Monetizing IT: DRFortress Launches Cloud Storage Service

Turning IT Costs into Profits

This is the latest post in an ongoing series relating to how IT organizations are turning IT costs into profits. IT organizations have for decades been viewed as a cost center, however cloud computing allows IT to become a revenue and profit generator.

We’ve provided three examples recently including NYSE Euronext  – a traditional IT organization that has begun to sell cloud services to the financial industry, Cerner, which has taken a similar path in health care and USC which has launched a cloud archive. All of these organizations have taken an Amazon-like approach within their respective niches. There are hundreds of examples popping up and every day new innovation is occurring around  a business model that takes traditional IT, flips it externally and monetizes its infrastructure and applications.

Last week I spoke with Fred Rodi, the President of DRFortress, a Honolulu based cloud service provider and another example of an organization hoping to profit by selling cloud services. DRFortress was formed from an externally funded management buyout of Equinix Honolulu in 2006. It claims to be the largest cloud service provider in Hawaii with the only Class A data center on the islands. The company recently launched a cloud storage service based on Nirvanix technology. Rodi told me that his firm is launching cloud storage services because “storage is sticky,” meaning when servers are bought in the cloud, they’re provisioned then often decommissioned when compute requirements drop. Storage is different in that customers tend not to reduce storage once its provisioned. Rodi told me that according to IDC, cloud computing is a $7B+ market opportunity with about 15% going to storage. He said it wasn’t that much of a stretch to take the existing DRFortress business and extend it to cloud storage.

Like Amazon, DRFortress is offering a simple storage service priced on a $/GB/month basis. Pricing has not been publicly released. I asked Rodi why Nirvanix? He said DRFortress looked at several alternatives including Amazon, Savvis and others. Amazon, according to Rodi, wouldn’t allow the auditors of DRFortress customers to go on site at Amazon data centers and audit the operations. Savvis on the other hand didn’t have the flexibility that Nirvanix had with respect to enabling DRFortress resellers and partners to OEM the service (i.e. the portal didn’t allow for partner enablement, usage, consumption tracking and pricing). Rodi said the Nirvanix customer portal was “amazing” in the flexibility and features it provided. Finally, Rodi cited the fact that Nirvanix had recently signed IBM, Cerner and USC to add to VMware, Cisco, NBC Universal and others such that DRFortress felt comfortable going with a smaller privately held firm.

I asked Rodi about the distance factor – i.e. the fact that the his data centers were 2,000 miles from the nearest mainland city. He said that is one reason why DRFortress has architected its cloud to be a combination of an on-premise Nirvanix node (private cloud) with data being replicated off site to the Nirvanix public cloud. Rodi told me that even if he were on the mainland however the company would have architected the service in a similar manner to have peace of mind for security and to also preserve its value add. We see this theme a lot – i.e. organizations taking control of their own private cloud and either building out their remote sites or directly accessing the public cloud.  Generally speaking hybrid cloud has been slow to take off but we’ve seen numerous examples around Nirvanix lately. This is directly due to the way the company’s technology works – i.e. that it can be placed on premise or utilized in the cloud with a true global namespace. Notwithstanding that moving large volumes of data is exceedingly time-consuming, the hybrid cloud approach that these customers is taking (i.e. a node on premise and tapping into the public cloud) has merit.

Ever since I first published results from Wikibon’s survey, which showed hybrid cloud strategies were not in the mainstream, I’ve been searching for hybrid cloud examples. It’s easy to find both private and public cloud examples, but “true hybrids,” where there exists a global namespace across multiple geographies (i.e. outside of a single data center) are hard to find. Nirvanix has now provided me with three examples and it says it has many more if I want to talk to their customers.

As John Furrier recently wrote – cloud storage is hot. I agree. And when it comes to the so-called hybrid cloud, I’d love for some additional suppliers to provide me with examples of true hybrids other than in marketing PowerPoints. Thus far, Nirvanix, a small startup seems to be leading and innovating in this regard while many of the larger firms talk the game but can’t deliver good examples. Many call it “cloudwashing.” I’d just like to see some proof points behind the marketing.