Now, he says, VeriCenter has become crucial to the business, storing key data such as Social Security numbers, course materials, grades and financial information. "We entrust the lifeblood of our business to VeriCenter," Power says.

What's Different?

Back in the late 1990s, the majority of storage service providers (SSP) focused on delivering primary storage -- or storage that acts as the external disk drives to mission-critical transactional databases -- as an outsourced service. One of the proponents of that so-called utility storage model was Waltham, Mass.-based Storage Networks Inc., which spent hundreds of millions of dollars on the highest-end storage arrays for its data centers.

But while the company was able to woo some Fortune 100 customers to store referential data, such as e-mail and files, at off-site facilities, clients weren't willing to hand over primary, mission-critical data to a third-party service provider, according to Dave Russell, an analyst at Gartner Inc. in Stamford, Conn.

In 2002, with sales dropping, Storage Networks, like other pure-play SSPs, tried adding storage management software to its portfolio of products and services, but that move couldn't save it from being forced to shut down in 2003. Other SSPs, such as Storability Software in Southboro, Mass., successfully made the leap from hosted service provider to storage management software vendor.