An interview with Cameron Bahar, Founder and CTO of ParaScale, a Cloud Storage Start-up

HostReview had an opportunity to speak with Cameron Bahar, founder and CTO of cloud storage start-up ParaScale. In the interview, he discusses the market for cloud storage solutions, the current trends and the future of cloud computing, and much more.

Would you tell us a few words about yourself and your professional background? How long have you been involved in the cloud computing space?

Cameron Bahar:I have over 20 years of systems software development and deep expertise in distributed operating systems, file systems and data center management. The creation of ParaScale was inspired by recognizing a need at the end of the last dot.com bubble. Many of the customers of the storage service provider I worked for were asking for a software version of the service that provided storage for digital content owners. At that time most of the now automated functionality was manual and performed by many administrators, thus making a software solution impossible. ParaScale was created in 2005 to deliver on that need.

You attended HostingCon, the world’s largest gathering of hosted services professionals that took place at the Gaylord National Resort and Convention Center in Washington, DC in the beginning of August. Could you please share with HostReview’s readers what you thought some of the most interesting takeaways from the show were?

Cameron Bahar:People at the show had an insatiable appetite for all things cloud. It felt like every conversation was cloud related and ParaScale was well received. People wanted to understand how cloud storage can drive new revenue streams without massive capital outlay. Our booth was packed and sessions were well attended.

Is it true that cloud computing represents a huge opportunity for growth and development for service providers during the current economic downturn, and why?

Cameron Bahar: Yes – there is significant opportunity for service providers in cloud computing.Analysts from Tier1 quantifies the public cloud service market to be around $300M in 2009 and conservatively estimates 100% growth per year for the next three years. Cloud storage is estimated to be about 40-60% of this market. Although cloud computing has garnered a lot of early attention, the near term opportunity is cloud storage, since customers can adopt it quickly without requiring too many programming tweaks to existing applications. Overall, cloud storage is an easier economic sale for the host, who can offer up his offering as an alternative to CAPEX spends on storage systems in a recession where data growth continues unabated.

Cloud storage is a big market for a hosting provider because it provides revenue in three ways. The first is inside the data center. Today file storage is typically offered to a host’s customer using a Tier-1 device at a Tier-1 price point. However up to 75% of the data does not require this level of functionality and thus is not a candidate at the price point. Implementing cloud storage as a tier-2 NAS offering within the datacenter opens up a new and large revenue stream. Data can be aligned with the appropriate tier by customer value and the host collects revenue on a larger storage footprint.

The second is dedicated services. Outside the data center there is overwhelming demand for services like remote backup and content management. Non-hosting companies like Mozy (now EMC) have emerged to address this gap at the detriment of the hosting community. Leveraging a cloud storage platform, hosting providers can create dedicated offerings that address their customer’s needs, expanding the revenue base. These services offered on the strength of a strong customer relationship, with top-tier support will prove vastly superior to offers from mass market players like Mozy.

The third is “the Amazon model” of shared multi-tenant storage. While this is the first use most folks associate with cloud storage it is also the most difficult in which to compete. Most customers shop for this based on price and without massive scale it is not possible of service providers to provide this type of offering and create a viable business.

ParaScale recommends choosing a solution that addresses all three revenue aspects and enables the provider to create a differentiated offering that will grow with the business.

How can hosting providers get their infrastructure ready to support cloud? What are the key considerations that hosts should make before jumping into the cloud storage service business?

Cameron Bahar:On the business side, there are several considerations for service providers and managed hosting companies as they develop their cloud storage services offering.These include:

• Evaluate your customers and their data needs. Do you have customers in particular verticals? Do you have customers with data that you can only access if you are on-premise?

• What amount of data do you intend to store for your customers?Do you have a lot of small customers? Do you have a few large customers?

• What sustainable differentiator should you base your business on? Are you able to provide top-flight support, professional services, virtualization expertise?

• What cloud services are already available and how will you compete?For instance, will you use different performance characteristics and SLAs to personalize your offerings? Will your customers be able to use high-performance streaming clouds as differentiators or lower-cost archival clouds?

• If you succeed, is the business and architecture going to scale? Have you thought beyond the “front-end” of your solution? Have you considered the escalating operations cost and data loss probabality as you store more and more data without a well-designed storage “back-end”?Regardless of how the service provider answers the above business questions, the systematic approach to evaluate cloud storage technologies remains the same:

• Choose a cloud solution that can start small with a few TBs and scale up. This allows the flexibility of getting into the storage cloud business and growing as you learn. In addition, this allows the hosting of dedicated clouds for those customers who are uncomfortable with multi-tenancy, or require a higher SLA.

• Avoid proprietary interfaces and APIs, even if they are REST APIs. Customers are already concerned about lock-in.

• Look for integrated services like video transcoding. This enables the service provider to eliminate an entire application server layer, resulting in cost savings and architectural simplicity, while offering a differentiated value-add service.

• API-based access is great for new applications and is the likely wave of the future. Today most data is accessed via standard enterprise protocols like NFS, CIFS, FTP, etc. You need to “go where the data is” and this means considering the legacy protocol capabilities of your storage cloud platform.

• Research the options to ensure that you have a full storage cloud solution. Some vendors provide only the front-end portal or billing/provisional interface, and some of the new and proprietary data access APIs, but not the economical scale-out storage solution.Make sure you are looking at all three parts for a complete solution. Remember that Amazon and Google figured out how to address the cost of their storage first.

• Always perform a proof of concept within the environment. Don’t believe the marketing hype, instead work with vendors who will let you deploy a trial solution and truly understand its capabilities. Find a vendor who is in it for the long haul and wants your business to scale profitably, so that they can grow.

With the growing interest in cloud solutions, are hosting providers losing business, if they don’t provide cloud storage options to their clients? Are cloud platforms threatening traditional hosting offerings like dedicated servers and shared hosting?

Cameron Bahar:Absolutely. The hosting business is transforming based on the demand of customers. The first boom in hosting was driven by the enterprise looking to outsource its business and switch away from a CAPEX model. This originally started with IBM Global Services and EDS. The hosting market responded with the invention of managed hosting providers who undercut the three-letter firms and pulled in enterprise customers. Today those customers are looking for a more granular approach to hosting. It is no longer acceptable to offer a one size fits all price per application or service. The customer places a different value on each application and the hosting company needs to align with that value. This drives the need for a hybrid of services including dedicated, shared and cloud hosting options. Service providers without cloud offerings cannot meet the cost and manageability requirements of the customer and will face increased churn relative to those who can.

What is cloud storage, how does it work?

Cameron Bahar:Cloud storage is an emerging technology that leverages commodity hardware tied together by software to appear as a single storage device. Nodes can scale to the 100’s so policy based management, self healing, dynamic expansion, capacity management and simple interconnect are requirements or the storage cloud becomes unmanageable. Overall a cloud storage solution includes three main components.

1. The Data Access Layer. This layer should be based on standard pro¬tocols that don’t require application changes. Service providers should avoid proprietary REST APIS that require custom programming that burden your customer’s IT resources. By making it easy for customers to access the cloud locally or over the WAN, service providers will increase revenues. Parascale supports standard LAN and WAN data access protocols for simplicity and reliability.

2. Cloud Storage Infrastructure. This is the core of the solution and must satisfy two primary requirements. First it is about storing data in a flexible and economical way. Look for software running on commodity hardware from your existing vendor-of-choice to drive down costs. Next, cloud storage requires simple scale out and data management. Service providers need to plan for a solution that provides end-to-end data management and supports massive growth. Parascale software provides automated data management that can grow with your business while eliminating manual storage configurations. The platform runs on commodity hardware allowing you to avoid costly capital expenditures. You can even re-purposing existing hardware without renewing the warranty. As customer demands change, you can add or remove physical storage and the system balances out load and capacity.

3. Billing and Provisioning. The solution must integrate seamlessly with your existing environment. Don’t be forced to implement a new portal interface. Instead look for “plug-and-play” solutions that won’t disrupt your current operations. Parascale software leverages web services to simplify integration. When considering cloud storage options the service provider should look to an option that satisfies all three requirements.

What is the difference between a public cloud and a private cloud?

Cameron Bahar:A public cloud is offered as a service, usually over an internet connection. Private clouds are deployed inside a firewall and managed by the user organization. This simple difference drives very unique experiences and capabilities to the end user. Both offer shared access to a pool of IT resources.

Public clouds typically charge a monthly usage fee per GB, combined with bandwidth transfer charges. Users can scale the storage on demand and do not need to purchase storage hardware. Service providers manage the infrastructure and pool resources into capacity that customers can claim.

Private clouds are built from software running on customer supplied commodity hardware. The data is typically not shared outside the enterprise and full control is retained by the organization. Scaling the cloud is as simple as adding another server to the pool, while the self-managing architecture expands the cloud by adding performance and capacity.

What are the top three challenges to organizations seeking to embrace the cloud computing model?

Cameron Bahar:

1. Navigating the vendor hype. Today everyone is selling cloud solutions and everything from a simple API to an archive platform is being called a “cloud platform”. As an organization seeking to embrace cloud computing the challenge is separating the hype from reality. This Q&A offers up many suggestions for this process within the cloud storage space.

2. Avoid vendor lock-in. Many cloud solutions are based on custom and proprietary REST APIs or hardware. These solutions lock the service provider into a single vendor solution and put the providers future in the hands of a single vendor. Instead providers should look for options that support commodity hardware and standard data access methods. This removes the single vendor restrictions and enables differentiated offerings.

3. Differentiating your offering. Creating a copy of an existing cloud solution will lead to commodity competition on the basis of price and quickly becomes a race to zero. This is a loosing strategy as the winner will be the organization with the largest scale. Instead service providers should speak with their customers and learn what offerings are of interest. Use this information and a flexible platform to createspecific offerings that drive higher value (and revenues).

What trends do you see in the cloud computing space?

Cameron Bahar:Service Providers certainly risk losing business by not being able to offer up a cloud storage offering and allowing competitive cloud storage providers inroads into their accounts. And storage is a sticky service – once your competition is in your account, it is non-trivial to displace them.

In Q4 this year and the first half of next year, public cloud services will really breakout. Today the storage service buyer is faced with a few limited choices (Amazon S3, Rackspace, etc). Amazon’s S3 is a very credible solution, but it is a 1-size-fits-all-cloud. With archiving application and streaming application, you have one cloud. Many customers like what S3 offers, but it is a case of “you can have any color so long as it is black”.

Where do you see cloud computing heading in the future?

Cameron Bahar:In late 2009 through 2010, the many service providers of all sizes, observing the success of Amazon S3 and looking to compete, will be able to leverage packaged cloud storage platforms to enter the market. They can avoid undertaking an open-ended engineering project with unknown scalability challenges, as was the situation in 2008. Instead service providers and hosting companies will be able to focus on that which they do best - service creation and service delivery. Expect to see the following dynamics in the service provider-driven public cloud storage space:

• Real customer choice! Providers creating different kinds of storage clouds by selecting different kinds of underlying commodity hardware. Deployments of archival clouds (cheap CPU, less memory, many SATA disks) versus streaming media clouds (powerful multi-core CPU, more RAM, SAS drives).

• Smaller providers getting into the cloud storage service business, with focused CAPEX outlays, and satisfying the needs of local SMBs and regional businesses. Customers could even drive down to the local hosting company and get TBs for a fast emergency recovery.

• Service providers building many small and mid-sized (50-200 node) clouds versus a single uber-cloud, thus ensuring better stability, more isolation, and flexible DR-options across multiple locations.

• Hosting providers getting into the business by offering managed cloud storage services for enterprises by bringing up mini-clouds for enterprises in their own racks. Now hosting providers have a way to participate in the wave of interest in private cloud storage.

Recessions in many cases assist in the adoption of cost-saving technologies. This seems to be the case with the various cloud technologies. The brakes are being applied for non-urgent infrastructure projects, yielding more time for IT staff to focus on ways to be frugal in must-spend areas like storage.

What should be expected from ParaScale in the coming months?

Cameron Bahar:ParaScale will continue to educate and innovate in the cloud storage space. We look forward to continued success in service provider accounts where deep due-diligence is performed on ParaScale and other so-called cloud platforms. These customers will learn what many already have, there is more to cloud storage than a set of APIs. Our customer base is growing and providers are recognizing the power of a ParaScale solution. We offer a specific entry point into the cloud market that is affordable, flexible and easy to manage. Providers are re-using and repurposing legacy Linux servers and implementing cloud storage at extremely low cost points. ParaScale is unique in its ability to enable co-resident third party applications on storage nodes, which enables the creation of differentiated services that satisfy service provider customers. On the product side we have many exciting new features in development that will emerge in the coming months. Stay tuned and be ready to be impressed.