tape-open (LTO) technology optimized for high capacity and
performance with high reliability, in either a stand-alone or an automated
environment. Ultrium (LTO) allowed for 200 GB capacity (2:1 compression) in a
single compact cartridge with speed of 30 Mbps as compared to 15 Mbps in DLTs.
Speeding up of e-governance projects, and a growing need for data archival were
the main drivers for this market. Apara’s turnkey project for the Andhra
Pradesh Data Center was one of the best examples.

Storage consultancy market also witnessed massive growth last year. Customers
are evaluating storage as a separate decision, apart from the server decision.
The storage buying decision has become increasingly complex and difficult to
deal with, for customers. Storage vendors like HP, IBM and Sun, besides SIs like
Apara are offering storage consultancy and management services bundled with
hardware to help customers plan and define a storage strategy, and finally
provide an end-to-end solution.

The verticals where maximum potential exists and where capital is already
being invested on a fairly large scale for storage consolidation include
banking, telecom, FMCG, petrochemicals and pharmaceutical sectors. No wonder,
some of the biggest turnkey projects in storage in 2002—03 were in IOCL,
Reliance, and ICICI, among others. Traditionally, industry sectors that rely on
mission-critical information have been telecom, finance, government and
manufacturing businesses. The Indian marketplace in FY 2002—03 was no
different from anywhere else when it came to these verticals leading the way in
implementing enterprise storage solutions. Of late, there has also been the
emergence of highly interactive banking applications and online banking, with a
lot of data involved. There have also been guidelines by SEBI and RBI to have
disaster recovery systems in place. This has also spurred the need for storage
systems.

The events of 11 September 2002 made it clear that catastrophic events can
take place and hurt a business for months or even years. In many cases, the cost
of recovery is simply too great. Banking and financial services, commercial
distribution, logistics, hospitals and travel are the sectors where disaster
recovery is beginning to be taken seriously in India. The storage software
market subsequently underwent a major boom, which sustained the infrastructure
market through this rough period.

Software-controlled activities within storage systems play a key role in
enhancing the performance of multiple hardware systems and supporting them. They
provide the end-user cost benefits and also provide an information
infrastructure for businesses, call centers, service providers and e-businesses
to execute, scale and provide better services. The key verticals that are
driving this market are banks, financial institutions and telecom. The vendors
addressing this market include EMC, Legato, Veritas and Computer Associates. EMC
is shifting its focus to storage software and is targeting the high-end storage
market. These products can work on any platform. Veritas, Legato and CA address
the SME segment in this space.

There is a combination of demand from large organizations and
the SME segment. As SMEs move up the value chain in terms of intelligent use of
information, they are increasingly compelled to consider the advantages of
implementing intelligent enterprise storage. For large IT-savvy organizations,
the benefits of consolidated networked storage in providing cost savings and
productivity gains will drive demand. For disaster recovery (DR) and business
process continuity (BPC), banking and finance, telecom and manufacturing are the
key sectors.

Vendor Slugfest

HP was the biggest gainer in the networked storage space, thanks to its
merger with Compaq. While earlier IBM was the market leader, the new HP now
enjoys the numero uno status. HP witnessed growth in two areas–automated
backups and SAN implementations. Though banking and telecom remained HP’s core
focus areas, the company bet big on the petroleum industry, IOCL being a major
project.

IBM India saw a great potential for network storage in the
IT-enabled services and call center spaces. The company’s integrated solutions
include a NAS gateway connecting to both the IP network and the SAN fabric. In
this kind of solution, Big Blue used an enterprise storage server (ESS) to store
data with a clustered NAS gateway providing access. Two such solutions were
deployed last year. Also, IBM installed 50 to 70 low-end NAS boxes and 15 to 20
high-end boxes during the same period.

Network Appliance majorly banked on the direct access file
system (DAFS) and iSCSI technologies to offer products that simulated
block-based storage using file-based commands. Its biggest implementation in the
country was a 45 TB rollout at Texas Instruments India.

EMC used a NAS front-end that plugged into its SAN back-end
system. The company has implemented a SAN for AirTel that’s used for billing
and CRM. Wipro, HCL and Tata Infotech had practices offering Sun storage.
Quantum had 250 NAS installations in India with customers including Anna
University, ADA, NCL, BEL and Musicworld.

Rajneesh De