Actifio Wants to "Virtualize" Data Management

Take two of the more impenetrable terms in the IT industry, "data management" and "virtualization," and put them together. What do you get? The doubly difficult moniker of "data management virtualization."

To an outsider, this might sound like a bunch of gobbledy-gook. But it's actually pretty straightforward. What's more, the sector could end up producing the next big storage-software company -- something along the lines of Data Domain, which went public in 2007 and was acquired by Hopkinton, MA-based EMC (NYSE: EMC  ) for $2.1 billion last summer (as co-founder Kai Li discussed with me when he was on leave in Seattle).

That's what Actifio is banking on, anyway. The stealthy start-up in Waltham, MA, talked with me yesterday after my colleague Ryan reported the company had completed its $8 million Series A financing round, led by North Bridge Venture Partners and Greylock Partners. The start-up's CEO and founder is Ash Ashutosh, a 25-year data-storage veteran, former vice president and chief technologist of Hewlett-Packard's (NYSE: HPQ  ) StorageWorks division, and founder of AppIQ and Serano Systems.

To understand where Actifio fits in requires a little background. The big issues with data centers break down into three pieces. The first is servers and computing power. The second is networking and communication that lets data move around. And the third is data storage and protection. The first two categories have been strongly affected by the trend of virtualization -- software that lets companies efficiently run multiple operating systems on a given server, by effectively separating software from hardware and applications from operating systems. Big players in the sector include VMware (NYSE: VMW  ) , Cisco, IBM, Citrix, HP, Dell, and Microsoft (Nasdaq: MSFT  ) .

But Actifio is concerned with the last of the three categories, data management, and here, virtualization is less proven. Sure, there are plenty of big storage companies -- EMC, NetApp (Nasdaq: NTAP  ) , Symantec, and Isilon Systems spring to mind. But to hear Ashutosh describe it, nobody has quite figured out how to "decouple the management of data from the underlying storage system" in a unified and efficient way. In other words, things like data backup, protection, and recovery across different computer systems are still complicated, expensive tasks for companies to deal with. (Maybe that's why we seem to hear about a new online data management start-up every week.)

Actifio isn't giving much detail yet on how its technology works, or exactly what it does. But Ashutosh and his team have been working on the project for about a year and a half. Greylock Partners incubated the company for seven months, until last July, and the start-up has been working with 40-some beta customers, mostly in the Boston area, plus strategic partners. It is shooting to release its software for the masses in the fourth quarter of 2010. Its main distribution strategy is to go through resellers -- IT consultants who bundle software and services for companies.

Although the first market opportunity for Actifio is in disaster recovery, it's clear the company is shooting for a much broader audience. "It isn't about backup, it's about [data] management and virtualization," Ashutosh says. "It's similar to what VMware has done on the compute side."

Actifio has grown to 50 employees, and is currently hiring for sales, marketing, and business development positions. The company has assembled a top management team that also includes David Chang (a fellow founder of AppIQ), Steven Blumenau, Rick Nagengast, and James Pownell (the last three have done time at EMC and other prominent tech firms).

But enough of the practical stuff -- let's dream a little. The home run here would be to turn this company into the next Data Domain, in which Greylock was also a founding investor. So I asked Ashutosh about any particularly relevant lessons from Data Domain, which created a fundamentally new way of doing data compression and storage (something called deduplication), and is now part of the EMC machine.

"Data Domain did two key things," Ashutosh says. "The first is it provided a very tangible value that simplified people's life and made a difference. The second is execution, which is very, very critical -- just focus on getting customers happy. We take a page from that one."

Lastly, Ashutosh stressed again that Actifio is about more than disaster recovery and data backup. "This is about a new market," he says. "The last thing we want is to be put in the bucket of 'another backup company.'" Instead, he says, the ultimate goal is "to meet the needs of the new virtualized data center."

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Gregory T. Huang is Xconomy's National IT Editor and the Editor of Xconomy Boston. You can email him at gthuang@xconomy.com, call him at 617-252-7323, or follow him at twitter.com/gthuang.

This article has been lightly edited. Microsoft is a Motley Fool Inside Value selection. Vmware is a Motley Fool Rule Breakers pick. Motley Fool Options has recommended a diagonal call position on Microsoft. Try any of our Foolish newsletters today, free for 30 days. The Motley Fool has a disclosure policy.


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