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IBM Partners With Actifio To Target $100 Billion Cloud Market

February 8, 2014

IBM sees big opportunity in delivering cloud storage services to big enterprises and Small and Medium Sized Businesses (SMBs).

To that end, it’s investing $1.2 billion to boost its cloud storage services. And as of February 4, IBM is announcing a partnership to deliver a cloud storage service with Waltham, Mass.-based Actifio, a fast-growing provider of so-called copy data management technology that boosts data storage efficiency for enterprises and SMBs.

Forbes - Actifio and EMCThe problem is easy to understand but hard to solve. Companies traditionally make separate copies of their critical data for each purpose. They make different copies of their corporate data for various purposes such as application development, testing, analytics, and data retrieval.

And as the amount of data that companies store increases every day, the cost of maintaining all these distinct copies escalates. CFOs are increasingly demanding that IT executives find a way to rein in these costs.

And through an appliance coupled with software, Actifio — which I wrote about in 2012 and 2013 – has developed a way to do that. It offers companies the ability to store one so-called golden copy of its data and to use it for these purposes without creating different copies.

As a result, Actifio enables IT executives to meet the demands of CFOs to handle the corporate need to manage its growing pool of data while controlling the upward growth of operating and capital expenditures for IT equipment and software required to store it.

IBM has been working with Actifio for several years and is now ready to launch a managed cloud storage service called IBM SmartCloud Data Virtualization (SCDV) that ”will enable customers to decouple their application data from their physical infrastructure, improving business resiliency, agility, and the ability to move more seamlessly into the cloud,” according to Laurence Guihard-Joly, General Manager for IBM’s Business Continuity and Resiliency Services.

IBM is seeking to respond to the concerns of top executives — such as CFOs and chief information officers (CIOs). As Guihard-Joly explained in a February 3 interview, “There is an explosion of data storage in the enterprise. Production data is used for many purposes including development, testing, analytics, and recovery. I was in Asia/Pacific during the last year and listed to many CFOs and CIOs and they kept asking ‘Why are storage costs going up?’”

Guihard-Joly found that Actifio — which has worked with IBM for years — could provide a way to help address their concerns. “When I met with Actifio a few months ago, I realized that its approach of offering a single golden copy of a company’s production data would enable IBM to offer its clients a solution to the issue that CFOs and CIOs were raising,” said Guihard-Joly.

Allen Downs, IBM’s Director, Global Business Continuity and Resiliency Services, told me in a February 3 interview, “I look for leading edge technologies whether from a partner or from a team inside IBM. I saw that Actifio — with its idea of the golden copy of data — would be unique in its ability to manage the explosion of data. I have been working with Actifio for over 12 months. We did laboratory analysis and client pilots and saw that Actifio could enable our clients to do more for less.”

IBM also likes Actifio’s working style and vision. As Guihard-Joly explained, “I like the way Actifio works. It’s fast and flexible. And it has worked with us to meet our requirements for compliance and security. I like how they have worked to integrate themselves with the rest of IBM. And they share our vision of delivering value to customers, not just taking their money.”

IBM will buy Actifio hardware and software and use it to help deliver SCDV to customers. IBM will deliver customers a managed service and charge customers on a per gigabyte protected basis — which will save clients from paying for duplicate copies of data.

Actifio is thrilled with the IBM partnership. As Actifio president Jim Sullivan explained, “We’re so excited about the offering with IBM. We serve Global 2000 and mid-market companies. Every client wants a cloud offering and this will deliver them high service quality and — thanks to lower legacy costs and a drop in monthly cash outflows — an instantaneous return on investment.”

Actifio continues to grow fast and believes that the IBM partnership will help it compete in huge markets. “We just saw record growth at the end of January. And Actifio is targeting a $44 billion market and the venture with IBM will target a $100 billion market for cloud expenditures.”

Gartner Group is bullish on the IBM/Actifio partnership. As Gartner analyst, John Morency explained in a February 3 interview, “The partnership will enable IBM to deliver an all-in-one services that rivals deliver in separate bundles. Instead of buying different backup services for equipment from EMC, NetApp, and IBM and for virtual and physical storage, customers will be able to buy a single service.”

This all sounds great for IBM and Actifio. Sullivan is focused on strengthening Actifio’s relationships with customers and partners. As he said, “We will try to keep people happy. We will do capital raises and eventually an IPO. Our focus is on a long term partnership with IBM that will deliver value to our customers.”

If the partnership is successful, it will show up in Actifio’s financial results and could accelerate a payday for its investors.

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