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Please can you give a little bit of background to your business – its development and successes to date?
S3 has been around for over twenty years. It focused on dealing with a relatively small number of customers but knowing their storage requirements intimately and delivered very constant revenues until acquired by a new management team in late 2005. Since then we have broadened the customer base, but not overstretched our resources, and concentrated on bringing new solutions to our customers. In the process our revenues have almost trebled in four years.
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How do you think that you've managed to be successful in what is a very competitive market sector?
We have focused on taking on new technologies early in their lifecycle so that we could bring ‘step function' improvements for our customers. The two primary example of this, I guess, are Data Domain and Isilon. We invested resources in these companies earlier than any of our competitors and became their biggest UK partners but simultaneously we continued to supply mainline storage products. In summary innovation supported by strong customer services has been at the core of our growth.
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Do you think that the days of the generalist reseller are numbered, or will there always be a place in the Channel for such volume ‘box shifters'?
I think they will always have a place and I don't want you to think that we consider ourselves above box shifting, as long as it is profitable. As product categories gain more market penetration, in other words as they move along the adoption lifecycle curve, they become more and more commoditised. Late adopter customers, or those replacing existing installations, expect that more and more functionality will be built into the product, when did you last hear of somebody buying a maths co-processor for a PC? At this level box shifters will always have a role to play. I guess this is evident in the tape market, backup software and perhaps even increasingly in SATA and NAS storage.
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In other words, do you think that it is important for resellers to specialise/offer real expertise in one or more key IT discipline to survive/thrive into the future?
It depends on the model you choose to operate under. For S3 the answer is yes. We focus on storage and aim to meet the continuing needs of our customers for all their storage needs, including highly commoditised products, but we always aim to be first to market with new innovations.
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Do you find that your customers are increasingly asking you to supply a solution to a specific problem, rather than simply sell them some hardware and/or software?
Our customers tend to be large organisations and are usually pretty sophisticated, but sometimes we go back and present something other than they originally asked for. Our first Data Domain sale back in 2005 was an example of this. The customer came to us for a large tape library but it was clear that being able to hold de-duplicated data on nearline disk was a more appropriate solution. So that was what we proposed and the fact that they didn't subsequently disagree with us was indicated by their buying a lot more from us after the first sale.
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And when customers do demand these solutions, do they specify open or single vendor ones, or do they not mind, so long as the solution works?
That's a difficult one. In our experience from a practical management viewpoint most customers want to limit the number of suppliers and will often do so even when a slightly better solution could be delivered by a multi-vendor solution. This is largely a matter of controlling acquisition and maintenance costs. Some customers will, of course, go for the best solution but overall I thing a pragmatic view of vendor management dominates.
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What are the key business issues your customers are trying to address at the present time?
Doing more with less. It's a business imperative. Data volumes are increasing at more than 50% year on year, compliance is a major issue. Either you add disk so that the rows get so long you can't see the end of them because of the natural curvature of the earth or you get smart!
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And which technologies are they keen to investigate to help them with these issues?
Virtualisation has clearly been a key issue in this but so has de-duplication and the emergence of other new compression technologies. Also technologies that are optimised for the storage of unstructured data are becoming very important. We have recently entered into agreements with vendors who have interesting technologies to optimise storage at the right level, tools to give detailed analysis of environments to help reduce customers TCO and others which provide cost and energy efficient devices for specific data down to block level. We are also seeing the emergence of single instance technologies for primary storage related to specific applications such as ERP. These are at a very early stage but could be very important.
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Are you able to share any specific customer success stories with us?
Well it's best to refer you to our case studies on the web site; we're very proud of them. They include Lloyds Products & Markets, Insight Investments, The British Library, Infoterra, the company that creates mapping images for Google and several other customers and require a very sophisticated infrastructure for unstructured data and Fitzpatrick. This is a wide range of customers with very varied requirements that S3 has been able to meet.
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Working in the industry, one assumes that the messages of the benefits of consolidation, optimisation, virtualisation, de-duplication etc. are well-known to end users by now. Is this the case, or do you still see a need for education?
In our user community I believe these issues are now well understood. Market penetration of these technologies is such that success stories are now very visible so adoption is well under way however as new space and energy saving technologies are made available there will always be a need for education.
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What, if any, have been the negative impacts of the current credit crunch to your business?
Our business has maintained high growth but it would be foolish to say there has been no impact. We have been aware of big projects that have been shelved that would have made our growth even stronger. So I guess the best way to put it is that the impact has been to make our business success less positive than it would otherwise have been rather than to say it has been negative.
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What, if any, have been the positives of the credit crunch in terms of forcing customers to address storage/IT issues?
I think users have been forced to consider new, innovative approaches to data growth and this plays to S3's strength.
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Looking ahead, do you see some real opportunities for the business to grow, or is it more a case of making sure that the business remains healthy until conditions improve?
Our plan is for continued growth in our new financial year, which started on July 1st. We currently see no reason to believe we will not achieve it.
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What would be your number one tip to help a customer get the best possible ROI in the current economic climate?
Well the move to virtualisation is rapid, acceptance of de-duplication of secondary storage is well advanced and the economics of vendor management mean that users are already focusing on control of the number of vendors they deal with. My own view is that users should start to look at the ways of reducing the storage load of individual key enterprise applications. How can single instancing, thin provisioning and intelligent ILM help to reduce total primary storage volumes, their energy consumption and the amount of CO2 they produce. Focus on this last issue can only increase.
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How important is the relationship between the business and the other links in the Channel – your distributor and your vendors?
Very important. Staying close to vendors is critical, even when the business is transacted with a distributor. But the real issue for us is keeping close to developments so that we spot innovative technologies early.
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Do your customers want to know who it is that you work with within the Channel, or are they happy to deal with, and trust, you alone?(!)
They trust us to a significant extent, but as already noted we tend to deal with large companies so they demand a reasonable level of exposure to our vendors
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What value add do you think that your distributor and vendors should bring to the relationship – other than good technology/products?
The value add of distributors is the longest running discussion in the industry. Frankly all we expect is that they deliver what they say they will deliver at the time they said they would deliver, at the agreed price and we want no mistakes – it should result in trouble free installations. It might be nice to get more than that, but it's rare. Saying that we do have exceptional relationships with those distributors we use and work closely with them to develop future pipeline for us both. From vendors we look for best-in-class technology and marketing support – not leads, support for our marketing activities focused on our target market segments – and in general if we ask for it we get it and the distributors support them
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Assuming it is important, does this value-add reassure customers that you want to work with them long term, and not simply sell product and walk away?
We build very close customer relationships and consider it to be our job to persuade customers that we do not "sell product and walk away". The result is that we keep customers for a long time.
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Moving forward, with the solutions emphasis discussed earlier coming to the fore, do you foresee the Channel model changing, as such solutions can be provided at different stages within the Channel?
The use of the channel works on a predictable cycle. Very early stage disruptive technologies tend to be sold direct with system integrator support, at the early adopter stage of the market for a product category the channel becomes important in order for vendors to increase reach and externalise cost and in the late majority stage box shifters tend to dominate. I don't see any change in this pattern. Of course some vendors will find interesting ways to extend reach without the use of a channel but the overall pattern will remain for the foreseeable future I think. So for us it is critical that we continue to identify the technology innovators so we can constantly offer step function improvements for our customers.
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Tags: Virtualization, BC/DR, Cloud Storage, Compliance, Data Centres, Deduplication, Disk/RAID/Tape/SSDs, Ethernet Storage, SAN/NAS, Tiered Storage |
