MSI Courts the Enterprise

The CEO of ManagedStorage International Inc. (MSI) says the storage service provider (SSP) model is alive and well and set to thrive in 2004. But he says enterprise customers, not just service provider resellers, will be key to collecting big bucks.

Starting in January, MSI plans to expand and formalize a suite of services it's been offering to large business customers for the last few months. Specifically, the company will aggressively peddle its ability to monitor and manage storage networks, regardless of whether MSI helped put in the storage equipment or not.

"We have well over a dozen clients already using the services," says Tom Sweeney, CEO of MSI. "We will monitor the storage assets you already have in the data center as an enterprise client, all of the assets and subassets." Tape libraries and servers, as well as SAN and NAS networking gear, will be tracked in order to provide alerts and measure performance against specific service-level agreement (SLA) parameters.

Sweeney says the tack should result in enterprise revenues outstripping sales to service providers by the end of the first quarter of 2004.

That's a change of emphasis for MSI, which used to rely on service providers to resell private-label versions of its offerings, mainly remote backup. In the middle of 2003, however, MSI sought to broaden its distribution channels by acquiring a fleet of enterprise customers from StorageNetworks, which exited the SSP business in June (see StorageNetworks Ditches Services Biz and Top Ten Private Companies: Summer 2003).So far, it seems to have worked. Sweeney says enterprises can realize substantial savings by outsourcing storage networking, which makes services from the likes of MSI an attractive proposition. What's more, enterprise services present more opportunities for MSI to sell high-ticket integration and other outsourced services to its customers, whereas services sold through providers are often restricted to remote backup.

According to Sweeney, enterprise customers typically account for $10,000 to $100,000 per month each, whereas service provider subscribers range from $300 to $3,000 per month.

Sweeney won't name his new enterprise customers, but he indicates that one is the second-largest airline in the U.S. More information will materialize next month when the enterprise launch is announced, he says.

Meanwhile, the overall economy is helping to fuel better prospects for storage services. "It's a pretty good business to be in right now. You had to survive the last couple of years, and that wasn't fun," he notes.

Signs of an upswing are evident in improved financials (see MSI Reports EBITDA-Positive Q3), as well as in sheer volume. Sweeney says that in December of last year, MSI was streaming 47,000 gigabytes to its service customers. This month, it will stream over 600,000 Gbytes.Competition is heating up as well, demonstrating the sector's renewed vigor. Over the last few months, a fleet of startups, most notably Arsenal Digital Solutions Worldwide Inc., have scored new funding and are laying dibs to their own piece of the services pie (see Arsenal Reloads With $11M and Backup Service Providers Swell).

It all adds up to new challenges and opportunities for MSI, which sees the monitoring and management services it's unveiling as key to beating its rivals to enterprise dollars. "We're pretty excited about where we stand with large and small businesses," he says.

Mary Jander, Site Editor, Byte and Switch