EDS and Storability Plug into Utility Model

Old and new companies are switching to the storage utility model. Electronic Data Systems Corp. (www.eds.com) and startup Storability Inc. (www.storability.com) are examples of the types of companies turning to the new storage paradigm.

Venerable EDS, historically a corporate services provider for desktops and other system management, is branching out into Web hosting and other outsourcing services. Providing storage services is an extension of its array of services for a variety of enterprises.

"It's definitely the utility model" says Sandy Scully, vice president of marketing for portfolio offerings at EDS. The utility model offers storage on per-unit basis, charging customers for what is used. This strategy is supposed to cut the cost of hardware and maintenance.

"Enterprises can relieve themselves of the capital investment," Scully says. Since EDS assumes the risk of storage devices and hires and trains support personnel, IT managers spare themselves the headache of purchasing the correct equipment and hiring capable employees.

Overhead is another expense that is eliminated through EDS's model. Since EDS retains and manages the storage devices at its site, enterprises located in high-rent areas will not have the worry of device footprint or appropriate environmental conditions. Storage becomes virtually invisible, much like a power plant is invisible to most electricity users.

The storage utility model also offers greater and faster scalability than purchasing devices. Customers who need more storage can simply ask EDS for a greater allotment and wait for the bill to come. A quickly growing company may not be able to scale fast enough if it chooses to maintain its own storage.

EDS expects to attract many of its current clients to its new storage services, and expects to find new customers, as well. "We're definitely pursuing new markets," Scully says.

"Dot-coms are prime candidates," he says, pointing to Internet start-ups as customers who can benefit from focusing on their lines of business, rather than the banalities of acquiring and maintaining storage devices.

Scully is quick to point out that mature businesses can also gain from choosing a storage utility model: Companies that need a large amount of storage for a short period of time would do better to hire out storage rather than purchase storage for a temporary need. In addition, archiving and backing up storage requires expertise that is in short -- read expensive -- supply in the booming economy.

EDS offers three levels of service for storage clients. "Storability" is its entry level offering. At this level, EDS offers managed storage at what company officials say is a competitive price. "Storagility" provides smoother backups and faster scaling than the basic service. "Storevelocity," the premier offering, is designed for rapid scaling and one-time storage needs.

EDS is partnered with storage giant EMC Corp. (www.emc.com) to provide devices and expertise for the EDS storage venture. "The combo of the two brands make a great offering," Scully says.

EDS hopes that they can grab a significant slice of the storage utility pie. Scully says the company, "Can drive the managed services with innovative products."

While EDS is focused on fast scaling and transparent storage, Storability Inc. (www.storability.com), which is not related to EDS's entry level service, offers a different approach to storage services.

"We work from our customers needs," says Kirby Wadsworth, vice president of marketing at Storability. The start-up develops storage plans on a case-by-case basis for each customer, designing a strategy to suit the user's needs.

Unlike EDS, Storability expects to house and maintain a customer's storage on site, while monitoring the devices at Storability's offices. Customers can choose, however, to have storage off site.

Although Storability's strategy is not as utility-like as EDS's, Storability's pricing is based on the utility model. "We take the risk of every portion of the infrastructure," Wadsworth says. Although the devices will be on site, customers do not make the capital investment, nor will they maintain the devices. "The only thing a customer has to worry about is deciding what they want," Wadsworth says.

Wadsworth makes a distinction between Storability's strategy and storage service providers. He considers Storability to be part of a different category: storage infrastructure provider. In addition to unit pricing, Storability offers added value by creating and maintaining a storage infrastructure, rather than simple blocks on a hard drive.

Consequently, Storability is targeting its services at large, mature organizations with stable storage needs. Wadsworth says his company and EDS both offer storage services, but they differ in that EDS caters to companies who need rapid scalability and Storability focuses on clients who want a stable long term infrastructure.