With companies struggling to contain the costs of managing ever-growing demand for reliable and accessible storage capacity, a new buzzword - virtualisation - has emerged that could change the way companies think about storing data.

Storage virtualisation is a technique in which all the storage capacity available in a network is considered as a single "virtual pool". In effect it separates the representation of storage to the server operating system from the physical storage, allowing users to cut costs and increase flexibility.

A report last month published by the451.com (before the online IT analysis company went into receivership), says storage virtualisation "promises to be a potentially massive market as the value opportunity in storage moves from hardware to software.

"If storage virtualisation vendors can deliver on the promise, users will be able to throw off the shackles of proprietary storage, and put storage back in the box where it should be," says report from the451.

Over the past three years, several big storage vendors and computer manufacturers have scrambled into virtualisation, with activity picking up over the past year. Big names include Compaq, Dell, Hewlett-Packard, EMC, Hitachi Data Systems and Veritas.

But analysts say there is a gap between some vendors' promises and their ability to delver. "Many of the major storage vendors are way behind in the battle to bring virtualisation products to market," says Sue Clarke, data management senior researcher at market analyst Butler Group.

Virtualisation start-ups include DataCore - which claims its SANsymphony software offers the first true cross-platform disk virtualisation - OTG, ScaleEight, and Xiotech.

Vendors agree that the cost-effectiveness of virtualisation is a powerful attraction for customers. "The economic downturn has brought additional pressures for IT directors to find solutions that are more cost effective," says Bharat Kumar, DataCore's director of marketing communications for Europe.

"Currently, discs are not fully utilised [on companies' existing storage systems]. Creating a virtual pool, so discs can all be used, saves companies money," says Mr Kumar.

However it is early days for the virtualisation concept. "The virtual solution has yet to gain corporate acceptance, but has evident benefits," says Klaus Heihoff, director of data management at Synstar, a European business continuity specialist. "Most users will be happy for data and storage capacity to be available anytime, anyplace and anywhere."

There are also cultural issues to be resoved. Mr Heihoff warns that there may be certain departments within an organisation that do not want shared storage capacity - which in a virtual sense is what the new concept provides - and resent the "Big Brother" approach to data storage.

"If virtualisation is to become widely adopted, it requires buy-in from top level - and we all know how difficult it is getting the board to understand IT!" he says.

Standardisation could also be an issue. Peter Coleman, president of the Fibre Channel Industry Association Europe, believes standards are now required if the confidence of IT managers in the concept is to be raised.

"This will enhance adoption of virtualisation, in the same way that the recent introduction of standards for SANs [storage area networks] has assisted adoption," says Mr Coleman. "More education is required, as many companies are missing out."

The potential of virtualisation was emphasised in July when H-P bought StorageApps, a New Jersey-based start-up, for $350m.

H-P says the acquisition will strengthen its storage offering by adding virtualisation to the company's federated storage area management (FSAM) strategy. FSAM's role is to enable customers to manage ever-growing and disparate storage systems, increasing their storage by a factor of ten but without the need for extra IT staff.

Meanwhile Compaq, which is also being taken over by H-P, has independently developed its own virtualisation software, which it calls Versastor.

Compaq claims early customer tests show Versastor improves the efficiency of a company's existing storage resources by at least 40 per cent. The software also reduces dependence on increasingly scarce and costly IT staff by allowing a company's total storage capacity to be managed from a single point of contact.

Versastor also removes any need to locate storage systems where new applications are being rolled out, or the need to colocate storage and servers. Colin Rankine, an analyst with Giga Information Group, believes that Compaq's software is the better product and will win out over StorageApps.

Some vendors are also are building the internet into their virtualisation services. "The user doesn't care where or how his information is stored, as long as he can get it back when he needs it, and it's protected from corruption and loss," says Paul Sleep, European marketing director at Auspex Systems, the California-based storage vendor.

According to Mr Sleep, Auspex's NAS (network attached storage) servers offer virtualisation capability, enabling storage to be grown or shrunk online without affecting its users. The servers can mirror or replicate the customer's data to another system either locally or on the other side of the world.

"This is achievable over a standard IP link, so no dedicated links are needed, driving down the cost of managing and protecting the data," he says.

Another California-based company, Xdrive Technologies, uses a combination of online storage, intelligent push and wireless access to provide a different type of virtualisation service. Its users can locate, save, share and respond to internet information securely from any connected device (such as a personal computer, cell phone, or personal digital assistant).

These varied approaches to virtualisation will be tested in a difficult marketplace over the next few months. But at least there are no signs yet that the explosion in data creation is slowing.