Storage life preservers in a sea of digital information: high-tech vendors are racing to create the best methods to store data for companies that are drowning in tidal waves of digital information - Marketplace: Executive Briefing

DRAMATIC GROWTH IN the storage solution market in Latin America should come as no surprise, as companies find themselves confronted with the dilemma of how to manage the perpetually growing amount of information they send, receive and record.

IDC Latin America estimates that the total value of the disk-storage system submarket in Argentina, Brazil and Mexico grew from US$496 million in 1999 to US$785 million in 2000. Furthermore, IDC predicts that this same market will soar above US$3 billion by the end of 2004.

This leap in total value is being spurred by many different drivers, among which the development of e-business infrastructures has emerged as the single greatest catalyst for storage investment in Latin America. Growth in this area has been fueled by the need to develop company-specific Internet-related infrastructure, as well as the proliferation in Latin America of both dotcoms and outsourced service providers (i.e. application service providers, Internet service providers, storage service providers, etc.).

Privatizations, foreign investments and efficiency pressures have also accelerated the need for storage solutions among Latin American companies. All three of these catalysts are being felt strongly in the telecommunications, media and finance industries. According to IDC Latin America, companies in the telecommunications and media industries were the leading data storage system customers in the first half of 2000 in Argentina, Brazil and Mexico, accounting for 30 percent of total purchases. The finance industry followed, with a little more than 25 percent.

Company size has proven to be the most predictable factor in storage investment, with the size of the business being directly proportional to data storage needs.

Not surprisingly, large-sized companies (more than 250 employees) have generated more than 55 percent of storage purchases. Somewhat more remarkable is the high demand among small-sized businesses (10-99 employees), especially storage-dependent dotcoms.

Solutions

Latin American companies faced with the challenge of data storage should turn to vendors that offer solutions tailored to their particular needs, either through a direct sales channel or a knowledgeable consultant. These need to be long-term solutions that allow for scalability and ease of administration.

Many storage vendors have begun to provide outsourced storage services in response to the large portion of potential customers that have neither the financial resources nor the qualified IT staff to house storage solutions on-site. IDC research indicates that currently only 3 percent of Latin American companies are taking advantage of these storage service providers (SSPs). It should be noted, however, that this percentage is almost double in the communications, transportation and utilities industries, as well as in large companies.

Companies with limited financial resources should explore outsourcing. In particular, small Internet companies, which are dependent on storage solutions to keep their Web-enabled businesses up and running, are strong candidates. Companies seriously considering outsourcing, however, are cautioned that its success depends on the strength of the telecommunications infrastructure within their specific country.

Acquiring a storage solution reaches far beyond the initial purchase of hardware, to the software and the networking technology that accompanies the investment. Some of the most lively debates between MIS workers overheard at the proverbial company water cooler surround network-based solutions such as Network-Attached Storage (NAS) and Storage Area Networks (SANs).

Both of these networking solutions add intelligence to storage, thereby helping to reduce costs, increase data access efficiency, improve scalability and, ultimately, boost an organization's productivity. Beyond those similarities, however, NASs and SANs are different storage solution concepts, although not mutually exclusive. As defined by IDC, a NAS is attached to a server network--part of an organization's LAN/WAN. A SAN, on the other hand, is defined as a storage area network attached to the organization's network through a hub, switch or director.

In an ideal world of unlimited IT budgets, companies would adopt both simultaneously, creating a consolidated storage network of SANs operating with NAS gateways. This situation, however, seldom exists, and most companies are forced to choose one technology to invest in, depending on their particular storage needs. While IDC cannot recommend one solution over the other, research indicates that early adopters in this emerging market have demonstrated a tendency to invest first in a NAS because of the shorter implementation and lower resource requirements, and later in SANs.

The avalanche of digital information descending on many large organizations in the US and other mature IT markets is now racing to engulf the rest of the world. As this continues, storage is quickly gaining importance within the companies and their IT budgets. Latin American companies need to brace themselves and invest in long-term storage solutions that provide the proper foundation for future business growth.

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Rebecca Wilson is a senior analyst for the Enterprise Solution market at IDC Latin America. www.idc.com

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