In 1998 Bill Miller was in the hardware storage business. His specialty was oil firms. He’d make a sales call and hear the complaints. Clients were tired of buying hardware. They were frustrated by the complexity of the software. And they were pulling their hair out trying to fill positions given today’s IT labor shortage. Many were spending more time searching for data storage solutions than they did searching for oil.
The oil companies wanted to return their focus to their core samples, their core competency. Miller co-founded Storage Networks Corporation in Waltham, Massachusetts, to help them do that. By the end of 1998, the start-up had five employees. Miller apparently tapped into a gusher of interest. Today the company manages storage needs for 130 national clients from all strata; there are 600 employees on the roster.
Customers plug into Storage Networks’ infrastructure at the speed of light through a fiber channel. Various offerings allow companies to plug multiple servers into the same storage unit, eliminating the need for adding additional storage every time a company adds a new server. This is a key requirement for firms who require top performance for their online transaction processing. Typical customers are brokerage companies completing securities trading or retailers selling their wares online.
The company labels its various services data “pacs.” This is an acronym which summarizes the supplier’s services: protection, availability, continuity, security and scalability.
Storage Networks’ customers are companies who are continually adding new projects that are IT intensive, explains Bill Brodnitzki, director of services marketing. Xdrive, a Santa Monica, California customer, is that kind of company. Xdrive, whose application allows users to share their “X files” regardless of their geography, adds 30,000 new users a day. “With our scalability, we give Xdrive the ability to grow,” says Brodnitzki.
SLAs Set Expectations
Xdrive purchased Storage Network’s Net Pac, which allows a number of servers to share the same data, and Back Pac, which provides a tape backup and restore capability.
Security was another attraction for Xdrive. Brodnitzki says the vendor’s security department is “constantly probing” external and network security. Since the company has no applications, it knows nothing about its customers’ data. “All we see are ones and zeros,” he explains.
He says customers have dedicated lines to their networks that only they can use. “There’s no potential for someone to break in,” he contends.
Brodnitzki says the supplier’s service level agreements (SLA)s are “meant to help set expectations.” It’s the vendors responsibility to ensure its customers understand exactly what they are going to get. Once the scope lines are clearly black and white, both parties “can work jointly to exceed those expectations,” continues Brodnitzki.
A key SLA is the availability of the vendor’s services. Customers can chose from 98.5 percent to 99.9 percent depending on their needs and budget.
Another SLA clearly describes the vendor’s change management procedure. If the company needs to install a new switch or update security, it will give its customers a 30 day notice and let them select the best times for Storage Management to perform its maintenance.
The supplier includes penalties as a remedy for missing an SLA. A customer will receive money back on its monthly bill if the vendor failed to perform. Brodnitzki says in the history of the firm it missed an SLA just once. “We build our services so these things don’t happen,” says the executive.
Tools to Monitor SLAs
Monitoring SLAs can be tricky. But not for Storage Network customers. The vendor has created tools that show buyers what happened so they can compare actual performance to the agreed upon SLA. “We ask our customers to trust us. But this gives them tools to check us out,” says Brodnitzki.
Storage Management takes managing its outsourcing relationships seriously. “We assign our best people to it,” reports Brodnitzki.
If there is a dispute, the vendor refuses to point fingers. Instead, “we try to understand the root problem, then fix that promptly,” he continues. If a client is in crisis mode, the vendor has to respect that and treat the problem as a crisis, too.
Often, however, the buyer must cooperate to solve the problem. Even though Storage Networks does the “heavy lifting,” its computer systems often tie into its buyers’ networks. In that case, the buyer has to get involved in the diagnostics.
In addition, the vendor wants a commitment from the buyer that it, too, will view the relationship as a partnership. “We invest heavily in our buyers up front,” says Brodnitzki. Outsourcing is much different from the old days when Miller sold a piece of hardware and then left with the words, “Good luck with it.”
To make the relationship work, the vendor has to understand what’s going on in the rest of its customers’ computer environment. Then it can assess how best to work together. Xdrive, he says, “is pushing the envelope, creating a good learning curve for us.”
Brodnitzki says the vendor’s offerings dovetail with Xdrive’s selling proposition. “Its business is sharing data. Ours is storing it,” says the executive.
Joint Marketing Opportunities
The two companies, which already have a joint presence on the Web, are preparing a joint marketing campaign. “We’re keeping our eyes open. When we see an opportunity that fits Xdrive’s business model, we let them know,” says Brodnitzki.
And that’s what outsourcing is all about. Two parties working together to make each partner stronger.
Lessons from the Outsourcing Primer:
- SLAs help a vendor manage buyer expectations.
- SLAs require the buyer to trust the supplier. Storage Networks has software tools that monitor the SLAs for its buyers.
- Vendors who invest heavily in their buyers hope to create a lasting partnership with them.
- If a buyer is in a crisis mode, a vendor must react accordingly.