Storage sector split about impact of downturn

One in four companies expect to see IT budgets being tightened in the coming months

The UK storage industry is split on the impact that the current economic downturn will have on IT's purse-strings, according to a new survey from Hitachi Data Systems.

One in four (or 29 percent) said they expected to see IT budgets being tightened in the coming months, which will have a corresponding knock on effect on storage purchases. But a sizable portion on the storage industry remains positive in the face of the credit crunch, after one in five (or 20 percent) of respondents saying that there will be little or no impact on the sector.

The reason for this optimism in these dark times is put down to the "fact that the exponential growth in digital data shows no sign of abating." The optimists also feel that the current legislative requirements mean "that organisations are acutely aware that managing and storing their ever expanding data mountain is a business necessity."

The findings were based on 110 interviews conducted at Storage Expo back in October, just after downturn began making itself felt in mid September.

Last month, IDC warned that IT spending would grow by 2.6 percent in 2009, down from its previous forecast of 5.9 percent growth. It said that software and services would see solid growth overall, while hardware spending would decline in 2009, with the exception of storage.

"The results are a mixed bag as you would expect," said Tony Reid, UK services director of Hitachi Data Systems. "Fifteen months ago for a lot of customers, discounts and costs were still an issue back then."

"But now there has been a fundamental shift," he said. "Whereas before customers were asking to be shown an ROI (return on investment) in a 18 to 24 month period, now it is much more tactical. Customers are asking to be shown an ROI in this quarter or the next quarter (three to six months). It is a dramatic shortening of ROI timescales."

"Customers simply cannot undertake big strategic (or long-term projects) at the moment," said Reid. "They are spending on much more tactical (short-term) projects."

"IT departments are making tactic decision on where to spend their money, but they have also got to look down the line in 12 to 15 months to take advantage of the end of recession," said Reid. "Coming out of recession will happen equally quickly as going into recession."

And Reid was clear about the tactical versus strategic spending of companies. "The technology that is being implemented now, will not necessarily change when companies consider strategic spending, it will just be used in a different way. Our technology enables customers to grow and scale their environments, and be able to drop new applications onto the new environment to get a fast to market advantage."

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Looking forward, it seems like more good news for virtualisation vendors, with many respondents to the survey feeling that virtualisation will remain a key trend for 2009.

One in five (23 percent) respondents said that businesses should review, consolidate and optimise their storage infrastructure to get more from their existing solution. Virtualisation was singled out as a technology that will enable businesses to achieve lower operational costs and a better return on assets.

Such is the confidence in virtualisation, that just under half (46 percent) view the next 12 months as the year when virtualisation comes of age, with existing virtualisation pilot projects turning into full-scale enterprise adoption.

"There is a difference between the uptake of server virtualisation and storage virtualisation," said Reid. "There is a lot of server virtualisation out there, but a lot of customers are not taking as much advantage of storage virtualisation as they can."

"For example, we are talking to customers trying to understand what that their content is (unstructured or structured). We even ran into some cases where some customers had unstructured data that was more than four years old, and hasn't been touched in four years. Moving it off to archive or second tier storage, where it can still be accessed, will be much more efficient."