As a small to mid-sized business grows, so does the sheer volume of information generated each day: account information and budgets, along with databases of inventory and employee records. The list is endless. A generation ago, it was euphemistically called the paper blizzard. Now, it’s more like a digital Tsunami that only gets bigger and more difficult to manage for the organization without a storage strategy.

“Archiving data is less about where to put it and more about how to get it when you need it,” says Andrew Reichman, an analyst from Forrester Research.

Indeed, many small to mid-sized businesses make the mistake of growing out their methods for storing data like the business itself: piecemeal and as needed. The end result can be disjointed, irretrievable data that is mission critical to the company, yet scattered across a variety of discs, servers, and individual employee hard drives.

The good news: data storage has never been more plentiful or cheaper. The trick is wading through the myriad of options available and deciding which one works best for your organization.

In-house versus out

The first big decision to be made is whether to keep all or most of the company data in-house or out-of-house. Traditionally, companies of all sizes have kept their information on site. However, using a third party host to store data online is increasingly popular.

Out of house options

What do Intel, Google, Microsoft, IBM, Seagate Technologies, and EMC all have in common? They are all heavily investing in online backup storage solutions; whether it’s buying startups like IBM snapping up Arsenal Digital, EMC acquiring Mozy, or Seagate absorbing eVault. And then there’s Google launching its own initiative called GDrive service. There are also countless independent companies (that haven’t been bought up yet) offering data backup and storage online and on the cheap.

Here are some of the advantages and disadvantages for the growing company:

  • Advantages: It’s cheap, fast to deploy, and turnkey requiring no staffing to maintain the data. Plus, vendors have the advantage of using economies of scale to provide better security and store data more cheaply than a smaller organization doing it all on its own. However, the most important advantage is really more basic than that. The biggest reason to go out of house is to get remote backup capability,” says John Longwell, research director for Irvine, Calif.-based Computer Economics. Simply put, you don’t want to have all your eggs (or data) in one basket (or place). If the building burns down or even just a poorly-timed snow day keeps employees away from the office during a critical time for the business, the results can be devastating. Off-site backup and remote access to information is a core need for most businesses today.
  • Disadvantages: “The server and the application need to be in the same place. Going outside works if you’re talking about using Gmail as the company e-mail client and then archiving it all on Google, or CRM data with Businesses need to be careful which parts of the business processes they can give to someone else,” says Reichman. Even Amazon is now offering cheap data storage and retrieval programs like “SimpleDB”, which is in beta as of this writing. However, simple is the optimal word in that brand. It is a very simplistic way of searching and fetching data. It is not the place to store financial information a company may need to aggregate in a variety of sophisticated ways to generate specific reports.

In-house options

Despite all the hype over third party vendors offering online storage, in-house options make a lot of sense, as well, and may be more practical for many businesses.

  • Advantages:  The obvious advantage is retaining control at all times. The other advantage is that the major disadvantages are disappearing fast. In-house solutions are getting cheaper and more effective too. “There’s a big shift among small to mid-sized businesses from on-board discs (data separately stored on each individual computer and server) to what’s called centralized network storage. This can be as simple as throwing a single appliance on the network that houses all the data. By centralizing storage, information can be pulled from multiple sources and aggregated into richer data. It also makes it easier to manage all the company information, control user access and retrieve it when needed.
  • Disadvantages: In-house solutions mean buying gear, getting it installed, and then taking on the expense of maintaining it. “Sometimes it’s a tough pill for small to mid-sized businesses to swallow,” admits Reichman, who encourages executives to look at the long term savings of better data management specific to the business. It’s something an outside vendor can’t provide, as well.

Deciding factors

  • Costs:  Web-based third party vendors are cheaper, at least up front. It depends on the size of the business, however, whether they make sense. If a company has someone on staff to maintain a centralized storage network, then it might make more sense to invest in the equipment and save on vendor fees typically based on the amount of data stored on a subscription basis.
  • What data and why and when it is needed:  How will users interface and retrieve information as they need it? A third party vendor may not be able to offer the sophistication needed to work with certain applications or databases. Then again, it may make sense to house older and less important data off-site and out of the way.
  • Prioritizing storage needs: What’s the primary motive for storing data? Is it backup and security? If so a third party vendor is likely the answer, since it offers off site protection of the data and often smaller businesses don’t have the same level of security as the vendor (like encryption and less network downtime). 

Sidebar: Data Storage Options

Carbonite is designed to backup data on each individual computer or server. It runs constantly in the background backing up data and is handy for the desktop user who loses a file or accidentally deletes something of importance. Lost information can be retrieved immediately. This is not a likely solution however, for growing companies that need to manage data in a centralized way controlling access and aggregating data driven reports.

Mozy Similar to Carbonite, it is designed for the individual user who needs his or her information constantly being backed up remotely in case of a virus strike or ill-timed computer crash. Mozy, however, does offer a professional version with a number of features like administrative powers to manage data from multiple sources and encryption. Its new parent company, EMC, may have something to do with the increasingly beefed up services targeting corporate clients. Pricing is based on a combination of price by seat ($3.95 per computer, per month) and 50 cents a GB per month

xDrive is primarily targeting the consumer market. But for the small business just starting out, it’s worth consideration. xDrive charges $9.95 for 50 gigabytes of storage.  Based in Beverly Hills, Calif., xDrive is actually owned by AOL and markets itself as a preferred solution for backing up pictures, graphics and video for easy web access and collaboration with others. As is, it’s easy to imagine a business quickly outgrowing xDrive. But with AOL as its parent company, it’s also easy to imagine xDrive scaling up it services for growing organizations before that happens.

Nirvanix is attracting a lot of attention, as well as high profile investors like Intel. The San Diego, Calif.-based data storage company is especially attractive to the small to midsize business market because it offers scalable storage services for a flat fee of 18 cents a gigabyte. What makes Nirvanix special is its application programming interface (API) that enables companies to easily integrate Nirvanix Web Services into their own company applications.

In comparing just these four examples of online data storage vendors, there is at least one common denominator: they are all still growing out their corporate features to accommodate businesses. “The options are still limited today, but it’s getting there,” says Reichman.