Ahead Of The Jukebox Curve
With the cost of optical storage decreasing, VARs find they have to sell more product to stay profitable. Pennsylvania VAR Systems Solution, Inc. plans to increase profits by entering the enterprise storage market.
There's nothing I hate more than when a client knows more than I do," said Lance Schad, director of sales and marketing for Systems Solution, Inc. (SSI) (King of Prussia, PA). The company's tag line, "Ahead of the Curve," drives Schad's business attitude. SSI provides graphic and multimedia solutions for professionals.
Ten years ago, SSI filled a niche by selling Mac products. As its customers' graphics needs increased, the company stayed ahead of the curve by offering solutions like UNIX servers. Expanding further into the systems integration market, SSI now provides mass storage devices like jukeboxes. The company grew from three people in 1990 to 65 today. The core of its image has remained with Apple products. So, SSI recently spun off a new division called Enterworx to make its own name in the enterprise storage market.
Enterworx aims to help companies manage digital assets. It can implement RAID (redundant array of independent disks), tape libraries, SANs (storage area networks), and CD jukebox strategies. E-mail archiving, moving huge blocks of data in a pre-press environment, and establishing high-availability server clusters are some solutions Enterworx designs and implements. "We're going beyond graphic arts. We'll be talking to CIOs and IT managers. We're not cannibalizing our existing business. Enterworx will complement it. We want our image to represent a storage-centric company rather than just desktops," said Schad.
SSI's move into the enterprise storage arena is a direct response to the declining costs of lower-end storage. "There's an industry movement toward putting jukeboxes into the hands of everyone," said Schad. "Recently, a company came out with a 200 DVD ROM jukebox for $1,500. That's killing us." The lower-cost jukebox might be suitable for a consumer installation; but in Schad's opinion, it's not at all suitable for the enterprise storage environment. An enterprise storage CD with a jukebox and software can cost from $13,000 to $40,000. "There's a difference in quality, especially in the robotics," he said. "The disk mechanisms, transports, and construction are cheap. We don't integrate solutions like that. Companies with priceless data can't afford to go for lowest-cost solutions. Would you put your child in the lowest-cost child seat?"
Virtual retailers are challenging companies like SSI with catalogue sales or Web sites where customers can buy a jukebox as easily as if they were buying a computer cable. "The customer often doesn't perceive the value we bring to the table," argued Schad. "It takes a lot of work for us to demonstrate a solution and provide references. The customer doesn't realize the amount of overhead we have on our 15,000-square-foot building alone. We're not going to abandon our existing customer base, but we are going to focus on the higher end through our new division."
E-Mail Archiving Requires Mass Storage
Schad sees limitless opportunities for VARs in the enterprise storage market. Storage requirements for businesses are becoming increasingly complex. Schad cited the recent antitrust case where a Microsoft employee admitted destroying e-mail messages that "could be problematic in an investigation."
Recently, Schad was doing some prospecting on SSI's e-mail archiving system. He contacted government agencies and trading companies required by law to archive their e-mail and electronic records. "Currently, they're printing out reams of paper and storing them in closets and warehouses," he laughed. "It's a waste of real estate, and it's bad for our environment. What if they need to find something? Electronic images are easier to find."
Getting into the enterprise storage market launches other considerations, such as a longer sales cycle, revealed Schad. "Larger-scale customers have variables such as budgets, approval processes, and space issues in their environments. Most installations displace older equipment that takes up a lot of real estate. We can't just get rid of the old equipment right away. It has to be phased out gradually. We have to plan for that and make sure that the system design is correct."
Schad said another expensive consideration when entering the enterprise storage market is that larger companies sometimes call for a "proof of concept." Providing a proof of concept can take as much time as delivering a regular product. "Some companies want to see that the solution will work. So, we must do all the work up front. We only agree to a proof of concept when we feel strongly about the opportunity."
Doing the proof of concept can be advantageous, according to Schad. "We feel it demonstrates our abilities better than just talking about the concept. The client is less likely to go out shopping." He illustrated his point. "We just did that with a clustering situation. A Web company needed maximum uptime on its servers. We put two servers in. One runs all the time - actively. The other operates in a passive mode. If the passive server doesn't sense a heartbeat through the cable that connects the two servers, it will assume responsibility for the data. People don't believe this until they see it." Better education of the marketplace will eventually shorten the sales cycle for enterprise storage, said Schad.
Reacting Quickly To Market
How will SSI enter a market where there are already larger, more established companies providing enterprise storage solutions? "We don't have the bureaucracy that bigger companies like StorageTek and EMC have," said Schad. "The approach we're taking is that we are more agile than larger companies. Therefore, we can react more quickly to market changes. But we also have a proven track record with our existing clients and the ability to build a personal relationship."
Future plans for SSI include pushing its commodity business to the Web. "We're not abandoning our current clients. We're here to help them move to the next level. We'll be the resource for them to get their basic cables and consumables that their own IT person can handle. But when they need assistance, we'll be here. Even when ordering on the Web, there will still be a human being who knows the customer."
Questions about this article? E-mail the author at LisaK@corrypub.com.