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SSPs: Managing your data needs - Views on News from Equitymaster
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  • Feb 19, 2001

    SSPs: Managing your data needs

    One common feature amongst all the organisations that adapted IT is that they have collected bytes and Mega bytes of data and will continue to do so in the future. But could they convert this into any tangible benefit is a different story all together. The fact, however, remains that there is a huge volume of data being generated everyday and organisations need to store them. The option till recently was to make expensive investments into data storage equipments and employ people to maintain them. This definitely added overheads to the normal course of business. To meet this a group of start-ups started renting out the service of storing data. This was the birth of storage service providers (SSPs).

    The storage services business is driven by two primary factors. The need for data is growing exponentially. Organisations cannot keep pace with the technology. But more importantly the task is becoming more and more complex. Therefore, organisation would rather concentrate on their core business rather than spend time and money on the infrastructure for data management.

    The projections for the size of the market are quite attractive. The SSP market is expected to grow to between US$ 5 - $7 bn worldwide by 2003. These figures seem to have generated a lot of interest in India too. A host of companies are showing interest in this market. The major players include Satyam Infoway, Mantra Online and Reliance. The list of multinationals includes Intel, Enron and Singapore Technologies.

    Presently, most of the hosting is done in the US. The Indian USP in this market is again going to be value for money like it has been for the software sector (skilled manpower at competitive rates). Of course, the cost of running operations in India is far cheaper. No doubt this would provide the Indian SSPs with the upper hand in the race for the market share.

    Bandwidth demand(Gbps)
    Year NASSCOM Frost and
    2000 10 1.3
    2001 40 2.5
    2002 100 5
    2003 160 11.3
    2004 220 22.6
    2005 300 35.4
    Current bandwidth availability is 390 Mbps

    However, the development of the industry depends on the availability of two resources that are critical for the operations of this kind of an industry; bandwidth and power. Theoretically, clients would expect an onsite kind of performance from SSPs, which is possible only if there is sufficient bandwidth. The second issue that is very critical to the growth of this industry is the availability of uninterrupted power. Power fluctuations and failures could damage the storage facilities.

    India’s has to generate an incremental 10,000 MW of electricity every year for the next 10 years to plug the demand-supply gap. More importantly, it has to bring transmission and distribution (T&D) losses to a minimum. India’s T&D to generation ratio stands at a dismal 0.3:1, as compared to an international benchmark of 1:1. This is going to be the major hurdle in the development of the SSP industry.

    The government needs to take strong steps to improve the infrastructure for the IT industry. The Government has been supportive to the industry but there is more to be done. The Indian IT success story should not only be limited to software. Very soon the IT enabled services industry will makes its own contribution and it will be by no means small.



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