As the volumes of data moving around global networks have soared in response to the demands of the internet, e-business and entertainment, the task of storing and retrieving all that information has become awesome.

But it has taken the horrific terrorist attacks of September 11 in the US to really ram home the message to many companies. Whereas before they may have been dimly aware of the importance of storage-though paying it little attention at board level-they now realise what it could mean to lose valuable data and not be able to recover it.

"The perception has changed," says Don Swatik, vice-president for products and services at EMC, the US storage group. "I believe there is hardly a boardroom in the world where the CIO [chief information officer] is not being called in and asked to present a disaster recovery plan for the company."

But the perception has gone beyond the painful and complex areas of disaster retrieval and back-up, vital though these are for companies dependent on IT infrastructures and electronic links with customers, suppliers and partners around the world.

"Information is their core asset," Mr Swatik adds. "Information is becoming the heart and soul of every business." Companies are now looking much harder at their storage needs and capacity, and studying whether they are getting value for money.

As this magazine illustrates, storage has become an essential element in modern business. Forrester Research expects the enterprise storage market-covering the world's large corporations-to grow by more than 52 per cent this year. Many companies' storage needs are doubling each year, and the amount of information stored in digital form has reached staggering levels.

The surge in worldwide use of the internet has injected new life into the storage sector. Some experts predict that the amount of data held in the entire world will double between 2002 and 2003. Gartner, the US research group, says many internet data centres report a doubling of capacity every quarter.

Since the terrorist attacks in New York and Washington, "customers have become even more conscious of their data and of the reliability of that data," says Dietmar Wendt, vice-president for storage solutions in Europe at IBM, a fierce rival of EMC. "The server can fail but if the data is gone, that's really critical."

Yet despite spending large sums on storage equipment and software, many businesses have inflexible systems that are under-utilised and do not meet the needs of today's fast-moving, volatile business environment. Susan Clarke, senior research analyst at Butler Group, the UK IT research company, says that on average, companies never use between 40 and 50 per cent of their storage capacity.

This is because much of their storage was installed to meet particular applications and cannot be used in other parts of the business. Much of the under-utilisation results from poor storage management-with a lack of differentiation between potentially valuable information and a mass of data-and the lack of an integrated approach.

In today's cost-conscious times, with executives focussing ever more sharply on return on investment, companies are less tolerant of such inefficiencies. "Storage has always been vital, but it has not been regarded in that light," adds Ms Clarke. "Companies have not thought about it in strategic terms. Now they are. It's a fundamental change."

With this increased emphasis on managing storage to extract the most value and benefit from systems, the trend is very much towards networked storage. This enables capacity to be used across corporate systems. Gartner expects 80 per cent of external storage to be networked by 2005.

"Most of our clients report that they can afford to buy storage, but they can't manage it," says Nick Allen, vice-president and research director at Gartner. "Storage management tools have not yielded sufficient productivity gains to cope with such high growth rates."

It is this more services-oriented part of the market on which storage providers are tending to concentrate. "We have changed our focus over the last two or three years from a box to a solutions provider," says Mr Wendt. This means looking at storage in the overall business context rather than as a separate operation. It has moved from the back-office to the front-office in terms of company awareness.

The immediate challenge now faced by storage companies is to link what John Clavin, executive vice-president for marketing at StorageNetworks of the US, calls "stranded storage"-islands of stored data that are not in networks and with capacity that is thus unavailable for other applications. This means providing the right software tools to manage data so that the business benefits.

In Gartner's view, the winning strategies and vendors will be those that help users to scale-up their storage tenfold without the need to add staff. As well as the initial cost of the installation, the total cost of ownership over the system's lifetime also has to be considered.

Gartner also recommends that storage networks consist of two tiers. One, the storage plumbing tier, links up the network and sends commands to at least one storage node. The second, or software tier, provides value-added services that operate over the first tier.

"The market is very dynamic and changing," says Mr Wendt. "The issue is not just storing the data but managing it. How can you increase the efficiency of the whole data infrastructure?" Large companies, especially investment banks, are acutely conscious of the need to address such questions. The fact that they were mostly able to recover so quickly after September 11 shows how seriously they take the necessity to manage and automate storage.

But for those companies which were not prepared, the search for streamlined, cost-effective solutions is only just beginning.