Attrition of cloud storage providers gives channel a wake-up call

The recent shakeout among cloud backup services and cloud storage providers signals that customers need cloud exit strategies and migration plans.

Symantec Corp.'s decision last month to phase out its Backup Exec.cloud offering and the Nirvanix flameout in September serve to put channel customers on notice: Are their cloud backup and storage partners in it for the long haul?

Symantec will put a stop on new sales and renewals for its cloud backup service as of Jan. 6. The service will remain operational beyond that date, but Symantec will terminate access to the service, data and technical support as of Jan. 6, 2015. The policy buys customers some time to find a place to park their data. Nirvanix provided just a two-week heads up when the company informed customers it would shut down its cloud storage service.

Attrition among cloud storage providers and services impacts the channel in a couple of ways. First, resellers of the defunct services must select a new vendor and migrate their customers. Backup Exec.cloud partners should have plenty of time for due diligence when they assess a replacement service. Industry executives contend that resellers must examine a cloud storage or backup provider's funding, track record and underlying technology. And when it's time to ink a deal, they suggest working out an exit strategy with the vendor -- just in case.

"It is always a good idea to have an exit strategy in place for every partner relationship, and it is especially important in today's turbulent cloud storage marketplace, given the likelihood of a continued shakeout of providers," noted Jeff Kaplan, managing director of THINKstrategies Inc., a Wellesley, Mass.-based cloud consulting firm.

Another upshot of the cloud storage provider churn: While some companies search for new storage allies, other channel players hope to scoop them up. A number of managed services providers and cloud service providers specializing in backup now offer migration programs. Dozens of jilted resellers have made inquiries and some have already made the switch to a new provider.

Help wanted

The need to move customers to a new backup or storage service is the obvious issue resellers must confront. But there are costs involved in doing so, which creates another problem. A reseller may have paid in advance for a cloud storage service, which means facing both the cost of its investment in the terminated service as well as the cost of starting up with a new vendor. Cloud providers' migration programs aim to alleviate that particular pain.

Backup Technology Ltd. (BTL), an online backup and disaster recovery managed services provider, on Dec. 6 announced a free migration program for Backup Exec.cloud customers. BTL is part of Iomart Group PLC, a cloud services and managed hosting provider.

The company's move follows its migration of Datek Solutions Ltd., a managed IT provider in the United Kingdom, from Backup Exec.cloud to BTL. In a statement, Dave Twilley technical services manager at Datek Solutions, said many of the company's customers depend on cloud backup for sensitive documentation and other types of data, so "we knew we had to act quickly."

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Twilley said his company contacted BTL on a Friday and by the following Monday morning all of its customers' data had been backed up.

Rob Mackle, senior sales manager at BTL, which is based in Leeds, England, and operates a U.S. office in Houston, said his company has heard mostly from resellers wanting to move away from Backup Exec.cloud as opposed to direct customers.

"They have invested in Symantec," he noted. "Some have entered into cash transactions and already paid for the service. We are offering free migration to ease the cost issue and to make sure they can technically deliver."

BTL's offering is based on Asigra Inc.'s cloud backup software, which facilitates migration from other platforms, Mackle noted.

Zetta.net, which offers SaaS-based backup, disaster recovery and archiving, launched its migration program on Nov. 29, the Friday following Thanksgiving in the United States. By the following Monday, 50 people had contacted the company to learn more, noted Gary Sevounts, vice president of marketing at Zetta.net.

Zetta.net offers to buy out a reseller's Backup Exec.cloud contract -- up to six months -- if the partner agrees to purchase a one-year subscription to its service. In addition, Zetta.net provides a 20 percent discount on that annual cloud backup contract.

"A lot of folks already have negotiated a contract and need to get out," Sevounts said. "They need an exit strategy that will not make a big hit on already spent budgets."

BUMI, a New York-based MSP specializing in online data backup and recovery, likewise unveiled a migration initiative. The company's Symantec Trade-Up program offers Backup Exec.cloud customers a free backup and recovery consultation, a migration plan and two months of its BUMI There cloud backup and recovery service without charge. The program kicked off Dec. 5.

Jennifer Walzer, CEO at BUMI, said the company is starting to receive calls on the offer, mostly from channel partners that "need to start looking at alternative providers."

Due diligence

While the Nirvanix collapse called for a quick decision, the winding down of Backup Exec.cloud gives channel partners some breathing room to evaluate their next cloud partner. Vendors said they don't expect an immediate surge in migration activity, noting that most channel companies will take the time to research the market.

Sevounts summarized the attitude he has encountered among resellers and MSPs: "If I have to switch anyway, let's look for a solution that will work for me."

It is especially important [to have an exit strategy] in today's turbulent cloud storage marketplace, given the likelihood of a continued shakeout of providers.

Jeff Kaplan, managing director, THINKstrategies Inc.

Resellers should be looking for several things as they assess cloud storage providers. Sevounts pointed to performance, noting that a lot of online backup solutions target small businesses and won't scale to accommodate larger enterprises.

Another technical consideration is the storage technology operating behind the scenes. Mackle said a reseller should inquire whether its prospective cloud backup vendor uses storage solutions from the likes of EMC, NetApp or Hitachi. The presence of such products underscores the professionalism of the solution and indicates a willingness to invest in infrastructure, he said. On the flip side, the use of cheap disks could indicate a vendor looking to make money from day one, rather than committing to a longer-term investment, he noted.

"Don't be afraid to ask questions," Mackle advised.

Overall, getting a sense of a cloud backup or storage company's longevity and funding situation can help a channel partner protect itself and its customers.

"It's important to really understand who you will be working with," Walzer said. "How long have they been in business? What type of financial situation are they in? ... Are they venture-backed and looking for a quick exit, or are they in business for the long haul?"

But history isn't always a clear indicator of how a cloud service will fare. Symantec, for example, is a well-established brand. In the case of a long-time vendor, it might make more sense to ask whether a new cloud offering is central to its business.

Nate Solloway, manager at Raffa Inc., an accounting, consulting and technology firm based in Washington, D.C., suggested that Symantec may have strayed too far from its core product line with Backup Exec.cloud.

"This was a whole new focus for them," Solloway said, noting Symantec's backup-to-media orientation. "I saw this coming as soon as the product came out."

Raffa, which never signed on with Backup Exec.cloud, has been working with Zetta.net for about a year.

Justin Moore, founder and CEO of Axcient, a disaster recovery and business continuity service provider, also suggested that the cloud wasn't Symantec's strong suit. He said Symantec has been "slow to adapt to the cloud" and will now go back to the drawing board.

Axcient announced its Backup Exec.cloud migration program Dec. 4. The program includes a dedicated migration specialist, free setup and implementation, and free service during the migration period, among other elements.

Planning for the worst

Taking care with vendor selection should reduce a reseller's risk exposure. But planning for the worst is never a bad idea.

"If your backup/storage provider goes out of business, make sure they provide the ability to get a copy of all of your data as a mandatory requirement prior to their shutdown," Walzer said.

Kaplan said the exit strategy should include a set of criteria or key performance indicators "that should alert you that the partnership is at risk." That strategy should also include established procedures for terminating or modifying the relationship and migrating customer data and records, he noted.

A channel partner would also do well to have a list of alternative providers at the ready, Kaplan added.

This was first published in December 2013

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