Welcome to Open-Experts – The Data Storage Podcasts, episode #6! This time Topper Power, Head of Business Development at Open-E talks with Kristof Franek, CEO of Open-E. Together, they dive deep into the major disruptive factors reshaping the data storage industry – from the impact of AI and cloud repatriation to supply chain turbulence, cybersecurity threats, and the growing importance of professional services in modern storage environments. Discover how Open-E stays resilient amid global uncertainty, balances cloud and on-prem infrastructures, and ensures data security and continuity through a flexible, hardware-agnostic, software-defined storage solution – Open-E JovianDSS. Tune in now and explore how Open-E is turning today’s challenges into tomorrow’s opportunities!
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Topper Power: Hi.
Kristof Franek: Hi, Topper.
I would like to begin by introducing you to Christoph Franek, CEO of Open-E, who is here to discuss the shifting dynamics in the data storage industry, particularly focusing on the disruptive forces he views as affecting the industry.
So Christoph, from your long experience in the industry, what do you see as the most disruptive factors shaping the enterprise data storage market today?
Well, this is a difficult question, to be honest. There are so many difficult, there are so many disruptive factors… Probably AI, because AI became famous since a couple of years. We are speaking AI all the time. It is used, or at least people are talking about using it in every possible field of our industry. So yeah, probably usage of AI in storage, for storage, with storage, it is the factor which is really playing the big, big role in our base, in our current days. As I said, many people are just to be on top of wave, just to be on top of discussion. They are saying, they are pretending that they are using AI, but in many cases, this is just talking only, at least from my experience, at least from what we see on the market. But in the certain areas, of course, yes, it is in use. So it has a really important influence on this, what we are doing.
And it certainly captured the headlines. You read about it every day in the popular press, as well as in industry publications. You read it about whole new industries that are now being created, like the AI agent phenomenon. And I think also in the context, perhaps of software-defined storage, the tools that are being produced in order to facilitate the development of new applications.
Yeah, well, AI is used by our team in Open-E, the development and other teams like QA and specialized development teams. This is used already since years. Our people always look for the newest technologies and try to use, implement them. And I must say that me as a person who need to pay for all those different toys, what we are looking for, it was very expensive. The hardware which can be used for AI is expensive. This is very, very demanding technology. You need a lot of storage for AI because AI is as smart as data from which it can learn. So algorithm itself, yes, it is important, but you also need to deliver as much as possible input. And in this case, data. So this is why AI and data storage are coming together. You need both to deliver good result what you are looking for.
Okay. Well, this raises in my mind another question. When you talk about bringing AI and data storage together, the average enterprise may not be large enough to handle large amounts of data. And it seems to me that one of the big structural changes in recent years has been the mass migration to the cloud. Can you speak to this phenomenon and how it’s affected by AI, for example, and whether you see any disruptions taking place further in this? Because obviously, the migration to the cloud, while it’s disruptive, has been going on for a while.
Well, for many, many years, practically since we started to sell our software, the cloud was already visible, maybe not used, but people started to speak about cloud to those days. Actually, this is natural when you have internet and you have ability, possibility to move data from one place to another. And so it means that data needs to be provided to each of this office simultaneously. And it should be the same data. So we are becoming, we have a private cloud in this case, but when the people want to have something bigger and more sophisticated, then you are speaking about the cloud, what we see. And now migration to the cloud, it was moving all the years and became a really massive stream. I have customers who changed to cloud a hundred percent and sometimes serious, big corporations, enterprises, and they moved to cloud a hundred percent. Everybody knows that is not always a smart move. With AI or without AI, you are not in control of your stuff. When you are moving your data into cloud, everybody knows about it, but everybody seems to forget about it. That cloud, it is not the cloud in heaven. Cloud is just another computer. And the other computer is managed by somebody. Sometimes those are good people. Sometimes it can be bad people. So this is why you are losing control over your data. So this is one of the factors why cloud is not so great for everybody. I see the tendency, opposite tendency. The people are moving back from cloud. This is just nothing else but cloud repatriation. So people are still staying partly in cloud, but they are starting to build up their own storage back on their premises because we are having so many different factors which are playing a big role in our life. Well, look what is happening in our world today. We have wars. And where is my data, which I was exporting to cloud? So this is something that now the enterprises starting to think things through. So we see real, let’s say, risk to the integrity of the data from the geopolitical control issues.
And I also wanted to ask you in this context about the counter response to that. Countries are taking actions. You have compliance issues, regulatory issues have popped up. Is that a major concern that’s also spurring this, let’s say, cloud repatriation as you refer to?
Yes, it does. Our customers are talking to us when we are discussing any of projects with them. They are asking how we do manage this stuff, complying to data security. And of course, we do. We have no choice. We have to comply. It is costing us sometimes a lot of work, but as I said, there’s no choice. The rules are rules. So we do follow up.
I read some interesting statistics recently from IDC that said that up to 70% of enterprises are planning to rebalance workloads back to on-prem or hybrid platforms in some form. So clearly, this is a huge counter move. Well, exactly.
This is what I said. This very instable political situation in the world is making people starting to look what they are doing, how they are doing. And today, data is the most critical value for each company. So it was always, but in the past when everything was on the paper, then of course, it was with the company all the time. Nobody was even thinking that it can be different. But since data became digital and it can be moved from the one place to another pretty easy and pretty fast, then it started to be very, very different. So this is the case.
And this suggests to me another issue that I think you’ve kind of touched on related to the security aspect is the cybersecurity and the risk of ransomware. How is this, or can this be considered a big disruptive factor? Is it really so suddenly pronounced or have we always had a lot of it and it’s just kind of evolving?
This was, this is, and this will be. The world is full of, again, bad people, but also full of jokers who want to make some fun and they are especially with this kind of fun and putting the others under danger, whatever. So this is happening all the time. And yes, our software is providing the technology, snapshots, which are in control of administrator, which are enabling user to move back to the data before attack. And so this is pretty easy match. And we had many cases, really many cases when this technology was helping people to resolve the critical problem they had with ransomware attack. Even us, we were also attacked a few years ago by ransomware. And again, thanks God, we are using our technology. And thanks God, it was taking us like 10 minutes to move back to the again, working scope for the company. But so, yeah, but this is danger and which is, and I am afraid it always be, you know, since like, see the world, you know, we are having all the time, criminals and police, doesn’t matter how much world is moving forward. This is not changing. It’s always happening. Ransomware is part of our life.
Yeah. And what certainly has changed is the interconnectedness, the high level of interdependence of companies, enterprises on data being held or processed in different places, and the continual reduction of latency across systems. I mean, all this has kind of facilitated exposure. And one thing that it seems to me may be a significant response to this is that storage, for example, is no longer considered to be a kind of passive infrastructure layer. It’s a kind of primary attack surface.
Moving on, I wanted to ask you about what seems to be issues related to disruptions in the supply chain since, you know, COVID and all the geopolitical risks. Do you see this as a major source of disruption now that has kind of gripped the industry?
It is the major disruptive factor since always. Practically 2008, we had a recession. Lastly, COVID, it was only four years ago and it was also having a really huge impact on all our business because all the production is in China and China was infected first and all this communication layers were disrupted and it was really, really tough time. Current year, we have new regulations coming from United States, the famous tariffs.
Ah, and I can jump in here on that. I would classify that as, broadly speaking, reverse globalization because other countries are responding in kind, walls go up, and years that have been spent in building up supply chains are being dismantled overnight.
Exactly. So, it is now again tougher as it used to be. So, we all time are facing the ups and downs. Unfortunately, up is never big enough and then the down is coming and we are not having quiet periods anymore. So, it’s not something happening. So, like a few months, it’s quiet, though this is already a great time because there was no big interruption coming.
Now, to turn to how Open-E is adapting and responding to these kinds of issues. For example, Open-E is an SDS solutions provider. How does what you’ve just described affect how SDS solutions are adopted and valued?
Well, my problem is, Open-E problem is that we are not having impact at all on hardware. So, we are just a software manufacturer. So, we are good because the no change of tariff is influencing us at least now because software for years was not taken as a good, which were going under customs. It can also change. Yes, yes, yes. At this moment, we are still good, but I believe in the end of the year, the things should be all confirmed and kept this old way or it will change.
Yeah, and there are international treaties. I think it’s a WTO, but at least one of these international multilateral accords have that as part of the terms that there is no and will be no tariffs that can be put on software. But of course, these things can change. Stronger countries do what they will and weaker countries accept it, and that goes to companies.
But beyond the risk of changes to trade regimes and international treaties, there’s also just a practical impact of dependencies on supply chains for different types of hardware technologies. And if it’s suddenly not available, this suggests that a company like Open-E, which is hardware agnostic, has some advantages. Would you say?
Yes and no, because we are not A brand, we are B brand, let’s say. But it means that our partners are building their solutions based on B brand components. And B brand components are produced mainly in China. So it means that, okay, the Far East, you know, some of them are coming from Indonesia, from Malaysia, but always those factories are far away. And with those new regulations, it has a big impact on our business and it is beyond our control. So I can do whatever I want, but I cannot make any difference on 30% higher price on the server. So with the latest disruptions, even hardware agnosticism is not a perfect insulator. Even if we speak about our software can be installed on HP, our software can be installed on Dell and this kind of, and it is, some of our customers, partners are installing our software on Dell, for example. And yes, it works. But the Dell, I assume also produced in China, at least their servers. So in the end of the day, if this is made in China, then it will have to be more expensive than it used to be. But even if Dell was producing it and started in the United States for a certain period of time, this part of our business is just, I don’t know, maybe 10%, you know, based on this A brand hardware. The rest is on B brands. So Taiwan and Taiwan today is also producing mainly in China. So hardware agnosticism is not a perfect protection against supply chain problems, but it’s a mitigant. If you have an absolutely big need for a certain solution, being hardware agnostic is fantastic because you know, you install our software on anything and it works. But in the situation when you are just looking for the cutting down the price, so you are looking for less expensive, but still performing hardware, then yes, you need to have the hardware from the source, which today is unfortunately not supported.
Yes. So these are troubled times, but let’s speak for a few minutes on how Open-E is actually positioning itself and using its strengths. And I wanted to ask you a few questions along these lines. Let’s touch briefly on the reverse migration from the cloud. How do you see Open-E enabling this kind of flexibility, let’s say for the hybrid model?
Well, our software is prepared to manage this kind of tasks. We help customer to manage transfer from cloud into a local storage. And we have partners who are working on edge computing on edge storage since years. And our software is for them prepared and developed. So this is exactly the area where the transferred one or the other way goes. So edge computing, and we do it since very, very beginning, since edge computing was becoming known. And then we work with one of our OEM customers on improving those technologies. And those technologies are in Open-E software and to be used by our customers. So, but with this partner, we are lucky to be able to work together and be able to test all different demands, which are popping up during this transfers, whatever. And we know that infrastructure, as it gets smarter, gets more complex to manage. SMBs, MSPs, for example, which typically many lack strong IT teams, they struggle to keep up.
How does our ability, based upon our deep support for Linux, our ability to provide customer support, give us a competitive advantage here? This is not necessarily a major disruptive factor. It’s an evolving thing, but it’s clearly evolving in one direction toward greater complexity. How does our support capability give us an edge and where does that lead us, i.e., where do you see us going, like with professional services, for example, if you think that’s an area of importance?
Well, this is something what is making the A-brand vendors different than, well, just low-cost vendors. So, low-cost vendors are delivering one thing. The A-brand vendor is delivering one thing together with full service and also with accessories and also with many, many other things. And when you are buying a car, you don’t want to buy a car on the way that engine you are buying from one manufacturer and wheels you are buying from the other manufacturer and so on. You want to buy the car. But when you have the car, finally, then you want to have this car serviced. So, again, you prefer to have it serviced by the vendor, by the place where the car was manufactured, because you know that they know better how the car works and is it working good or not. So, this is the same story.
When we started, we were just producing software, which was improved Linux. It was 20 few years ago when we just started to produce open software. But over the time, we started to add different functionalities. We started to do the software more and more complete. And then we started to sell support for our software, because at the very beginning, we were selling our software without technical support, or it was kind of the freedom or whatever. Then we started to sell technical support. And now we are on the level when we came to the position that we are also able to offer to the people additional services, which are coming with our software or with the services which are offered by our software.
So, aside of the storage, storage is installed in a certain environment. So, is this environment corresponding to what you need from storage? So, is the storage, what is already working in the certain environment, working properly? Does it need to be changed? Does it need to be extended? Does it need to be, does the certain things, well, in case of storage, we are talking about mechanical things like rotating hard drives. So, then, and what mechanical things are getting broken. Doesn’t matter how carefully you manage them, they are still getting broken. There’s no other way. If they are working, they have to get broken someday. So, the question is, how smart, how alerted you are that you need to replace them? When? How long it can work without service? So, all this stuff, all this knowledge we have, and we are also starting to offer to our customers just consulting, how to manage your storage or how to set up your storage, how to set up architecture for your storage, if you are currently using this and this and this. You know, over the time, and when we started to sell our software, the companies didn’t have even the professional storage in the companies. They were using just a couple of computers. On the one of computer, they were hard drive where they were networking and so on. There was no professional storage. If this hard drive was getting broken, then the company was out of business, at least for a couple of days.
So, then we started to sell Open-E software where you had already a certain level of protection and so on. So, this is how it started to be. So, today, as I said, we are on the level that we are starting to offer to the customer different kinds of the professional services. One of the first ones would be the check-up service, you know, to check if your storage, what you are using, is in good stage. Because, well, if you don’t go to the doctor regularly, if you’re not checking yourself, you can get, I wish you the healthiness for all your life, you know, but you need to do check-up from time to time to be sure that you will be not getting, that you are not having any kind of the sickness, which can cost you a lot. So, go once a year to doctor and make a check-up. And this is what we are recommending to our customers. Just go to Open-E and make a full check-up of your storage. Make sure that all the drives are in charge, that all of them are working correctly, that memory what you are using is fine, that networking what you are using is delivering what you want or what you need really. Very, very, very often people are not aware what they are having in their environment. And since this got much more complex than it was before, much more complex, then people are just not aware. It seems to work, but very often it works with the huge, huge problems, but it’s still working until it collapses. And when it collapses, very often it can be too late.
So, I like your analogies. First, you started out with the analogy of the automobile and taking it to the shop just to get, you know, to make sure that it’s running properly. You want it to be worked on by the party, perhaps you sold it from, but someone who knows about the automobile. And you graduated to the human health because, in fact, such vital issues in operations within a company of computer services can be like life and death issues. So, these are powerful analogies, and it sounds like they make a compelling case for what you’ve just been described in the move toward professional services.
Christoph, thanks for joining us. It’s been a great conversation. We appreciate your insights and look forward to seeing how Open-E continues to shape the future of software-defined storage. Thank you.
Thank you very much.
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