The cost of backing up data has never been lower. So how can solution providers make money?
Now that the cost of storage in the cloud has lowered the cost of backup and recovery, a fierce debate has emerged between vendors about how best to pass on those benefits to customers.
Backup vendors such as Intronis are making the case that rather than charge customers for backing up their data, the time has come to charge customers when they recover that data. Intronis CEO Rick Faulk said because the cost of storing data is next to nothing, it doesn’t make much financial sense to charge customers to store data in the cloud for two reasons.
First, he said, charging for backup requires customers to make a bet on what data they will need to recover, as no organization can afford to back up all of its ever expanding data no matter what the cost. When an emergency inevitably occurs, there will be some critical piece of data that was not backed up because no one is sure what dependencies exist between various data sets.
The second issue, Faulk said, is end customers have a lot transparency into the cloud. They know what it costs to store data on, for example, Amazon Web Services (AWS). That means margins for a backup and recovery service priced based on the amount of data being stored will be low.
But as interesting as that approach may be from a solution provider perspective, others contend that charging customers for recovering data at the exact moment they need it most is inherently flawed. Rob Rae, vice president of Business Development at Datto, said charging customers for recovering their data during an emergency will appear to the customer as though the solution provider is gouging the customer at the exact moment they need the solution provider's expertise most. The solution provider will appear to be no better than the owner of a gas station that hikes pricing during a hurricane, he said.
Between these two extremes, David Maffei, vice president of Global Channel Sales at Carbonite, said solution providers should look to find a middle ground. In the event of an emergency, they shouldn’t charge customers to recover data. But there are hundreds of little emergencies daily when customers need to recover data because of human error rather than acts of God.
With the rise of image-based backup and replication in the cloud, the ability to back up and recover both applications and files successfully has never been greater. But now that the cost of delivering those backup and recovery service in the cloud has never been lower, the challenge facing solution providers is how to actually make money delivering those services.