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Making money in the SANbox

Storage area networking may not be sexy, but Jennifer Fonstad explains why investors would do well to get interested.

    It seemed to come out of nowhere. IT professionals used to talk about storage like people used to drink coffee before Starbucks came along--need it, got it, but not that interesting.

    Today, the storage market is hot. With $13.5 billion in sales last year and an eye-popping 35 percent increase year-over-year, folks are paying attention. SANs (storage area networks) represent half that market and all of the growth.

    It's not just about the numbers either. It's about the SAN revolution--a network-based architecture that separates servers from storage and provides tremendous performance and flexibility around data management, performance not even mainframes could supply in the old world. It came just in time too. The Meta Group predicts that by 2004 companies will be managing ten times as much data as they do today.

    The Internet has emerged as one of the key driving forces behind this data explosion. Whether it be server logs of Web site usage or critical customer-transaction history, data has begot data. What's more, business applications that use data effectively have led to significant competitive advantages for enterprises.

    Data has become a critical asset for e-businesses. Think about it: As data becomes more central to the enterprise, more individuals and groups need access to that data, adding layer upon layer of complexity as applications and integration efforts try to make this work.

    The problems surrounding the sharing of storage are huge. Large storage suppliers have developed methods for administrators to share boxes but not truly share storage. This is where SANs will continue to define the storage market.

    Storage networks provide the flexibility and scalability businesses need to handle all of those new disk drives (i.e., all that data). Many Web-centric companies, such as Alta Vista, have racks full of servers to handle Web applications on the front end and racks full of servers to handle database applications on the back end.

    Network storage in business
    Even older companies with well-established data centers, such as J.P. Morgan, are seeing more servers stacked in racks to handle the growing application demands. A distributed, network-based architecture gives businesses and applications significant flexibility and scalability to enable multisource access to that data, allowing for sharing and collaboration.

    Network-based architecture for storage begins to solve another critical challenge in the data center, which is handling the increased number of servers. Because of the need for continuous availability of information and applications that use that data, there is an increasing need for not only storage networks but also server networks or server clusters. Companies like Troika Networks (a DFJ company) and Network Appliance are driving the convergence of storage networking and clustering with a unified standards-based infrastructure to address the needs of business applications that scale across multiple servers and storage subsystems.

    Troika's solution, for example, leverages the same wire that is in the data center and sharing distributed access to a stored file through a high-speed network without the overhead of traditional TCP/IP communications. These innovative companies that understand the relationship between applications and data, and recognize the demand for application-focused data storage, will be the ones to watch. A number of companies today are working with different mechanisms and protocols to cobble these networks together.

    Big payoff for early adopters
    When SANs first emerged, many companies still relied on a simple SCSI over fibre-channel adaptor to put these systems together. This put interoperability to the test and greatly inhibited performance. Despite these challenges, early adopters of SANs have reaped huge benefits for their business both in terms of cost and in service to their customers.

    One company that has benefited is Liquid Audio, an e-commerce company that recently installed a fibre-channel storage area network and server-clustering environment for its worldwide business-to-business music-delivery application. Liquid Audio considers its data-center infrastructure to be a significant competitive advantage because it enables continuous application availability that yields uninterrupted service to customers.

    Another example on the outsourced-storage services side is ITIS Services, a company founded by former EMC sales executives. The demand for application-driven data-center networks is keeping new service providers like ITIS extremely busy. The firm is strictly focused on storage-networking consulting and integration at Fortune 500 companies.

    Service Level Agreements (SLAs) requiring the highest levels of application availability make it necessary for ITIS to utilize new innovations in its data-center proposals for clients. For example, ITIS is incorporating intelligent controllers from Troika Networks in many of its solutions to take advantage of automatic fail-over and fail-back features for continuous application availability. ITIS can't hire people fast enough to keep up with new business demands at clients such as large financial institutions, publishing houses, and industrial manufacturers.

    And it is still early in the SAN game.

    Companies continue to innovate next-generation solutions. Companies like Hitachi Data Systems and Network Appliance work with vendors like Troika to deliver the fail-safe, high-performance systems that data centers will continue to need as they build out their storage area and server-to-server networks. Virtual Interface (VI), a protocol originally developed by Compaq Computer, Intel, and Microsoft, is emerging as an integral part of the SAN solution. It enables applications to talk directly to one another in the data center, bypassing the high overhead of the processing-intensive TCP/IP software stack.

    VI is being deployed today on fibre channel and will be deployed in the future on InfiniBand as well. It has become much more about application management than the disk and tape connectivity of first-generation storage networks. What was once a simple (and dull) story about storage has emerged as a critical application network for the data center, connecting all of the servers and data-storage elements together that are required to run business-critical applications.

    All told, it's really the business application that matters. As more sophisticated and innovative technologies enhance data-intensive applications, winning companies will use the power of those data-driven applications to become even more competitive. And companies that provide the hardware and software for these server-to-server and storage area networks will continue to print money as they provide mission critical solutions. So, while storage is still not necessarily sexy, there's money to be made playing in the SANbox.