Entries Tagged 'Storage' ↓

Iron Mountain & Autonomy – between a rock and a hard place?

Two companies central to our coverage of information management are having their own particular – and distinct – issues with shareholders and equity analysts.

Autonomy has been having its run-ins with London’s equity analysts for some time. Not all of them, but a core and increasingly vocal group of them. Generally they regularly question a few things: how the company calculates organic growth of its core IDOL business; cash conversion; and why it hasn’t bought a company after saying it would do and raising £500m of convertible debt to help it do so, back in February 2010. We’re also weighed in on some of these issues.

Autonomy regularly takes on these doubters on its quarterly calls and also does the same during the quarter on its website, which is at least a refreshing change from companies that stay completely mute on such matters. However the answers are often very simplistic. In a post dated March 30, 2011 entitled, “How should we think about Autonomy’s penetration of its end markets, when we attempt to evaluate the opportunity for growth?” that most of the world’s top software companies OEM IDOL and thus are “building their future products with IDOL deeply embedded and paying Autonomy a royalty.” Are they? Autonomy doesn’t distinguish between its two main OEM product when it announces OEM deals, but there’s a big difference between OEMing IDOL and OEMing its document filters. And as we have discussed before we think a lot of the OEM deals are for the latter, rather than for IDOL itself, although we have no way of proving that, except to say that we speak regularly to these leading software vendors and they don’t appear to be using IDOL as their core search and classification engine nearly as widely as Autonomy claims. Ironically given what Autonomy does for a living, a fair bit of the to and fro on the site is semantic-related, e.g. discussion of what “early spring” or “Winter with snowdrops” scenarios mean in terms of the guidance given by the company to analysts. All will no doubt become clearer when it announces its Q1 results, due Thursday April 28.

Over at Iron Mountain, some dissident shareholders have been putting pressure on the company to take on board its slate of directors and eventually turn itself into a Real Estate Investment Trust (REIT), mainly for its beneficial tax status. We cover what used to be called the digital business – the back up and recovery, e-Discovery, archiving and other software that’s mostly been added via acquisitions over the past few years. But that doesn’t seem to hold any attraction to hedge fund Elliott Management, which owns just less than 5%. It was the company that put forward the slate of directors and advised the company to turn itself into a REIT and in general to focus on its core – non-digital – business. Elliott and even larger shareholder Davis Advisors (it owns a shade less than 20% of the outstanding shares) were annoyed when the company dropped a poison pill on March 23 to guard against a takeover. This week Elliott laid out its grievances in another letter to the board, urging it to reverse the poison pill and generally sit up and take notice of what it has to say.

It’s hard to tel where this will end, but it has already caused disruption to Iron Mountain’s business at a time when it is trying to get some of its digital units – notably e-Discovery – back in track after a very tough 2010. We’ll know if it’s had an effect on its Q1 performance when it announces its results, most likely int he last week of April. The shares, as is common with these sorts of investor challenges have enjoyed a strong run-up, and are currently at or around a 52-week high. The company’s annual shareholders meeting is coming up soon too. Although the date is not yet known, all shareholders on record as of April 12 will be allowed to vote at it. It could get quite lively.

451 is hiring!

As you may have seen from recent announcements, The 451 Group is expanding and both organically and inorganically.

As part of that  we’re looking for a bunch of new analysts, two of which are within the information management and storage areas, both of which are US-based.

Information governance and e-Discovery analyst

  • More details in the ad here

Senior storage analyst

  • More details in the ad here

In both cases the email to contact is careers@the451group.com

We basically look for very smart people who can write and who are passionate about their chosen area. If you have those three attributes, you’re a long way to becoming a 451 analyst.

Information management preview of 2011

Our clients will have seen our preview of 2011 last week. For those that aren’t (yet!) clients and therefore can’t see the whole 3,500-word report, here’s the introduction, followed by the titles of the sections to give you an idea of what we think will shape the information management market in 2011 and beyond. Of course the IT industry, like most others doesn’t rigorously follow the wiles of the Gregorian calendar, so some of these things will happen next year while others may not occur till 2012 and beyond. But happen they will, we believe.

We think information governance will play a more prominent role in 2011 and in the years beyond that. Specifically, we think master data management and data governance applications will appear in 2011 to replace the gaggle of spreadsheets, dashboards and scorecards commonly used today. Beyond that, we think information governance will evolve in the coming years, kick-started by end users who are asking for a more coherent way to manage their data, driven in part by their experience with the reactive and often chaotic nature of e-discovery.

In e-discovery itself, we expect to see a twin-track adoption trend. While cloud-based products have proven popular, at the same time, more enterprises buy e-discovery appliances.

‘Big data’ has become a bit of a catchall term to describe the masses of information being generated, but in 2011 we expect to see a shift to what we term a ‘total data’ approach to data management, as well as the analytics applications and tools that enable users to generate the business intelligence from their big data sets. Deeper down, the tools used in this process will include new BI tools to exploit Hadoop, as well as a push in predictive analytics beyond the statisticians and into finance, marketing and sales departments.

SharePoint 2010 may have come out in the year for which it is named, but its use will become truly widespread in 2011 as the first service pack is release and the ISV community around it completes their updates from SharePoint 2007. However, we don’t think cloud-based SharePoint will grow quite as fast as some people may expect. Finally, in the Web content management (WCM) market – so affected by SharePoint, as well as the open source movement – we expect a stratification between the everyday WCM-type scenario and Web experience management (WEM) for those organization that need to tie WCM, Web analytics, online marketing and commerce features together.

  • Governance family reunion: Information governance, meet governance, risk and compliance; meet data governance….
  • Master data management, data quality, data integration: the road to data governance
  • E-discovery post price war: affordable enough, or still too strategic to risk?
  • Data management – big, bigger, biggest
  • Putting the BI into big data in Hadoop
  • The business of predictive analytics
  • SharePoint 2010 gets real in 2011
  • WCM, WEM and stratification

And with that we’d like to wish all readers of Too Much Information a happy holiday season and a healthy and successful 2011.

Sizing and analyzing the cloud-based archiving market

The cloud archiving market will generate around $193m in revenues in 2010, growing at a CAGR of 36% to reach $664m by 2014.

This is a key finding from a new 451 report published this week, which offers an in-depth analysis of the growing opportunity around how the cloud is being utilized to meet enterprise data retention requirements.

As well as sizing the market, the 50-page report – Cloud Archiving; A New Model for Enterprise Data Retention – details market evolution, adoption drivers and benefits, plus potential drawbacks and risks.

These issues are examined in more detail via five case studies offering real world experiences of organizations that have embraced the cloud for archiving purposes. The report also offers a comprehensive overview of the key players from a supplier perspective, with detailed profiles of cloud archive service providers, with discussion of related enabling technologies that will act as a catalyst for adoption, as well as expected future market developments.

Profiled suppliers include:

  • Autonomy
  • Dell
  • Global Relay
  • Google
  • i365
  • Iron Mountain
  • LiveOffice
  • Microsoft
  • Mimecast
  • Nirvanix
  • Proofpoint
  • Sonian
  • Zetta

Why a dedicated report on archiving in the cloud, you may ask? It’s a fair question, and one that we encountered internally, since archiving aging data is hardly the most dynamic-sounding application for the cloud.

However, we believe cloud archiving is an important market for a couple of reasons.  First, archiving is a relatively low-risk way of leveraging cloud economics for data storage and retention, and is less affected by the performance/latency limitation that have stymied enterprise adoption of other cloud-storage applications, such as online backup. For this reason, the market is already big enough in revenue terms to sustain a good number of suppliers; a broad spectrum that spans from Internet/IT giants to tiny, VC-backed startups. It is also set to experience continued healthy growth in the coming years as adoption extends from niche, highly regulated markets (such as financial services) to more mainstream organizations. This will pull additional suppliers – including some large players — into the market through a combination of organic development and acquisition.

Second, archiving is establishing itself as a crucial ‘gateway’ application for the cloud that could encourage organizations to embrace the cloud for other IT processes. Though it is still clearly early days, innovative suppliers are looking at ways in which data stored in an archive can be leveraged in other valuable ways.

All of these issues, and more, are examined in much more detail in the report, which is available to CloudScape subscribers here and Information Management subscribers here. An executive summary and table of contents (PDF) can be found here.

Finally, the report should act as an excellent primer for those interested in knowing more about how the cloud can be leveraged to help support ediscovery processes; this will be covered in much more detail in another report to be published soon by Katey Wood.

3PAR’s rocketing valuation; belief, scarcity and little bit of luck

I had the opportunity to meet up with David Scott, CEO of 3PAR, the current belle of the ball in storage as the bidding war between HP and Dell continues to intensify (read our analysis of the deals for free by clicking here). Though discussion of any details concerning the acquisition process was strictly off limits, Scott provided some interesting color on why he believes the battle for 3PAR is taking his company’s valuation to unprecedented levels.

Actually, our conversation was a continuation of a discussion that we began over dinner at 3PAR’s analyst event in California a few weeks ago. During that discussion I asked Scott why 3PAR hadn’t yet been acquired; his response pretty much described the events that are now playing out. Scott believed there was in effect a Mexican stand-off taking place; multiple vendors would potentially be very interested in making a bid for 3PAR, but a fear of being outbid – and losing out – was holding them back. Thus, for the time being it was generally in all potential suitors’ best interests for 3PAR to remain independent.

Why Dell decided to break rank and shoot first is not entirely certain at this point — though HP losing its CEO may have been a trigger — and was certainly not on the menu for discussion with Scott. But the CEO was more forthcoming on the reasons for this fear of being outbid, which are rooted in 3PAR’s scarcity; ie the belief that there is no viable alternative acquisition target to 3PAR. The bidding war that has played out since Dell made its first offer would appear to support this. Why? Scarcity seems like a crazy assumption to make in an industry that is constantly spitting out new startups.

Scott’s reasoning for this scarcity has both demand-side and a supply-side dimensions, both of which have taken a couple of turns of the IT cycle to come to fruition. On the supply side; cast your mind back a decade, and the IT world was alive with the prospect that ‘xSPs’ (especially storage service providers and application service providers) would play a transformative role in delivering IT as a service; Cloud 1.0, if you like. What these xSPs required was a way of building these services on a scalable, secure and shared technology infrastructure. Unfortunately for SSPs such as Storage Networks, the infrastructure components to build such a stack were not available, and the entire model collapsed under the weight of having to build dedicated systems for each customer.

But the promise of the xSP model was also the catalyst for innovation at all levels of the IT stack. There was nothing inherently wrong with the model of IT-as-a-service – it was, and remains, highly attractive. What was needed was a new underlying architecture that could provide the required scale and flexibility as cost effectively as possible, such as blade servers, virtualization software and ‘utility’ storage.

Thus, as interest in the xSP model began to build, VC money started to flow into storage startups developing ‘carrier grade’ platforms; in particular Cereva Networks, Yotta Yotta, Zambeel and 3PAR. Only one of those companies managed to make a go of it; the rest succumbed to the same burst bubble that did for the xSPs. Cereva (which had raised almost $140m in VC funding) collapsed in 2002, Zambeel (which raised around $66m) closed its doors in 2003, while the assets of YottaYotta  (which took in around $100m) were eventually acquired by EMC.

As the only remaining player in this new generation of high-end storage platforms, Scott says 3PAR was in a unique position. Perhaps even more crucially, these failures meant VCs were now loath to invest in high-end storage startups; even if the next “3PAR killer” came along, it would have struggled for funding. Instead, VCs turned their attention to startups targeting the mid-range storage market – LeftHand Networks, EqualLogic, Compellent, Pillar — which was growing much more quickly than the now-slowing high-end space.

Scott admits 3PAR came under pressure to target the mid-range space more aggressively (and it did release smaller versions of its InServ arrays), but the company’s core efforts remained on the high-end, with a continuing focus on direct-, rather than channel-based, sales. Scott and his team remained as convinced as ever that ‘utility’ computing was real, and would eventually pay dividends via 3PAR’s scalable storage platform.

In particular it found traction with the next generation of service providers –such as managed hosting providers and telcos – that, subscribers to the cloud model attest, will collectively host the vast majority of the enterprise IT workloads of the future. Indeed – and this is where the demand-side argument comes in – the post-recession reality for organizations of all types and sizes – from financial services giants to local government offices – is that they are looking for more cost effective methods of running their IT processes.

These service providers differentiate themselves on quality of service and cost, and the only way of achieving this – according to Scott – is through best of breed IT infrastructure. Scott and co have made much of the fact that seven of the ten largest service providers by revenue are 3PAR customers, and we’re sure this point is not lost on HP, Dell or any other would-be acquirer.

Of course, with hindsight it’s easy to make the facts fit a story, but we’d note that 3PAR‘s own strategy and messaging has scarcely changed since day one. 3PAR has always targeted ‘utility’ computing, and has stuck with the term as the rest of the industry dispensed with what to them was just the latest buzzword (for proof, see the first research report (451 clients only) we wrote on 3PAR, back in 2002). Indeed, for 3PAR and Scott, delivering IT as a utility is an integral part of its proposition; it gets to the core of why the company believes it is different, and why (at least) two giants of the industry are prepared to pay well-over-the odds to own.

EMC World redux, and EMC’s own ‘journey’

We recently attended EMC’s annual user conflab – EMC World – in Boston. The 451 Group was there in force, with Kathleen Reidy and Katey Wood representing our Information Management agenda, as well as Henry Baltazar and myself on the storage side. Yes, it’s taken me longer than I though to put some thoughts together – which I am attributing to the fact that I have been involved in the Uptime Institute’s Symposium in New York this week; an excuse that I am sticking to!

For our take on some of the specific product announcements that EMC made at the show, I would refer you to the reports we have already published (on V-Plex, Atmos, SourceOne, mid-range storage and Backup and Recovery Systems). But aside from these, I was struck by a few other broader themes at EMC that i think are worth commenting on further.

First, the unavoidable — and even overwhelming — high-level message at EMC World revolved around the ‘journey to the private cloud,’ – in other words, how EMC is claiming to help customers move from where they are now to a future where their IT is more efficient, flexible and responsive to the business. Whether or not you believe the ‘private cloud’ message is the right one – and I talked with as many ‘believers’ as I did ‘skeptics’ – there’s no doubt that EMC has the proverbial ball and is running with it. I can’t think of many other single-vendor conferences that are as fully committed to cloud as EMC, and given EMC’s established position in the enterprise datacenter and its range of services that range across virtualization, security and information management, you can understand why it has cloud religion.

But there undoubtedly is risk associated with such a committed position; I don’t believe ‘cloud’ will necessarily go the way of ‘ILM,’ for example, but EMC needs to start delivering tangible evidence that it really is helping customers achieve results in new and innovative ways.

Another issue EMC has to be careful about is its characterization of ‘virtualization’ versus ‘verticalization.’ This is designed to position EMC’s ‘virtualization’ approach as a more flexible and dynamic way of deploying a range of IT services and apps across best-of-breed ‘pools’ of infrastructure, more dynamically than through the vertical stacks that are being espoused by Oracle in particular.

Though I believe that a fascinating — even idealogical — battle is shaping up here, it’s not quite so clear-cut as EMC would have you believe. What is a vBlock if not a vertically integrated and highly optimized storage, server, network and virtualization stack? And doesn’t the new vBlock announcement with SAP offer an alternative that is in many ways comparable with the Oracle ‘stack’ (especially if you throw in Sybase as well)? I get the difference between an Oracle-only stack and a more partner-driven alternative, but I think the characterization of virtualization as ‘good’ and verticalization as ‘bad’ is overly simplistic; the reality is much more nuanced, and EMC itself is embracing elements of both.

Speaking of journeys, it’s also clear to me that EMC is on a journey of its own, both in terms of the products it offers (and the way it is building them), and in terms of how it positions itself. EMC has always been a technology company that lets its products do the talking; but in an era where larger enterprises are looking to do business with fewer strategic partners, this isn’t always enough. Hence, the ‘journey to the private cloud’ is designed to help EMC position itself as a more strategic partner for its customers, while efforts such as the VCE (VMware, Cisco and EMC) coalition bring in the other infrastructure elements that EMC itself doesn’t offer. At the conference itself, much of the messaging was focused on how EMC can help deliver value to customers, and not just on the products themselves.

This approach is a rather radical change for EMC. Though it remains at its core a conservative organization, I think this more ‘holistic’ approach is evidence that two senior management additions EMC has added recently are starting to make their presence felt.

The first hire was that of COO Pat Gelsinger, an ex-Intel exec who has been brought to assemble a plan to execute on the private cloud strategy. As well as a very strong technical pedigree, Gelsinger’s strength is the combination of an ability to conceive and articulate the big picture, as well as understand the tactical steps that are required to realize this; including product development, customer satisfaction and M&A. It seems to me that Gelsinger is already immensely respected within EMC, and already seems regarded by some as CEO-in-waiting; a transition that would be a shoe-in should this strategy pay off.

The other key addition is that of ex-Veritas and Symantec CMO Jeremy Burton as EMC’s first chief marketing officer. To me, this appointment underscores EMC’s need to market itself both more aggressively, as well as differently, in order to maintain and grow its position in the market. Though Burton has only been in the job for a few weeks, we got a sense at EMC World of how he may reshape EMC’s public image; a more light-hearted approach to keynotes (some of which worked better than others, but you have to start somewhere!) bore Burton’s hallmarks, for example.

But if Burton came to EMC for a challenge, I think he has one; EMC’s reputation and brand in the large datacenter is solid, but it has work to do to build its image in the lower-reaches of the market, an area that CEO Joe Tucci has highlighted as a major growth opportunity.

Although this is as much a product challenge as anything else, EMC must also carefully consider how it brands itself to this audience. Will an existing EMC brand – Clariion, Iomega or even Mozy — appeal to a smaller storage buyer, or does it come up with something entirely new? Given its disparate product set here, could an acquisition of an established smaller-end player provide it with an instant presence?

Then there’s the issue of direct marketing; today, EMC spends a fraction of its rivals on advertising in the trade and business press. Given Burton’s background at Oracle and Symantec, plus the growing imperative for IT companies to appeal to the C-level suite to reinforce their strategic relevance, could EMC soon be featuring on the back page of the Economist?

Upcoming presentation on virtualization and storage

I’m going to be presenting the introductory session at a BrightTalk virtual conference on March 25 on the role and impact of the virtual server revolution on the storage infrastructure. Although it’s been evident for some time that the emergence of server virtualization has had — and continues to have — a meaningful impact on the storage world, the sheer pace of change here makes this a worthwhile topic to revisit. As the first presenter of the event — the conference runs all day — it’s my job to set the scene; as well as introducing the topic within the context of the challenges that IT and storage managers face, I’ll outline a few issues that will hopefully serve as discussion points throughout the day.

Deciding on which issues to focus on is actually a lot harder than it sounds — I only have 45 minutes — because, when you start digging into it, the impact of virtualization on storage is profound on just about every level; performance, capacity (and more importantly, capacity utilization), data protection and reliability, and management.

I’ll aim to touch on as many of these points as time allows, as well as provide some thoughts on the questions that IT and storage managers should be asking when considering how to improve their storage infrastructure to get the most out of an increasingly virtualized datacenter.

The idea is to make this a thought-provoking and interactive session. Register for the live presentation here: http://www.brighttalk.com/webcast/6907.  After registering you will receive a confirmation email as well as a 24-hour reminder email.  As a live attendee you will be able to interact with me by posing questions which I will be able to answer on air.  If you are unable to watch live, the presentation will remain available via the link above for on-demand participation.

Bridging the “storage-information” gap

When Nick first unveiled this blog last month he rightly noted ‘storage’ as one of the many categories that falls into a capacious bucket we term ‘information management.’ With this in mind he reminded me that it would be appropriate for the 451 Group’s storage research team to contribute to the debate, so here it is!

For the uninitiated, storage can appear to be either a bit of a black hole, or just a lot of spinning rust, so I’m not going to start with a storage 101 (although if you have a 451 password you can peruse our recent research here). Suffice to say that storage is just one element of the information management infrastructure, but its role is certainly evolving.

Storage systems and associated software traditionally have provided applications and users with the data they need, when they need it, along with the required levels of protection. Clearly, storage has had to become smarter (not to mention cheaper) to deal with issues like data growth; technologies such as data deduplication help firms grapple with the “too much” part of information management. But up until now the lines of demarcation between “storage” (and data management) and “information” management have been fairly clear. Even though larger “portfolio” vendors such as EMC and IBM have feet in both camps, the reality is that such products and services are organized, managed and sold separately.

That said, there’s no doubt these worlds are coming together. The issues we as analysts are grappling with relate to where and why this taking place, how it manifests itself, the role of technology, and the impact of this on vendor, investor and end-user strategies. At the very least there is a demand for technologies that help organizations bridge the gap – and the juxtaposition – between the fairly closeted, back-end storage “silo” and the more, shall we say, liberated, front-end interface where information meets its consumers.

Here, a number of competing forces are challenging, even forcing, organizations to become smarter about understanding what “information” they have in their storage infrastructure; data retention vs data disposition, regulated vs unregulated data and public vs private data being just three. Armed with such intelligence, firms can, in theory, make better decisions about how (and how long) data is stored, protected, retained and made available to support changing business requirements.

“Hang on a minute,” I hear you cry. “Isn’t this what Information Lifecycle Management (ILM) was supposed to be about?” Well, yes, I’m afraid it was. And one thing that covering the storage industry for almost a decade has told me is that it moves at a glacial pace. In the case of ILM, the iceberg has probably lapped it by now. The hows and whys of ILM’s failure to capture the imagination of the industry is probably best left for another day, but I believe that at least one aim of ILM – helping organizations better understand their data so it can better support the business — still makes perfect sense.

What we are now seeing is the emergence of some real business drivers that are compelling a variety of stakeholders – from CIOs to General Counsel — to take an active interest in better understanding their data. This, in turn, is driving industry consolidation as larger vendors in particular move to fill out their product portfolios; the latest example of this is the news of HP’s acquisition of Australia-based records management specialist Tower Software. Over the next few weeks I’ll be exploring in more detail three areas where we think this storage-information gap is being bridged; in eDiscovery, archiving and security. Stay tuned for our deeper thoughts and perspectives in this fast-moving space.