In this week's blog on new Brocade-enabling service provider revenue opportunities, I examine storage area network (SAN) extension services. This emerging new service is designed to overcome multi-vendor, multiprotocol, or distance limitations (of 10 miles) inherent in connecting SAN islands. Once again, I am reporting on an online study among 192 medium and large businesses conducted by WaveLength Market Analytics this past spring. Today's topics are enterprise storage and data center-related issues, willingness to buy SAN extension services, and premiums for value-added features.
First of all, the market size for SAN extension services is potentially quite large. SAN island connectivity works best when they are located no more than 10 miles away from each other. Anything outside this key metric is well known to impair storage performance. According to the research, about 92% of large enterprises disperse their data centers OUTSIDE that key 10 mile distance threshold. Medium-sized companies obviously have fewer data centers and about 52% are outside the 10 mile threshold.
Large enterprises in the study report that distance impacts performance. In fact, nearly half of large enterprises report that SAN performance degradation over distance as their top storage issue. This is significant, particularly when considering the second highest ranking storage problem - unmanageable data growth, which is a widely-acknowledged storage problem.
Medium-sized enterprises also report that they experience issues that SAN extension services solve. Nearly 38% of them say they cannot meet recovery demands that are close to real-time, like SAN-to-SAN replication, making it their top storage-related issue. As a close second with 33%, medium-sized enterprises say their biggest storage issue is bridging multi-vendor SANs is too expensive.
As a result, service providers can expect a strong demand for SAN extension services. Eighty-four percent of large enterprises and 23% of medium-sized enterprises are willing to pay for SAN extension services.
In addition, service providers can expect new revenue to come from SAN extension value-added features and services. While some features in the chart below are actually built into the definition of SAN extension services, the conclusion is that enterprises find value in SAN extension services, specific SAN extension features, and are willing to pay for them. Among large enterprise survey participants, 88% of large enterprises say they are willing to pay extra for near real-time data recovery intervals and 83% say they would pay more for a SAN extension service that offers encryption in transit. Traditionally more resource constrained, fewer medium-sized enterprise participants say they are willing to pay extra for any SAN extension service feature.
So how much extra are participating enterprises willing to pay? On average, enterprises are willing to pay around 30% extra over the monthly base SAN extension services fee. Large enterprises are willing to pay 31% extra for data in-transit encryption and 28% for device redundancy. Medium-sized enterprises are willing to pay 24% extra for data in-transit encryption and 27% more for continuous service (device and circuit redundancy).
Not only is the market for SAN extension services potentially large, it also solves the biggest enterprise storage problems, so enterprises want to buy them. Service providers should move to offer feature-rich SAN extension services now. They should also bundle them with storage and security services and make SAN extension available as stand-alone services. Service providers should act now to capitalize on this opportunity.