Service provider takeaway: VARs can package new data protection software such as CDP and deduplication with hardware to maintain revenue levels while shifting customers' backup strategies.
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The introduction of continuous data protection (CDP) and deduplication features in data protection software and hardware is influencing traditional tape sales cycles as disk assumes a larger role in backup. No longer can value-added resellers (VARs) count on customers to buy ever more tape cartridges, drives and libraries for use as backup targets, since disk is displacing tape as the preferred initial backup medium. Yet selling new data protection tools can lengthen the sales cycles while lowering the total dollar amount of the sale. This is forcing VARs to rethink the data protection sales process. Oftentimes, bundling data protection software with hardware can enable VARs to keep up with new client backup and recovery needs while maintaining revenue levels.
"Data protection on disk is now mainstream," said KEHP Group's channel data protection specialist, Kelly Polanski, who says that customers she encounters are now looking to use disk in some way in their data protection scheme. Disk's random access speeds, new deduplication features and larger capacities combine to make disk a better primary backup target than tape. But that doesn't mean most customers have a long-term, strategic plan to bring disk in-house. "Companies are incredibly tactical," she said.
This tactical approach has led to a similarly tactical response from VARs. Most VARs don't receive a salary and are paid on margin, so they typically want a short sales cycle. In many cases, deduplicating disk appliances such as Data Domain's DD120 or Quantum's DXi5500 solve customers' immediate backup and recovery pain points since they work with existing data protection software and shorten backup and recovery windows. Such appliances are attractive to VARs because they have a relatively short sales cycle.
But selling disk to customers does not mean that tape will go away. Steve Whitner, Quantum's product marketing manager, said that in most accounts that Quantum's VARs sell to, tape remains part of customer data protection strategies. Customers are merely adding disk into the backup process as an initial target for backup data. They then regularly migrate data from disk to tape for their off-site requirements and long-term data retention needs. This dynamic means the sales cycle can remain relatively short for new disk hardware without threatening VARs' existing tape business.
The Fall 2007 Purchasing Intentions survey conducted by Storage magazine found that 25% of respondents will be decreasing their purchases of tape in the coming months, but that does not mean, even in those environments, that tape is gone forever. A November 2007 study by Fleishman-Hillard indicated that those customer accounts that had eliminated tape and fully implemented disk in their backup environments are bringing tape back. Fleishman's research reveals that 68% of these disk-only users planned to reintroduce tape to "help control costs, energy consumption and address data security with tape encryption."
The hard soft sale
KEHP Group's Polanski finds that VARs are hesitant to introduce new data protection software into the sales process because that causes their customers to want to rethink their entire data protection strategy. This turns a short sales cycle into a long one and carries too much risk in the eyes of many VARs, since such a strategy may never result in a sale. To avoid this, she recommends that VARs bundle data protection software and hardware together. This solves immediate customer backup pain while addressing other pressing problems that they would not otherwise have the money to address.
For example, by packaging CDP software with disk-based storage systems, VARs can help clients solve their immediate backup and recovery problems while also addressing their disaster recovery requirements. CDP software can eliminate backup windows, perform point-in-time restores, automate local and remote disaster recoveries and ease the pain of data migrations during server and storage technology refreshes. All CDP software requires disk as a storage target. The combined cost of hardware and CDP software is often the same as what companies currently spend annually on hardware and software maintenance contracts. VARs can control their risk by running the CDP software side-by-side with the client's existing backup software and pressing software vendors to delay invoicing until the software is fully implemented and accepted by the client.
VARs may also want to consider changing their business model from "sell once, collect once" to "sell once, collect every month" by becoming a managed service provider (MSP) or reselling another MSP's services. A small percentage of customers are ready to outsource some or most of their backup, so it behooves VARs to consider offering this service though it may mean losing some tape revenue. The good news is that your customers are likely hoping to funnel the money they save into other corporate initiatives that could produce future hardware and software sales for you.
About the author
Jerome M. Wendt is the founder and lead analyst of The Datacenter Infrastructure Group. You can find his blog posts at www.dciginc.com.