Kable predicts the future of the storage market.
Analyst firm Kable predicts that although the UK's overall storage spend will increase at an annual growth rate of 3.9% over the next three years.
However, that's set against a backdrop of there being no increase in the Government's IT budget, while its 'ICT investment trends in the UK' survey predicts that 39% of the UK enterprises questioned predicted that their 2014 IT budgets will remain flat, with only 35% saying theirs may increase by up to an insignificant 5%.
With enterprises looking to reduce their capital expenditure related to the deployment and management of servers, data centres, and storage devices, hosting and data centre services are gaining traction among UK enterprises.
Thomas Cornely, VP of product management at software-defined storage firm Nexenta, says tight budgets are indeed changing the way firms buy storage, with people beginning to lean away from traditional vendors.
He claims: "In general, everyone buying storage is suffering. From a budget perspective your budgets are flat; they are maybe growing in single digits but in most cases they're flat, if not shrinking. You do have this pressure point.
"This is set to force the market into this new dimension. When you're a customer and you look at what you're actually buying, you're getting the same thing you could buy if you combine off-the-shelf servers, off-the-shelf drives and the right software. There's little justification for legacy vendors' high margins. It's very hard to make a case for why you have to pay all this money to an EMC or a NetApp."
Cornely believes that instead of buying storage as an entire package, companies are starting to consider firms such as Nexenta, which provide software separately to hardware, allowing them to choose whichever hardware option they like and avoid vendor lock-in.
"Storage is exciting because it's been going through a lot of changes over the past 10 years," he adds. "We are watching this acceleration with the approach of all-flash storage at the top end, software-defined changing how people think about storage for the lower end, and obviously cloud archiving for backup in the long term."
Kable's survey shows that UK enterprises are currently allocating 14% of their total IT services budget to IT consultants and contractors and a further 14% to cloud services, (see Figure 2). However, spending on cloud services is set to gain some momentum in the coming years, with enterprises identifying its advantages relating to cost savings, scalability, and ease of management, the analyst house says.
Moreover, with the UK Government's launch of the G-cloud programme in 2012, which entails 80% of Government departments using cloud-based systems by 2015, IT vendors specialising in various cloud services are expected to have enhanced revenue-generating opportunities.
Infrastructure as a Service (IaaS) in particular is proving popular with businesses looking to store a lot of data on the cheap, and according to Kable it has achieved a 46% penetration rate in the market. The analyst firm says IaaS is experiencing a decent uptake as enterprises look to reduce their capital and management costs relating to various IT infrastructure and platforms. In fact, it's expected to witness an upward swing in the next two years because 52% of respondents in the Kable survey are planning to invest in it through to the end of 2015.
"We are starting to see the emergence of a trend towards public and hybrid clouds," says Bob Plumridge, EMEA CTO of Hitachi Data Systems. "It's having a huge affect on the traditional storage market. I wouldn't go so far as to say it's every single customer we're dealing with, but maybe it comprises 15-20% of the customer base now."
He also adds: "[On] the backup and archiving service inside of that... people like Amazon [are] driving the pricing for long-term archive storage down quite rapidly."
The cloud pricing war between companies such as Amazon, Google and Microsoft has seen the cost of IaaS, which is dominated by big IT vendors such as the aforementioned trio, slashed in recent months, pushing firms with anaemic IT budgets towards the technology.
More than half (52%) of the firms surveyed by Kable say they are considering investing in IaaS over the next two years, yet cloud computing remains at a nascent stage of adoption in the UK enterprise market.
Microsoft is leading the pack in terms of customer perception, with 43% of respondents choosing it as one of the leaders in this domain, followed by Google and IBM, each with 27% of the vote.
IBM is aggressively targeting and therefore strengthening its position in the IaaS and hybrid cloud market, something evident from its July 2013 acquisition of SoftLayer. Meanwhile, following its market entry as a Software as a Service (SaaS) and Platform as a Service (PaaS) provider, Google is also investing heavily in the cloud market, undertaking forays in IaaS with the official launch of its Compute Engine offering in December 2013.
However, Nexenta's Cornely points out that data storage is about the only cheap thing offered by such providers.
"There's a lot of hype about the dollar per gigabyte per month that cloud providers will charge," he says. "[But] nobody talks about how much you pay to get data out. That puts you in a model where you have to think... [to] pull data out and store it and not touch it, because every time you touch it and put it back, you're going to pay.
"You get back to something that's more expensive than running on your own system on-premise."
It's for this reason, as well as the desire to retain control over their own data, that Hitachi's Plumridge believes firms will continue to buy on-premise storage for the foreseeable future.
"Certainly for a number of years we will see enterprise-class storage still being used on-premise by most organisations because for a lot of organisations the data they're using on a daily basis is their crown jewels," he explains.
While that may be true, companies of all sizes remain keen to shave costs from their IT budgets where they can, driving a trend of outsourcing with 64% of respondents to the Kable survey having already outsourced at least one function in their organisation to third-party providers.
Engineering consultancy WSP is considering doing the same thing, according to its UK director and head of project technology, Frank McLeod. The company has started using collaboration firm Huddle to share data without becoming ensnared by silos, and is on target to shifting 2,000 of its 17,000 employees to Huddle's technology by the end of summer.
When asked about where the project data is stored after the project ends, McLeod says WSP faces the challenge of storing it for at least 12 years to comply with industry regulations. Why, he asks, don't we just leave it with Huddle?
"We're now asking 'is it actually cheaper just to leave it on Huddle?' We can have as much storage as we want. We have these big on-premise archiving systems, which sometimes work, sometimes don't, and heaven help you if you have to go and find something," he says.
"If I can start to leave that information up there and archive it up there so that all the indexing, the searching, the algorithms are all working for me, the legacy data can stay up there. It takes a lot of the cost out of storage."
WSP has around 300 major server installations around the world, McLeod explains, all of them requiring full-time maintenance, so letting someone else do it all for you appears to make a lot of sense.
That solution sounds like it might possibly be an attractive option for Government, but the reality is that the public sector is struggling to virtualise its storage.
Senior Kable analyst Josh Hewer says: "They do want to move to IaaS, but the one problem they always have is about personal data. And, actually, can you store public data and deal with citizen data in a public cloud?
"Even something that seems relatively simple like census data has to be hosted in this country, has to be controlled by the ONS [Office for National Statistics], and that's data that actually hasn't got much more about you than you could find online."
The new Government Security Classifications Policy, which came into force in April 2014 to replace the impact level (IL) data security assessment scheme, has not made matters easier, according to Hewer's colleague and fellow analyst Daniel Jones. It is meant to enable Government departments to buy 'off-the-shelf' data storage solutions, by providing three different tiers for data security requirements: Official, Secret and Top Secret.
But Jones says procurers and suppliers alike "are still very confused about it".
"We still have vendors saying they don't know what the impact's going to be, they don't know what's going to change, and there are so many differing sources of information on it as well," he explains. "One of the major issues is that it hasn't been led enough by one Government department."
Government also suffers from large on-premise legacy deployments, says Hewer.
"It's very difficult to move legacy stuff out. That's been the biting point," he contends. "It's all very well moving your corporate helpdesk and bits of tin into an enterprise architecture, but you've got legacy systems that have been running for many, many years, and, ultimately, those systems still have to operate."
But he does see innovation in the public sector, albeit mostly - and unsurprisingly - in back-office systems, as well as a wider move towards data centre consolidation.
While government has always dealt with vast swathes of data, the proliferation of unstructured data has meant that private sector companies are experiencing some of the same issues.
Hitachi Data Systems' Plumridge says storage purchase trends are now being driven in part by firms desiring to not only access it quickly to analyse, but to understand it in the first place.
"This data is in all sorts of different formats. Because of that, it starts to become quite difficult to cross-reference all of it," he explains, adding that this has led to a growth in the use of object storage.
"The idea of an object store is to make it so that data formats become largely irrelevant. Instead of storing data as an Excel or Word document you store it as an object. Then it doesn't matter if the data's coming from a Word document or an X-ray - the data formats are common so it's much easier to cross-reference and search."
Nexenta's Cornely says that one of object storage's big issues historically has been the lack of APIs through which firms can access their object store, but says this has changed with the popularity of Amazon's S3 object storage.
"With S3 becoming the de facto standard, that has made it easier for people on the application development side and storage system development side to find a solution that meets their requirements," he claims.
Moreover, object storage is proving popular as a way to gain insights into big data.
"This whole world of big data and real-time analytics has been driving this push," says Cornely.
Hitachi's Plumridge concludes that while it's not all about cost, the trend of people moving from a Capex model to an Opex model is one that is set to continue.
"People require more and more storage because the amount of data organisations keep is growing," he points out.
"That's focusing people's minds on not just the operational and technical stuff but on how much it is costing, and the most efficient way of purchasing this and running it.
"Instead of six years ago giving us all the money for all the infrastructure on day one, [the model] we're finding is where they pay for 500TB one day and 600TB the next day and maybe the following day just 400TB."
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