Storage-as-a-service business model

The storage-as-a-service (STaaS) business model is characterized by a storage provider selling storage space to a customer. 

Understanding storage-as-a-service

Storage-as-a-service is a cloud business model where a provider leases storage space to a customer on a subscription basis.

By extension, the provider also handles the various aspects of long-term data storage such as security, hardware, and data integrity.

STaaS was initially developed for SMEs that lacked the capital or expertise to maintain an on-premise storage solution.

Today, the model is used by all kinds of businesses that desire integrated software which can deploy, manage, and optimize their data storage assets.

Since storage-as-a-service is software-defined, the storage capacity available to the customer can easily be adjusted.

Those who want to increase their capacity, for example, can do so at short notice without having to purchase extra servers.

How does the storage-as-a-service business model work?

The process starts with a company entering into a service level agreement (SLA) with the provider that clarifies (among other things):

  • How much data storage is required.
  • How often the data will be backed up, and
  • The entities deemed responsible in the event that data are stolen or lost.

STaaS providers store data in the cloud because for most customers, it is the more secure, more cost-effective, and less complex option.

However, perhaps the most obvious benefit of cloud-based storage is better integration with cloud-based applications.

For example, a customer with cloud-based accounting software linked to a cloud-based storage system will reduce data latency – or the time it takes for data packets to be retrieved or stored.

Customers can also utilize a host of ancillary services even without the expertise of a qualified storage engineer.

Some of these services relate to functions such as data backup, bulk data transfer, block storage, SSD storage, and disaster recovery.

The benefits of cloud-based storage are likely to see more companies shift to STaaS in the coming years. In fact, Gartner predicts that 50% of all enterprises will be utilizing a storage consumption model by 2025.

Storage-as-a-service vendors

Who are some of the storage-as-a-service vendors using this business model? Let’s have a look at a few of them below:

  • Amazon Web Services (AWS)Amazon offers a service that allows clients to access, store, govern, and analyze data. It also offers the Elastic File System for NAS and the managed filesystem FSx for Windows and Lustre.
  • Dropbox Business – this solution is for teams that want a storage and collaboration tool for teams. Team folders allow data to be stored, shared, and permissioned across multiple devices. Standard plans offer an impressive 5 TB of storage per user.
  • Google Cloud StorageGoogle offers several different cloud storage tiers with various price points and levels of performance. The Standard Storage tier, ideal for hot data that needs to be accessed frequently, comes with a 99.5% SLA guarantee for dual and multi-region storage.
  • Microsoft Azure Cloud Storage – Microsoft Azure offers block storage, file storage, data lake storage, and enterprise cloud file sharing, among other features. Naturally, these features are well integrated with Office 365, Exchange SharePoint, and some other Azure services. Azure also offers sub-millisecond latency for throughput and a zero percent annual failure rate. 

Key takeaways:

  • The storage-as-a-service (STaaS) business model is characterized by a storage provider selling storage space to a customer.
  • The STaaS business model starts with an SLA that defines how much storage is required, how often data will be backed up, and who is ultimately liable if data is lost or stolen. Providers store data in the cloud because for most customers, it is the more secure, more cost-effective, and less complex option.
  • Some of the vendors utilizing the storage-as-a-service business model include Amazon, Dropbox, Google, and Microsoft.

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Connected Business Model Types

Asymmetric Business Models

asymmetric-business-models
In an asymmetric business model, the organization doesn’t monetize the user directly, but it leverages the data users provide coupled with technology, thus have a key customer pay to sustain the core asset. For example, Google makes money by leveraging users’ data, combined with its algorithms sold to advertisers for visibility.

Attention Merchant Business Model

attention-business-models-compared
In an asymmetric business model, the organization doesn’t monetize the user directly, but it leverages the data users provide coupled with technology, thus having a key customer pay to sustain the core asset. For example, Google makes money by leveraging users’ data, combined with its algorithms sold to advertisers for visibility. This is how attention merchants make monetize their business models.

Marketplace Business Models

marketplace-business-models
A marketplace is a platform where buyers and sellers interact and transact. The platform acts as a marketplace that will generate revenues in fees from one or all the parties involved in the transaction. Usually, marketplaces can be classified in several ways, like those selling services vs. products or those connecting buyers and sellers at B2B, B2C, or C2C level. And those marketplaces connecting two core players, or more.

Wholesale Business Model

wholesale-business-model
The wholesale model is a selling model where wholesalers sell their products in bulk to a retailer at a discounted price. The retailer then on-sells the products to consumers at a higher price. In the wholesale model, a wholesaler sells products in bulk to retail outlets for onward sale. Occasionally, the wholesaler sells direct to the consumer, with supermarket giant Costco the most obvious example.

Retail Business Model

retail-business-model
A retail business model follows a direct-to-consumer approach, also called B2C, where the company sells directly to final customers a processed/finished product. This implies a business model that is mostly local-based, it carries higher margins, but also higher costs and distribution risks.

B2B2C

b2b2c-business-model
A B2B2C is a particular kind of business model where a company, rather than accessing the consumer market directly, it does that via another business. Yet the final consumers will recognize the brand or the service provided by the B2B2C. The company offering the service might gain direct access to consumers over time.

Crowdsourcing Business Model

crowdsourcing
The term “crowdsourcing” was first coined by Wired Magazine editor Jeff Howe in a 2006 article titled Rise of Crowdsourcing. Though the practice has existed in some form or another for centuries, it rose to prominence when eCommerce, social media, and smartphone culture began to emerge. Crowdsourcing is the act of obtaining knowledge, goods, services, or opinions from a group of people. These people submit information via social media, smartphone apps, or dedicated crowdsourcing platforms.

Open-Core Business Model

open-core
While the term has been coined by Andrew Lampitt, open-core is an evolution of open-source. Where a core part of the software/platform is offered for free, while on top of it are built premium features or add-ons, which get monetized by the corporation who developed the software/platform. An example of the GitLab open core model, where the hosted service is free and open, while the software is closed.

Open Source vs. Freemium

open-source-business-model
Open source is licensed and usually developed and maintained by a community of independent developers. While the freemium is developed in-house. Thus the freemium give the company that developed it, full control over its distribution. In an open-source model, the for-profit company has to distribute its premium version per its open-source licensing model.

Freemium Business Model

freemium-business-model
The freemium – unless the whole organization is aligned around it – is a growth strategy rather than a business model. A free service is provided to a majority of users, while a small percentage of those users convert into paying customers through the sales funnel. Free users will help spread the brand through word of mouth.

Freeterprise Business Model

freeterprise-business-model
A freeterprise is a combination of free and enterprise where free professional accounts are driven into the funnel through the free product. As the opportunity is identified the company assigns the free account to a salesperson within the organization (inside sales or fields sales) to convert that into a B2B/enterprise account.

Franchising Business Model

franchained-business-model
In a franchained business model (a short-term chain, long-term franchise) model, the company deliberately launched its operations by keeping tight ownership on the main assets, while those are established, thus choosing a chain model. Once operations are running and established, the company divests its ownership and opts instead for a franchising model.

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