Cloud storage market calms after historic year

1. Hybrid remains the immediate storage future

Remote work may have become a new normal for many professionals, but enterprise storage needs will still require a mix of on-premises environments and cloud storage.

Many institutions may still need to keep their files localized, due to either regulations or security, but the expansion into the cloud is expected to continue, according to analysts. The form of what a hybrid storage environment takes, however, could become more complicated.

Scott Sinclair

Scott Sinclair, a senior analyst at Enterprise Strategy Group, said he's noticed a decrease in the cost of flash storage, which can make speedy storage available through an on-premises system. The security and elasticity of cloud options keep them within the conversation, however.

"We've reached a point where hybrid cloud as an ecosystem is a default, but every business has some resources in the public cloud and some on-prem," Sinclair said.

Andrew Smith, an analyst at IDC, echoed Sinclair's comments, adding that the egress fees and service costs of the major clouds could lead to some buyers scaling back demand.

"Buyers are re-evaluating their forecast after 2020 and their budget," Smith said. "They're taking a more long-term look at what they should be planning for in a world that is a little more normal. … The reality is, most enterprises are going to fall into that hybrid cloud category where they're doing a mix of both. Security and compliance are probably a major driver in the decision to do that."

Henry Baltazar, a storage director at 451 Research, said enterprise IT shops face a reckoning when it comes to storage costs.

"Organizations on average are growing their data by about 28% in the next 12 months," Baltazar said. "[IT] budgets are not growing anywhere near as fast … that shows we're really in an unsustainable position. Unless we get a better value, we're really going to get overrun with data."

2. Managed services become more common

Dell Technologies Apex and HPE GreenLake are two prominent entries in the storage-as-a-service (StaaS) market, which may capture more IT buyers' attention going forward.

Analysts agreed that companies are likely to turn to StaaS services in the years to come, especially as it becomes more difficult to hire IT professionals with experience managing on-prem storage services and hardware.

Raffo said StaaS products aren't exactly cutting edge, but new competitors and interested buyers have led to an increased awareness campaign by vendors.

"All the vendors seem to be saying that their StaaS backup products have been really taking off right now," Raffo said.

Baltazar predicted that companies will increasingly turn to outsourcing more routine IT tasks, such as racking hardware and setting up configurations.

"All these things we do on a day-to-day basis for upkeep, the vendors are trying to absorb some of that," he said.

Sinclair said even the best IT storage professionals will eventually need to consider delegating tasks to vendors rather than doing everything.

"Candidly, IT is too hard and too big to do that anymore," he said. "The people who six years ago said, 'I want to manage the knobs' say this is too hard."

3. Little change on public cloud pricing

Unfortunately, none of the analysts expected the major public clouds to dip in cost anytime soon, especially as more and more organizations lock their data into any of the big three providers.

Raffo said he's found most cloud storage users are locked in already, and the current pricing structure is causing some second thoughts among potential buyers.

"The adoption rates are not really picking up," Raffo said. "A lot of people are really double checking the pricing. It may be easier, but it's not cheaper. … You're not paying for capacity; you're paying for simplicity."

The cost of ingress and egress fees can catch some IT departments flat-footed when they're used to the more static costs of capital expenses, Sinclair said.

"It's a pain not only because of the cost, but if you come to storage from an on-prem mindset, you never had to think about it. I haven't seen egress fees impacting the growth of any of these services," he said. "There isn't a ton of incentive for them to change it."

Still, even factoring the fees associated with going to the cloud, Sinclair said many customers are satisfied with performance, despite the cost.

"Their lesson learned is 'We should have looked at our application needs before moving in,'" he said. "Often when people have challenges moving to the cloud, it isn't because the cloud didn't deliver. It's because they didn't do enough due diligence before moving."

4. Cloud security remains a focus

Recent high-profile ransomware attacks have brought discussion about data security to the forefront of the IT sector and, more important, the attention of department managers who cut the checks.

All interviewed analysts agreed that while the cloud can offer greater security and disaster recovery, their tools and functionality are only as reliable as the organizations and employees make them.

Sinclair said cloud security typically remains strong, with issues arising primarily due to human or process errors.

"Differences create confusion, add complexity and people make mistakes," he said. "It not because the cloud was insecure. It's because there was a misconfiguration, or someone didn't click the right box. Which is more secure tends to be relative to an organization and their perception of their capabilities."

Baltazar said many professionals who oversee storage may still opt for an entirely on-prem backup-and-recovery strategy, due to a combination of experience and familiarity.

He pointed to surveys by 451 Research that indicated about a third of respondents still prefer entirely on-prem backup.

"They're just not ready to go to the cloud, and they'd argue they could do this less expensively on-prem," Balthazar said.

Enterprise Strategy Group is a division of TechTarget.