As data and legal regulations proliferate, often in seemingly equal amounts, across every industry, some companies,...
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particularly smaller firms, are finding that the best way to manage the sprawl is to hand the reins to someone else. And though industry experts say it remains unclear just where the backup outsourcing market is headed in general, the users who have chosen it say they swear by it.
According to Thomas Trillo, chief operating officer for Ridgefield Capital, a hedge fund that registered with the Securities and Exchange Commission (SEC) under the Investment Advisor's Act of 1940 after new guidelines went into effect in February (see Hedge funds snub SEC email archiving rule ) his firm soon found itself overwhelmed by compliance requirements for its data.
Ridgefield Capital explored several options for outsourcing firms, finally going with Eze Castle Integration Inc., which specializes in off-site backup and disaster recovery for the financial market. Another appeal to Eze Castle besides its expertise in Ridgefield's particular industry, Trillo said, was the size of the company. Eze Castle has more than 260 clients, according to its Web site, and has locations in Boston, New York, London, San Francisco and Stamford, Conn.
Ridgefield Capital stores 150 GB of data off site with Eze Castle's data center in Boston; the company also outsources management of its entire IT infrastructure, including hardware and software purchases, to Eze Castle as well.
"Some people look at outsourcing as a risk because you're putting all your eggs in one basket, but we felt it was prudent to have one service provider for the sake of convenience and cost management," Trillo said.
But, he said, "The bottom line is that as a hedge fund, our focus is trading and investing. Eze Castle has IT expertise we never will, and we also benefit from their economies of scale when it comes [to] doing hardware and software purchases through them."
Data growth and lost laptops: Two more reasons to outsource
For organizations both large and small, sheer data growth and the burgeoning amount of data kept on devices such as laptops are the other main factors that makes outsourcing backups a more appealing option.
For small companies like South Carolina-based Strahan Associates Architects, outsourcing backup has become the only viable option when the growth of critical data has come up against a lack of internal IT resources.
"We have seven people in our office total, and I'm the de facto IT guy," said Strahan engineer Chuck Ladd. Previously, Strahan had been sending critical data to a removable Integrated Drive Electronics (IDE) disk that plugged into a Windows 2000 server. That data was only up to 41 GB in incremental backups a day, but as more and more architectural data that previously had been kept on paper, such as computer-aided design (CAD) drawings, are put onto electronic storage, that amount was only growing, Ladd said.
"And even if we don't have a lot of data, our critical data is crucial," Ladd said. "We absolutely can't operate for a minute without it."
It had formerly been Ladd's responsibility to shut the server down, remove the disk and take the disk to a safe-deposit box every week.
"Murphy's Law says that if we have a failure, it's going to happen on a Thursday because that's the day before I usually swap the disk out," Ladd said. "We realized we just couldn't rely on swapping out that disk anymore."
This past January, Strahan Associates decided to outsource its backup with Arsenal Digital Solutions Inc.'s ViaRemote service, which pulls data off site through the firm's cable modem and stores it at a data center in Raleigh, N.C.
Ladd said he estimates the outsourced backup service saves his firm $600 per month on the labor time alone, as well as the downtime required to shut down the company's server and swap out the removable disk.
"That's more than it costs us per month for the service," Ladd said. "So it took us literally no time to recover the cost."
Data growth has also forced larger companies to consider outsourcing as storage administrators struggle to keep track of a large or mixed environment, especially one that includes portable devices, such as laptops and personal digital assistants, which store critical data for the company.
"Before, when our employees traveled, it could be as many as 10 days before their laptops were backed up, because they had to be connected to our network for the data to be collected," said Prabhakar Sonparote, IT director at Synovate Americas, a global market research company that has multiple petabytes of data on IBM storage at its headquarters in Chicago. From there, Sonparote said, the previous backup system had required an IT person to mail backup tapes for storage offsite with Iron Mountain Inc.
"It got very cumbersome," Sonparote said. "People didn't remember to log in, people didn't remember to mail the tapes -- there was a lot of risk there."
Despite being many orders of magnitude larger, Synovate is now using the same ViaRemote product as Strahan Associates, purchased through Sun Microsystems Inc. Managed Enterprise Services, albeit on a much bigger scale chiefly because it backs up data automatically from any of the company's laptops that connect to the Internet, regardless of whether or not they are dialed in to the Synovate virtual private network (VPN).
The biggest plus for outsourcing backups overall, Sonparote said, is the ability to keep track of data on company laptops. "We had a lost laptop at O'Hare [International] Airport recently, which was supposed to be with a rep doing a client presentation in London," Sonparote remembered. "Under our old tape system, that would have been a disaster, but we had the presentation restored from the main ViaRemote repository in Chicago before they landed in London."
"Backup outsourcing is definitely on the rise," according to W. Curtis Preston, analyst with GlassHouse Technologies Inc. (GlassHouse also has its own outsourcing business, a separate department from Preston's, within the company)."Of all the applications in the data center, it's the one that it makes the most sense to outsource," Preston said. "I can't think of any other application when, as soon as you get really good at it, you leave it."
In general, backup is a junior position in most IT departments, and an unpleasant job, according to Preston, who was himself a backup administrator in a former career.
"There's no career path there for most people in most organizations," Preston said. "Virtually, the only place you find people who do have a career path and long-term expertise in backups are outsourcing firms."
But while some in the industry are gung ho about it, analysts say it's difficult to tell just how big the market might be for backup outsourcing in general.
According to Robert Stevenson of TheInfoPro, the market for outsourcing may have a ceiling, as the Fortune 1000 hasn't caught on to outsourcing outside of email archiving. "There's some evidence they're looking into consultative services for capacity planning and data classification," Stevenson said of the largest enterprises. "Where we're seeing outsourcing is more of a small-to-medium business phenomenon on the whole, generally in the $10 million to $200 million revenue range."
According to a report by the Enterprise Strategy Group, while only 23% of those surveyed said they would consider an outsourced archiving service, 65% also said they would consider such a service because it would provide off-site data protection, a figure that could bode well for backup services. The majority of those who said they would not consider outsourcing said it was because of data security concerns.
Meanwhile, however, outsourcing firms themselves remain sanguine about the possibilities for the market.
"Backup is a necessary evil for most companies," said Tom Ludden, vice president of customer support services for GlassHouse. "But it's becoming increasingly difficult to bring in the right resources in terms of personnel and really stay current on change management and best practices for backup."
In response, traditional backup service providers are getting in on outsourcing, too. Third-party reporting software maker Aptare Inc. has fashioned an Outsourced Edition of its product, which is used by GlassHouse, as well as Hitachi Data Systems Inc. Backup maker Asigra Inc. and partner Exanet Inc. also recently announced that Digital Storage Corp., an outsourcer with 195 clients, is using its combined product to provide backup outsourcing services.