ScaleIO, a new software-defined storage player, came out from behind the stealth veil Tuesday jingling a $12 million A round in its pockets and sporting a bunch of brand names like SAP, Check Point and Aer Lingus that have been in production with its widgetry for months.

Not only that but the Israeli start-up, with a new headquarters in Palo Alto, says it’s got several thousand pilot installations and expectations of spooking the heck out of the traditional storage crowd – EMC, IBM, HDS and HP.

See, ScaleIO promises to save users 80% to 90% on their storage costs and deliver a direct savings of over 28% on an organization’s total IT budget.

Such chatter coming from guys who have been in storage market a long time and have sold storage companies to the likes of EMC and IBM gets a heads- up from corporates.

ScaleIO has got a nifty way of turning the local disks on application servers into a robust, high-performance, shared virtual SAN and dumping the complex and pricey external SAN storage and fabrics.

Amazing what you do with some sexy clustering algorithms and a loosely coupled architecture.

ScaleIO converges storage – ah, that currently popular buzzword – into compute, delivering elasticity, hyper-scalability and simplicity as well as giving high performance databases, virtual servers, end-user computing and high-performance computing a massive cost savings.

The start-up’s latest widgetry is called ECS v1.1, which has been GA- ready since Q1, and it scales out to hundreds if not thousands of nodes. Performance scales linearly with the number of application servers and disks and the company claims that the more you add the less the degradation. It says the mojoj can be installed in minutes and doesn’t require a “For Dummies” cheat sheet.

With ECS, any administrator can add, move or remove servers and capacity on-demand during I/O operations. The software responds automatically to any infrastructure change and rebalances data accordingly across the grid.

It supposedly helps ensure the highest level of enterprise-grade resilience by deploying advanced clustering algorithms whose distributed rebuild capabilities achieve the quickest handling of failures while maintaining maximum storage performance.

ECS can be managed from both a command-line interface or a graphical user interface. It natively supports all the leading Linux distributions and hypervisors; works agnostically with any SSD or HDD, regardless of type, mode or speed; and runs on x86, ARM, and other chipsets, giving organizations freedom of choice. Additional functionality includes encryption at rest and quality of service (QoS) performance.

Gartner says users can get rid of all of those “minions who perform mundane storage tasks because software-defined storage enables the promise of storage elasticity to match storage needs for traditional, virtual and service- oriented cloud strategies in response to the ever changing business requirements found in most IT organizations.”

OCF, the big European service provider, has gone with ScaleIO.

It says ScaleIO lets “customers to utilize capacity on hundreds of compute nodes and aggregate that capacity into a single shared LUN. OCF has deployed and tested ScaleIO ECS on a cluster with several hundred nodes in a large customer’s high-performance computing environment. The software made previously unused capacity available to the business applications and to a distributed file system while demonstrating impressive performance and resilience.”

ECS has been successfully deployed in a variety of environments, including development and testing, VDI, high-performance databases, private clouds and environments competing with Amazon EBS. In fact, Citrix has certified the stuff for its VID widgetry, which is abnormally heavy on storage.

SAP reportedly tried to break the product before finding it could deliver 2x the performance at 10x less cost of alternatives. It is now telling customers to use it. SAP SVP Jacob Kleinsaid says, “We are a ScaleIO customer.

ScaleIO ECS, in our experience, has had a dramatic effect on the overall price/performance of HANA. ECS delivers the same quality of service and performance as a traditional appliance-based SAN at a much lower cost. ScaleIO ECS would be an excellent fit for any HANA customer.”

ScaleIO CEO Boaz Palgi said in a statement, “As enterprises consolidate into mega-data centers and SMEs move to cloud and hosting infrastructures, data centers are rapidly expanding to many thousands of servers. As a result, data center operators face constantly increasing levels of complexity and costs. ECS helps organizations manage these challenges by providing a scale-out storage solution that was designed for hyper-scalability, high- performance, unprecedented elasticity and low total cost of ownership. ECS makes storage as inconspicuous as CPU and RAM. Running seamlessly alongside business applications, ECS enables data centers to be built wall-to- wall from commodity servers only.”

The ScaleIO team has been together on and off for 15 years, which is why they were able to get out the widgetry so fast. They bootstrapped the venture for two years, doing without salaries ahead of any revenues, and only now took venture capital money from Greylock IL Partners, Norwest Venture Partners and private investors to expand the company’s field operations in response to growing demand for the product among enterprises and service providers.

One of those private investor is Frank Slootman, currently CEO of ServiceNow and previously CEO of Data Domain, the data duplication outfit that EMC fought Dell to acquire last year and paid handsomely for.