As the online storage format known as the cloud has grown in popularity, Valley companies that floated up to provide support services now are reaping financial rewards and planning new product launches. The cloud — which stores information with other companies such as Amazon, Rackspace and Google — frees up vital space on a company’s servers. It also can save money and allows data to be accessed anywhere through the Internet. “This paradigm shift only happens every 15 or 20 years,” said SADA Systems CEO Tony Safoian. “And we are in a market position to take advantage of this.” SADA Systems, founded in 2000, jumped into the cloud four years ago. One cloud offering helps businesses migrate e-mail, documents and word processing software to the cloud. Business tied to the storage format now accounts for close to 90 percent of SADA’s business, the company said. SADA has helped shift more than 400 clients to the cloud since 2007. With the rise in cloud business, SADA added on about 15 employees this year and moved into a Class A office in North Hollywood about three months ago. Revenue is expected to nearly double this year from $6.4 million last year, Safoian said. Worldwide spending on services in the public cloud, or a cloud that pools many users together, was $21.5 billion in 2010, according Massachusetts-based research firm IDC. It’s expected to jump to $72.9 billion in 2015. A survey from the IT trade group CompTIA found 56 percent of business currently using the cloud will increase their investment in the technology by 10 percent or more by June 2012, providing more opportunities for firms that offer supportive services. “The winners of the cloud platform wars will likely be the new power brokers of the IT industry,” IDC said in a June press release. But who those winners will be remains up in the air. “There’s a lot of hype around it, and a lot of venture capital has gone into it. There will be a lot of carnage,” Peter Bell, managing partner at Highland Capital Partners said in a 2008 interview with Forbes.com. “But there will be some good companies that emerge, similar to Web 2.0” AltruIT, a Glendale company IT company, has grown 20 percent from its 2008 to 2010 fiscal years. Last year, AltruIT expanded by offering cloud services, mainly helping non-profits switch their data onto the cloud and training workers on the new system. The move paid off during the 2011 fiscal year, when the company saw sales rise 33 percent to $1.6 million from 2010. “One hundred percent of our business growth (in 2011) has come from the cloud offerings,” said CEO Miles Dapsauski. One new product offering allows social workers to collect data on phones and upload it to the cloud. The cloud is also helping Chatsworth-based tech manufacturer DataDirect Networks to grow. All of its data storage devices can be used for the cloud, and in October it launched the latest update to its cloud-specific storage appliance. The tech manufacturer has seen revenue increase 50 percent from 2008 to $186.6 million last year. DataDirect declined to disclose what percentage of its revenues are attributable to the cloud, however vice president of marketing Jeff Denworth said it accounts for a double-digit percentage. To guard against new companies bursting in a potential bubble, SADA has hooked its fortunes to providing services for technologies from large, established companies such as Google and Microsoft, Safoian said. While the space is crowded, those with out significant offerings are getting reading to jump in. Valencia’s Nexus IS, which until recently only built company-specific clouds, is looking to expand its offerings in the segment. The company, which provides and helps firms integrate proprietary technology from companies such as Microsoft and Cisco announced partnerships in recent weeks with two companies to resell cloud services. New cloud storage and security offerings are also due to launch next year, although Nexus declined to elaborate because those products are still under development. With business spending on cloud computing expected to rise, getting into the segment is a no brainer, said Mike Heiman, vice president of engineering for Nexus. “Those are good things to chase after,” he said.
Area Tech Firms on Cloud No. 9
