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Print Edition StoriesWednesday, September 23, 2009
Born in the Recession
John Clancy expounds on Iron Mountain Digital’s growth
By Rodney H. Brown
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Iron Mountain Digital has been growing steadily since it was created as a division of records storage giant Iron Mountain Inc. in 2004. That year the company made $40 million, and last year that number climbed to $250 million, said John Clancy, Iron Mountain Digital’s president. He talks about how the company kept growing during the recession and what it has in mind for the future, including expanding its digital storage and services further into the cloud.
How does Iron Mountain view the cloud?
Cloud is for real, everyone is talking about it. People are saying “third time is the charm.” You know, first there was hosted providers, then application service providers and now the cloud. I think the big thing there is that we have been doing this for over a decade. You’re going to start to see us talk more about the cloud and our framework of storage as a service, and what we want to get across there is it’s proven, it’s tested and it’s stood the test of time.
How does Iron Mountain Digital handle cloud security issues?
That’s the classic objection with cloud. I think the Iron Mountain brand and certainly the Iron Mountain experience, for decades, of outsourcing physical information and doing that incredibly securely helps. It kind of gets us to the table, if you will. The next question is, is it technically secure? And that’s where I think that really our big advantage comes in. For Iron Mountain to build out the cloud, we are going to put that rock-solid infrastructure in place. We understand better than anyone how important things like multi-tenancy are, how important encryption is, to the point now where we have Fortune 50 companies that go out into our cloud.
How big is Iron Mountain’s internal development operations?
It’s the biggest part of the Digital business. We’ve got hundreds of engineers in the most important areas in technology in Mountain View, Calif., Southborough and Bangalore, India — those are our three development centers of excellence. Digital today has 850 employees roughly and engineering is the largest division and it’s measured in the hundreds. If you think about the strategies of build, buy or partner, build is the biggest, with a capital “b.”
In addition to storing and retaining data, Iron Mountain Digital is getting into destruction. Is that a growth area?
I wouldn’t call it a lynchpin or a cornerstone operation, but it is somewhere where I think we have a unique competitive advantage. It’s new in that customers like the idea of it, like the comfort of it — it’s almost like chicken soup — but it’s not one that customers are putting into practice yet. We think that will change, because the raw economics of extraordinary storage growth with flat budgets means something will have to give. We think destruction will be one of those things that will have to give.
What other areas is Iron Mountain Digital looking to grow in?
One area you will see us getting more active in is consulting. We have a consulting business in the physical business of course, and it’s been nice to leverage that in the digital. I think (customers) are really looking for a partner to come in and look out over this farm of data and help them decide what’s good and needs to be held on to, what is bad data and might need to have a legal hold put on it, and what’s useless. So I think you will see us invest more and think more about consulting to help customers solve those problems. And consulting does open up new kinds of partnerships.
How tough was this last year for Iron Mountain Digital?
It was really in brain lock for the first quarter of this year. They were hiding under their desks. The economy and the pull back in IT spending did affect us but a lot less than most. One of the beauties of our business is it’s founded on recurring revenue. There’s a certain amount of predictability in that model. And the second largest division, outside of engineering, for us is service delivery. That makes us different from a standard technology company. Typically in a standard technology company that sells boxes or hardware or licenses, you want to make your support organization as small as possible because you’re really only getting 18 to 20 percent per year after your initial big pop, so it’s sort of one of the dirty little secrets of a perpetual license or technology business. In a recurring revenue business we have skin in the game the entire way through because it’s a pay-as-you-go model. That gives us less volatility when times are bad. At the same time, we don’t have the same run-up — you know ,the old rising tide raises all boats. We won’t participate on the peaks, but the beauty of that is we don’t have the valleys either.
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