DRaaS market: Ransomware, compliance open channel opportunities

Organizations battling ransomware attacks or responding to regulatory obligations may be prime candidates for channel partners' cloud-based DR services.

Are you searching for a market with high growth and significant consultation and integration opportunities? Then take a close look at DRaaS, or disaster recovery as a service.

Changing economics, the rise of ransomware and growing industry regulations have led to strong growth in this market: In 2017, Gartner said it believes the worldwide DRaaS market will reach $2.02 billion, a growth rate of 18.9%.

Cloud reduces the cost of disaster recovery (DR) infrastructure, which has opened up the DRaaS market.

"For small to midsize businesses (SMBs), we see very high interest in cloud-based DR services," said Mark Jaggers, research director at Gartner. "Many of these companies don't have secondary data centers or the technology skills needed to plan for and execute disaster recovery." 

Traditionally, DR services have been beyond the reach of most organizations.

"Corporations had to put a duplicate data center in place, which was too expensive for many enterprises," noted Phil Goodwin, research director at IDC.

A bevy of suppliers have entered the DRaaS market because of its sales potential. In fact, more than 400 vendors offer various DRaaS solutions, according to Gartner's Jaggers. The list includes Amazon Web Services, Axcient, Bluelock, Carbonite, Daisy Group, IBM, iland Internet Solutions, Net3 Technology, NTT Communications, Plan B Disaster Recovery, Quorum, RapidScale, Recovery Point, Sungard Availability Services, TierPoint, Unitrends, Verizon, Windstream Communications, Zerto and Zetta.

The DRaaS market is also attracting many resellers. In April, Contemporary Computer Services Inc. (CCSI), a reseller for more than 40 years, launched Iris, a DRaaS service.

"We see DRaaS as low-hanging fruit," said Joe Goldberg, senior cloud program manager at CCSI. "Cloud levels the DR playing field: SMBs now have access to the same level of DR service as Fortune 500 enterprises."

Finding the right DRaaS market niche

Even though the DRaaS market is crowded, resellers can find viable niches.

Joe Goldberg, senior cloud program manager, CCSI Joe Goldberg

Key Information Systems Inc., which has been in business since 1998, has been supplementing traditional pack-and-ship system sales with cloud solutions. The firm, which has about 70 employees and generated approximately $80 million in revenue last year, began selling DRaaS services two years ago, and it now represents about 4% of its total revenue.

"We have seen 100% growth in our DR services, which has been our fastest growing revenue segment," noted Scott Youngs, CIO at Key Information Systems. One reason is the firm's focus on an underserved niche: DRaaS services for corporations with IBM AS/400 systems.

Scott Youngs, CIO, Key Information Systems Scott Youngs

The dynamic cybersecurity threat landscape is also driving interest in DRaaS. Recently, ransomware became the hottest form of malware. The Online Trust Alliance, a nonprofit organization focused on developing online security best practices, found that the criminal use of cloud infrastructure for ransomware campaigns increased 3,500% in 2016. A DR system could help get a company back up and running if its systems were compromised by a ransomware attack.

Compliance regulations are also generating DRaaS market interest.

"Mandates in markets like financial services, health care, and pharmaceuticals are forcing enterprises to put comprehensive DR processes in place," said Dante Orsini, senior vice president of business development at iland, a provider of cloud services, including DRaaS.

BRaaS vs. DRaaS

How to recover from ransomware attacks and meet compliance regulations has become a corporate boardroom priority. Here, businesses need to understand the differences between BRaaS, or backup and recovery as a service, and DRaaS.

Mark Jaggers, research director, GartnerMark Jaggers

Backup provides a company with a spare copy of data.

"BRaaS is suitable if an employee accidently deletes a file," Gartner's Jaggers said.

DRaaS involves much more: getting applications and system infrastructure restored so employees can return to work. Here, business processes are more complicated than just retrieving data. A firm needs to put procedures in place to ensure that not only are the IT systems available, but also that employees can access them.

DRaaS, with its broader scope, is opening disaster recovery opportunities for channel partners. Historically, DR services were limited to large enterprises, but with the move to cloud, and a growing emphasis on system security, the market has expanded dramatically. 

Next Steps

Read more about the expanding DRaaS market

Evaluate legacy DR vs. cloud-based DR services

Learn how to start a cloud computing channel business 

How to understand DRaaS pricing and budgeting

Dig Deeper on Storage Backup and Disaster Recovery Services