Developing online backup and archiving services

Online backup and archiving services offer multiple routes to recurring revenue and your customer base may need different types of services than your competitors'. But if you can win customer loyalty, a lucrative services business could be yours.

It's clear that reliance on outsourced storage services among customers is trending upward. A recent Storage magazine Purchasing Intentions survey of almost 800 storage buyers showed that 21% of respondents are using outsourced or online backup services now, versus only 14% just last fall.

And while there are a number of paths that a storage solution provider can take to a successful cloud-based storage service offering, once they get there, they're often using a common set of tools and the same basic infrastructure model. Whether a managed service provider (MSP) started offering online backup and archiving using home-grown tools or waited to wade into the market until they found the right commercial products from the likes of Vembu or Asigra, the MSPs we spoke with all described the same basic model: Their target customers are SMBs with a limited amount of data to back up and archive; a collocation data center is much more feasible than their own data center; and customer data is protected with stringent methods to prevent or mitigate data loss.

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When it comes to the type of storage offerings, though, not all customers are looking for the same thing. Shane Monty, vice president of Montreal-based Bang Industries, which has nine employees and supports 3,200 nodes, said that his customers are interested in online backup but not archiving services. "There's not much call for online archiving in Quebec right now. [Customers] don't have to store messages to the same degree as in the U.S. Canada isn't as litigious as the U.S.," he said.

In the United States, several MSPs reported a different scenario. Alteritech Inc., a Vienna, Va., MSP with 30 employees and more than 30 online storage customers, is making more money from archiving than backup. Eric Nelson, chief development officer, said, "Online backup is a point of stickiness, but it's not a big revenue driver." File archiving and email archiving, on the other hand, involve "very, very high-end professional services. There's a whole set of business rules and business processes that you have to make decisions on. You have to educate the business community." Nelson added that he encounters customers that still haven't implemented archiving for compliance. "But as soon as we talk to them about it, it's a project that pretty quickly gets funded."

SecurElement Infrastructure Solutions, of Malvern, Pa., falls somewhere between Bang Industries and Alteritech in terms of types of storage services. "Customers are using both file archiving and email archiving, though a lot are not using email archiving. When a legal problem crops up, it becomes an issue," said President and CEO Patrick Baird. The company also gains revenue from online backup. "It's not a dead sell," he said. "It's something [customers] understand now, especially with staffs getting cut."

Alteritech uses Vembu's StoreGrid for online backup and Symantec Enterprise Vault for file archiving and email archiving. The company chose startup Vembu's because it built its software specifically for service providers. "We wanted very much to find somebody who was developing a product specifically for service providers rather than taking a legacy product and making that work with multitenancy," he said.

Monty said Bang, which was originally focused on hardware sales and break-fix work, has been offering online backup for at least six years. The company originally took the home-grown approach to offering online storage services, with a Linux-based system and open-source backup tools. That system worked for awhile, but the company eventually needed to do incremental backups. It turned to MSP Alliance to research options, and also chose Vembu.

SecurElement takes a different approach to online backup and archiving. The company, which has 12 employees and 75 to 100 active customers, uses a combination of appliances from SonicWall, Barracuda and NetApp at its collocation data center. SecurElement deploys agents at the customer site, and the agents send the data back to the data center. By using more than one system for backup, the company gains "By offering three [backup devices], we can build a custom solution," said Baird.

Of course, the MSPs must take precautions to prevent losing data or access to data. "Obviously, it's a huge concern for anyone doing online backup," said Bang's Monty. "You have to do backups, and it has to be redundant, on highly available systems." Bang uses fault-tolerant RAID hardware, and it backs up data first to disk and then tape. The company's collocation provider takes care of power, the physical cabinet and building security. And, like the other providers, data is encrypted before it leaves the customer site.

"While nothing is 100% guaranteed, online is a lot safer than the old-school methods," Nelson said.

Despite the precautions, many customers still have an aversion to online backup. "A lot of people are used to tape, and they're just more comfortable with that. So you're fighting that," said Baird. "The bottom line for them is that they're going to save money [with online backup]. And we can prove to them that [online backup] is safer than off-line backup."

Lauren Whitehouse, analyst for Enterprise Strategy Group, says an advantage for customers using service providers is they can switch providers easier than doing a rip and replace of their in-house backup/archiving system. "The online storage model provides a lot of opportunity for a customer to pick up and go to another provider, just like with a cell phone," she said. "That gives users a lot more choice than they've had in the past. There's less loyalty. You've got to earn it."

This was first published in June 2009
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