The dwindling cost of storage hardware is driving vendors to radically change the way they design, sell and deliver storage devices and services. These efforts to recoup what reports cite as a 30% drop in storage prices are driving five major trends that will affect how midmarket organizations purchase and use storage in 2008, according to research firm Gartner Inc.
1. Vendors will offer more high-value services.
Adam Couture, an analyst at the Stamford, Conn.-based research firm, said storage vendors will begin to focus on consulting, project management and managed services, leaving the basic services of fixing broken hardware to channel partners and third-party providers.
Couture said CIOs are going to lose that proactive service advocate with their storage vendors because service people will be working for someone else. This shift will also cut into a storage vendor's ability to escalate services during major events.
2. Vendors will push self-service storage.
Couture said vendors are increasingly designing their storage arrays for e-support and self-service. He said these products have built-in diagnostic systems and fewer modules associated with them so end users can make fixes on their own.
"They're asking you to do more self-support, which puts increased demands on your internal staff," Couture said. "People are going to have to learn those tools. That's going to take time away from their primary responsibilities. On the positive side, the resolution time for problems is going to go down because your people are already on site."
Couture said this trend will require CIOs to clearly define the roles of staff members who have to deal with these self-service technologies because unclear communication can lead to serious downtime. Also, Couture said CIOs should negotiate discounts on hardware and services from their vendors since those vendors are saving money by shifting to this self-service model.
3. The storage service industry will consolidate.
Couture said consolidation has been a fact of life in the storage hardware industry for years. Now consolidation is spreading to the hardware service industry as well. Companies like IBM, EMC Corp., Sun Microsystems Inc. and Symantec Corp. have gobbled up storage service companies in recent years.
Couture said companies are making these acquisitions to expand their market presence in the more lucrative high-end storage services industry and to fill voids in their service offerings.
"It means that you're going to see less competition out there," he said. "Fewer competitors mean that you're going to be paying more. On the good side, it gives you one throat to choke. You're going to have one company to turn to for services and one company to take responsibility."
4. Warranties will erode.
To save money, storage vendors are cutting back the scope of services guaranteed in their standard hardware warranties, Couture said.
Couture said vendors are offering tiered warranties, for which CIOs can spend a premium if they really to preserve that high-end warranty. He said CIOs need to apply these tiers of storage warranties according to their information lifecycle management plans. Storage hardware with critical data needs higher-end warranties.
"This could mean increased demands on your staff if the basic warranty is custom-installable -- parts only and you install, it will increase demands on your staff."
5. Vendors will move to business-based service pricing.
Business-based service pricing is an emerging trend wherein end-user companies pay their service providers a fee that it couples to the business rather than to the use of IT infrastructure. This trend could start to affect the managed services that storage vendors are offering. It will also affect the entire outsourcing industry.
Instead of paying a provider a fee based on the number of users supported by a product or the number of gigabytes stored with a provider, the end-user organization pays a fee based on a business process or a transaction.
Couture cited the example of Scandinavian Airlines Systems (SAS) and its outsourcing provider, Computer Sciences Corp. (CSC). In the past, SAS paid the El Segundo, Calif., outsourcing provider a fee based on the traditional manner, but recently the airline signed a deal in which it agreed to pay CSC a fee based on the number of passengers who flew with the company that month.
"This is dynamically different," Couture said. "They're linked to your business -- your success or lack thereof. The SLAs [service-level agreements] aren't linked to your infrastructure. They're linked to your business metrics, what makes you profitable. They are committed to your success because your success is their success."
Couture said this trend will force CIOs to document the relationship of IT to business processes so they can determine the appropriate fees to pay.
Let us know what you think about the story; email: Shamus McGillicuddy, News Writer