How NetApp exemplifies the transition of IT vendors from equipment suppliers to service providers

Profile picture for user kmarko By Kurt Marko October 30, 2019
Drilling down into the cloud services model with NetApp.

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The mass enterprise adoption of cloud infrastructure and application services, which reverberated across Wall Street and DC last week with the awarding of the DoD JEDI contract, has changed more than just how organizations choose to provision and administer applications. It has altered how they prefer to deal with vendors and pay for products and services.

Indeed, cloud vendors have popularized the notion of usage-based IT services that free customers from substantial capital investments, providing significant finance efficiency and flexibility in the process. The appeal of shifting IT entirely to OpEx has significant ramifications on traditional equipment suppliers as their customers press for CapEx-light cloud-like flexibility in purchase agreements and product offerings.

The mass adoption of cloud services has garnered most of the attention, as a recent executive survey (see here for my detailed coverage) found that the majority  of any incremental IT spending will go to cloud infrastructure (IaaS/PaaS) and applications (SaaS) even as one-third of respondents plan “significant reductions” in their data center footprint. Although most workloads will remain on private systems operated by or for a particular organization, the desire by IT and business leaders to consume IT services on demand and as needed is no less. Hoping to stem the tide of enterprise defections to the cloud, equipment vendors, particularly in capital-intensive areas like storage, have responded by introducing a variety of service options that go far beyond traditional leasing agreements to include some form of capacity-based pricing model.

Storage-as-a-service isn’t just for the cloud

Storage-as-a-service, dubbed STaaS since all the apposite four-letter acronyms had already been taken, is a broad and unwieldy category that includes both cloud and on-premises offerings and that spans financial and support models to cloud applications and development platforms. Offerings include bare metal storage capacity, raw storage volumes, network file systems (aka NAS), storage objects and storage applications like backup, archiving/vault or file sync and share, however, all incorporate some form of usage-based pricing model based on metrics like capacity or IOPS/throughput.

The most familiar storage services are offered by a variety of cloud providers including both IaaS Behemoths like AWS, Azure and Google Cloud and storage specialists like Acronis, Box, ClearSky, Dropbox and Zadara. The as-a-service model has also crept into the portfolios of all the major storage equipment vendors including Dell, HP, Hitachi Vantara, Lenovo and Pure Storage, which each offer various forms of usage-based equipment pricing with monthly payments. None has embraced the service-oriented business model more aggressively than NetApp, which used its Insight customer event this week to unveil a comprehensive strategy that includes both cloud and on-premises deployments.

NetApp’s Keystone for improved sales and customer satisfaction

NetApp isn’t new to the business of cloud storage services, having offered its ONTAP storage management software on AWS and Azure for several years. Now, the company is making its biggest bet yet on the superiority of a services-oriented business model to deliver storage capacity and features when and where customers need them. Called Keystone, the program allows NetApp customers the flexibility of usage-based pricing, rapid resource scaling and deployment flexibility that supports both public cloud and private data centers. NetApp says that its:

vision is to simplify the business of data services for customers from every perspective: from how they buy and consume products and services to how they run them in their environments and who services them.

Keystone offers customers three-dimensions of choice in how to procure NetApp products:

  1. Payments: outright purchase versus monthly subscription.
  2. Environment: On-premises, public cloud or hybrid (mixed).
  3. Management: DIY, by NetApp or a third-party partner/service provider.

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NetApp CEO George Kurian believes that cloud services "set the benchmark for customer experience" and sees NetApp's combination of data fabric technology and flexible consumption models delivering that same combination of cloud innovation, convenience and usage-based financial efficiency.

The Keystone program includes operational SLAs that cover performance, availability and resource efficiency, the last of which includes specific data reduction ratios depending on the storage workload (for example 4-to-1 reductions for virtual volumes and 8-to-1 for virtual desktop storage). Although most organizations continue to want some workloads to operate locally on private infrastructure, many want the flexibility to buy storage as a service and the choice of operating environment. For them, the Keystone STaaS model entails improvements to system management and maintenance via the following Keystone services:

  • Simplified capacity scaling using NetApp ONTAP, its software defined storage technology.
  • A single management console that covers both on-premises and cloud resources.
  • Intelligent monitoring with smart health checks that validate the performance of storage systems and whether they are meeting previously agreed on SLAs. Keystone also includes data analysis and alerts supplemented by machine learning (Active IQ) that provides system recommendations to improve TCO and efficiency.
  • A premium support offering (SupportEdge Expert) that provides half-day delivery of replacement parts and streamlined access to tier 2 support personnel.
  • A simple, flat pricing model for support contracts.

When paired with announced improvements to NetApp’s ONTAP software and new all-flash array hardware, Keystone caps some significant updates to NetApp’s portfolio and provides a significant competitive differentiator.

My take

Enterprises currently enjoy an unprecedented variety of storage options that span fully DIY deployments using traditional CapEx equipment to fully managed cloud services that implement block devices, file shares and storage objects. Enterprise architects planning multi/hybrid-cloud designs need some way to unite these environments in a rational way that simplifies storage management, data movement and policy enforcement.

While the cloud service model isn’t right for every organization or situation, business managers have demonstrated through surveys and buying decisions a preference for cloud consumption and billing models. With Keystone, NetApp has made an aggressive, but right move by offering perhaps the best service implementation that blends the cloud customer experience with a wide variety of storage implementations that encompasses both traditional privately owned and operated equipment and multiple cloud infrastructure platforms.

NetApp faces stiff competition in the enterprise hybrid infrastructure market, with Dell EMC-VMware being the most formidable with its combination of equipment, software and cloud services (both Dell Cloud and VMware on AWS). While other storage vendors have embraced some form of cloud-like usage-based billing model, few, with Pure being a notable exception, have the storage fabric and public cloud integrations to match what NetApp and Dell can offer. It will be interesting to see the customer reception for the Keystone model and whether it provides enough of a differentiator to win business away from its competitors.