Solution provider takeaway: Storage solution providers need to focus on making sure customers and potential customers know they can help streamline critical operations in 2009, and the way to do that is by retooling corporate messaging.
When I was growing up and learning how to handle my personal finances, my parents had some sage advice: Only invest in companies that provide the basics for people. To them, this meant investing in utility companies. They had been teenagers during the Great Depression and had witnessed firsthand the crash of the stock market. They also learned that government would prop up those firms that were critical to the nation's viability. Their recommended investment strategy does not provide fantastic returns; on the other hand, it reduces the deep valleys seen with investments in trendy companies during downturns.
As the global financial cycle comes back around to challenging times, how do storage firms operating in the channel ensure they will be able to weather this environment? The answer: Storage solution providers need to offer services that are critical to businesses' viability -- and, they need to make sure that their messaging around these services clearly communicates the ROI they can deliver. I believe storage, backups, archiving and retrieval are fundamental to all businesses. To test this theory, I reviewed several storage solution providers' financial statements and talked to a few privately held companies. The results are amazing.
HP announced its quarterly financials the last week of November. The investor relations section of HP's web site states, "Storage revenue grew 13%, led by 16% revenue growth in the midrange EVA product line and 9% revenue growth in the high-end XP product line. … HP Services revenue grew 10% [excluding revenues from the EDS acquisition]. Revenue in technology services and outsourcing services grew 10% and 15%, respectively."
The EMC investor relations site quotes company CEO Joe Tucci: "Against the backdrop of a tough global economy, EMC delivered its 21st consecutive quarter of double-digit revenue growth and solid double-digit profit growth. Revenue from EMC's Information Storage business, which includes revenue from storage systems, storage management software and related customer and professional services, reached $2.9 billion, an increase of 11% compared with the year-ago period."
I contacted DS3 DataVaulting to confirm if these types of returns were consistent for privately held firms. The theory that storage services are critical to all businesses was confirmed by this comment from Stacy Hayes, COO and co-founder: "In a down economy, service dollars are easier to come by than capital expenditure dollars. This environment actually benefits the managed storage provider space. At DS3 DataVaulting, we're continuing to see steady, near-double-digit growth per quarter, and we expect this to take off even further as companies continue to look for ways to get the best returns possible on their technology investments."
Clearly, storage is a requirement for business, no matter what the economic conditions are in the global market. But customers are not going to come banging down your door. You need to adjust your company's messaging to resonate with current market conditions. The messaging should emphasize strong financial advantages of using a storage solution provider. Here are a few messaging ideas that are getting traction:
- Storage solution providers help companies with cash flow concerns. Moving the firm's critical storage needs to a solution provider transfers the capital expenditures to operational expenditures.
- Storage solution providers take on the responsibility of managing and maintaining the servers, including software licenses. This frees up valuable IT personnel for redeployment to more strategic initiatives that will aid your customer in streamlining operations.
- Storage solution providers offer the optimal solution for each type of storage need, reducing the total cost of storage by eliminating the one-type-of-storage-for-everything that many firms use to simplify the storage process.
- Storage solution providers reduce the total cost of storage through the use of mature tools and processes such as deduplication and compression.
- Storage solution providers enhance a firm's business continuity and resiliency strategy. This is especially important as companies reduce staffing across the board. With automated backups, conducted across the WAN, backups are performed as scheduled.
- Storage solution providers eliminate some of a firm's data center footprint and the associated heating, cooling and power consumption.
Within chaos is opportunity. Companies that go through challenging times with a level-headed approach have the opportunity to make fundamental changes to the business' operations for long-term sustainability and competitive advantage. How storage service providers adjust their business messaging in response to changing business conditions will dictate how or if they will be in the market when we come out of the current financial situation. There are numerous, more productive, ways to reduce costs than through headcount reductions -- and you need to demonstrate that to customers. Those that emphasize streamlining operations critical to long-term viability will be much stronger in the long run by reducing exposure to wide market swings, similar to my parents' advice on how to invest in the overall market.
About the author
Martha Young is co-founder and CEO of Nova Amber LLC, a business consulting company specializing in business process virtualization. She has co-authored three books on virtual business processes: The Case for Virtual Business Processes, The Virtual Worker's Handbook and iExec Enterprise Essentials Companion Guide.
