Contents
DS3 DataVaulting (MSP) 3
Owns the infrastructure
Offers managed backup/recovery services Sells directly and through VARs
MSPX, Inc. (VAR) 5
Leverages DS3 DataVaulting vault
Offers full portfolio of IT services and products
Digitiliti (MSP) 7
Owns the infrastructure
Offers managed backup/recovery services Sells exclusively through VARs
Agosto (VAR) 9
Leverages Digitiliti vault
Offers full portfolio of IT services and products
Thinking of
Managed Backup
Services?
Thinking of Managed Backup Services? MSP and VAR Alignment. 2
Thinking of Managed Backup
Services?
MSP and VAR Alignment.
There are different paths available to managed backup profitability: Making the decision
to build a storage infrastructure or to partner. To build or not to build… everybody wins!
Wondering about the size of the opportunity? Debating about whether to build out your
own storage infrastructure or use another service provider’s existing vault?
Four managed service providers - two with their own vaults - offer their perspectives
on the market, as well as suggestions for getting started and succeeding in the
Asigra-powered managed backup/recovery services business. Find out why they think more
businesses than ever are ready to outsource backup/recovery services and what that
can mean for the MSP’s bottom line.
DR, HA, SOX, HIPAA, FISMA, ILM, BLM—it’s an alphabet soup that many businesses simply can’t swallow. But can one man’s poison be another man’s meat? Poison may seem an overly harsh analogy, but there is no doubt that the costs of inadequate data protection or the penalties of non-compliance can be toxic to business--and that can present some meaty opportunities for savvy MSPs.
As the following cases show, many paths lead to success in managed backup/recovery services. Businesses need and
want help, whether the MSP:
• Builds out the infrastructure or leverage someone else’s. • Exclusively offers backup/recovery services or adds them to a
larger portfolio.
• Sells directly or through the channel.
DS3 DataVaulting
Six years into the business, Stacy Hayes, chief operating officer at DS3 DataVaulting, reports high
growth, describes his company’s competitive advantages fueled by Asigra technology, and forecasts a
very bright future.
How’s business?
Stacy: Managed backup/recovery service is 100% of our busi-ness, and we’ve been growing 100% year over year. Our first dollar was a vaulting dollar and every dollar since has been a vaulting dollar. As we approach $10M, sustaining a 100% growth rate will be challenging, but there certainly is significant
opportunity. When we started out, we wanted to build a data management company and envisioned a multi-legged stool with electronic backup as one of the legs. Rapid growth has turned that multi-legged stool into a single, substantial tree trunk.
Stacy: Since we started our business in 2002, we’ve seen organizations become more receptive to protecting data by backing it up over the Internet. But there continues relentless downward pressure on cost. Companies struggle to control costs even as they are generating more data and facing more regulations. It’s particularly difficult for businesses managing
mixed U.S. and international data. As managed service provid-ers, we need to help businesses better understand their data, be able to quickly put their hands on it, and to guarantee that it’s stored or destroyed in accordance with policy - whatever the data origin.
Stacy: At the data growth rates we see, Asigra WAN-optimized features like de-duplication, common file elimination, and incremental backups are essential-eventually there must be some abatement to the consumption of disk. Also, Asigra offers backup lifecycle management (BLM) and is continually
enhanc-ing retention rules-that helps with both regulatory compliance and capacity conservation. For many modern companies, going green by using less disk is an attractive and sometimes even mandated proposition.
Profile: DS3 DataVaulting
DS3 DataVaulting delivers online, off-site backup and disaster recovery services. The company’s combination of strong backup technology, solid enterprise-grade infrastructure, robust service offering, and uncompromised focus on deliver-ing customer value has ensured its position as a leaddeliver-ing enterprise backup service provider. A customer-oriented solu-tions provider dedicated to data management excellence, DS3 DataVaulting meets business needs in a broad array of industries and organizations, including legal, government, hospitality, medical, and non-profit.
Customer profile: Small and mid-size businesses to large enterprises.
Vaulted data: >150TB protecting >1PB of customer data.
DS3 DataVaulting
One Ridgeview, 14900 Conference Center Drive, Suite 150, Chantilly, VA 20151 www.ds3datavaulting.com 703.968.8100
How would you characterize the backup/recovery services market?
Thinking of Managed Backup Services? MSP and VAR Alignment. 4 Stacy: The Value Added reseller must already have or be
able to build a trusted-advisor relationship with the end-user customer. This service is, after all, backing up the customer’s
mission-critical data over the Internet-that job is not taken lightly in any IT department.
Stacy: Yes-that’s beneficial to the VAR’s business model and VARs want to leverage the Asigra-powered brand. We utilize a SAS 70compliant AT&T secure facility and robust EMC hard-ware, and in the U.S. maintain a 24-hour, support desk. Lever-aging our service and expertise, the VAR can deliver superior service to the customer and enjoy a nice margin in the process.
We also will support VARs that grow their businesses to the point of choosing to build out their own infrastructures. It’s defi-nitely a benefit that the Asigra business model can be effective for a variety of scenarios, whether it’s investing in the infra-structure upfront like we did at DS3 DataVaulting, leveraging our vault to deliver managed services (and achieve rapid ROI), or using our vault to jump-start your business and then down the road making your own infrastructure investment.
Stacy: For one thing, the Asigra product was built to be delivered in a service provider model and to scale as business grows. Asigra also gives us technical differentiators-agentless technology, the ability to maintain local backup copies, continu-ous data protection (CDP) and backup lifecycle management, and the ability to handle large and complex data types. Such functionality really has allowed us to aggressively pursue enter-prise customers-that was an important enabler very early on in our business.
Also key to our success is expertise. We store billions of files, manage terabytes of capacity, and understand backup/ recovery as well as anyone in the business. Asigra provides the foundational technology, but what ultimately makes us successful is our ability to deliver superior customer service. I would venture to say that our customer retention ratios are well above the norm. As long as an MSP is innovative and deliver-ing value, customers will renew their contracts.
Is there a key ingredient needed to successfully transition from VAR to MSP?
Do you allow re-branding of the Asigra-powered DS3 DataVaulting service?
What are the top competitive advantages of DS3 DataVaulting?
Stacy: We have customers storing as much as 20TB, but the average range is more like 250GB to 2TB. It’s a definite advan-tage that our infrastructure lets us service the 2GB customer just as economically as the client with 8TB. On the enterprise side, our current customers are all U.S.-headquartered, but in many cases we’re servicing their remote and branch offices (ROBO), including international sites. Every day we ingress data from India and other global sites.
Economies of scale allow us to price our service attractively for both enterprise customers and value added resellers. The model is particularly attractive for resellers-since we’ve already built out the infrastructure, value added resellers (VARs) can immediately start leveraging our Tier 1 infrastructure to offer high-quality backup/recovery services to their existing cus-tomer bases. In most cases we can offer double-digit margin opportunities-typically 15-25%-to the channel. To give you just one example of the market opportunity, one of our VARs routinely adds five new customers per quarter.
A thought leader, a driver of innovation in the convergence of data and telephony, and a managed
services expert--that’s how Stacy Hayes describes his colleague and customer, Amir Sohrabi, MSPX
executive vice president. MSPX offers an array of IT services and leverages the DS3 DataVaulting
infrastructure for backup/recovery services. Here’s what Sohrabi has to say about opportunities in the
backup/recovery services market and the importance of Asigra features like LAN discovery.
MSPX, Inc.
Profile: MSPX, Inc.
Managed Solutions Planning Xperts (MSPX) provides a full array of IT services for complete, integrated solutions. MSPX experts assess, plan, deploy and manage IT solutions that can be leveraged across all technologies and envi-ronments and are interoperable with third-party products. With a focus on leading-edge technologies, MSPX offers comprehensive, mission-critical information technology infrastructure solutions for wireless, storage, convergence, security, and managed services. MSPX combines innovative methods, experience, and best-of-breed products to cre-ate solutions that help clients meet the strcre-ategic and operational objectives of managing IT infrastructures.
Customer profile: Small to medium-sized businesses, including law firms, financial organizations, schools, and other associations.
Typical size: 50-250 seats; 50GB-2TB of data to protect.
MSPX, Inc.
1934 Old Gallows Road, Suite 502, Vienna, VA 22182 www.mspx.com 703.525.1000
Amir: It was a natural extension of our IT services business. The backup/recovery service meets a critical client need and represents a good business opportunity for us in terms of recurring revenue. We believe that it’s important not only to
build and maintain long-term relationships with our customers, but also to be integrated into their infrastructures so that the organizations are each better able to focus on strategic growth and planning.
Amir: Yes--for one thing, the DS3 DataVaulting program decreases our liability. We did look at other players but we felt DS3 offered more sanitized solutions. DS3 DataVaulting was more willing to work with us to build a successful relationship and services offering.
The DS3 business model is very channel-friendly with ben-efits like real-usage billing and joint marketing. We also have confidence in their expertise and best-of-breed technology, including the hardware infrastructure and Asigra software. We leverage many of the Asigra features, such as LAN discovery
What are the top competitive advantages of DS3 DataVaulting?
Thinking of Managed Backup Services? MSP and VAR Alignment. 6 to better assess the storage needs of our clients and the web
portal to give customers direct access to their data vaulting information.
We also have tremendous flexibility. For example, we allow customers to evaluate the service on a single server. The decision to outsource corporate- or infrastructure-wide backup/ recovery processes is much easier for the customer when the service has been tested and proven on a smaller scale. DS3 also lets us fine-tune SLAs to exactly match customer
requirements, whether that’s simply automating daily backups or delivering a comprehensive, keep-your-business-running service with provisions for remote data access in the event of a major site disaster. We leverage DS3 DataVaulting as part of a larger managed service offering that can provide clients with end-to-end solutions. That’s another advantage to us when we are pricing services-while a client may perceive a strict backup service as a commodity, every corporation understands the value of data protection and business continuity.
Amir: For many of our clients, the subject of backup/recovery is part of a larger conversation about business continuity and disaster recovery. When that’s the case, we work with every enterprise business unit as part of a strategic assessment to identify critical applications and data and align backup/recovery processes appropriately. Security and storage management have been core competencies for us since the inception of MSPX in 2000.
By partnering with DS3 DataVaulting for the actual backup/ recovery service, we can focus on other strategic elements of data management-that is, helping our customers set recovery objectives, retention policies, and so on. We aren’t investing resources maintaining the storage infrastructure, and our cus-tomers aren’t worrying about the mechanics of daily backups, tape management and the like.
Amir: One of the major value propositions of DS3 DataVault-ing is that they help us achieve economies of scale at a much faster pace, so that right out of the gate we can offer affordable backup/recovery services to our customers.
Some competitors charge a flat fee for the service-that is not always a good deal for the end customer. Our clients benefit from the fact that we are able to bill on actual usage and do not
require them to sign a long-term contract. A good example of where this model has worked particularly well for a customer is the National Association of Independent Schools (www.NAIS. org). We deliver an affordable service that enables them, as small as they are, to automate backup/recovery processes, dictate their unique requirements for retention, and have full confidence that their critical data is protected.
Amir: Managed backup/recovery service can deliver significant savings when compared to the cost of maintaining the admin-istrative staff and storage infrastructure required to keep the process in-house. And for businesses still using tape backup-of course that technology is inherently slower and less reliable. Tape is also surprisingly costly to maintain, often in excess of $10K annually.
As for disk-based backup, clients tend to overlook the cost of underutilized capacity because the organization either lacks the right technology or the expertise to manage storage assets. The end result is that many companies utilize as little as 20-25% of their storage infrastructures. Leveraging the DS3 DataVaulting infrastructure, we all benefit from their expertise in maximizing capacity utilization, and the costs are shared across a large user base.
Amir: We do in the range of $5-$8M in annual revenue, and the managed backup/recovery service accounts for about 20% of our business. We turned on the vaulting just six months ago,
so we feel that’s a pretty impressive number. A fast ROI-typi-cally three months-is a real advantage of working with DS3.
Amir: Make sure you understand storage-you can’t be suc-cessful as a generalist.
Who do you typically sell to within an organization?
What about costs?
How do the costs compare to maintaining backup/recovery processes in-house?
What can you tell us about revenue?
Brad Wenzel, CEO of Digitiliti, says that with millions and millions of end-user opportunities out there,
the managed backup/recovery services business has much to recommend it. But, he cautions, choose
your foundational technology wisely-a duct tape approach can cost you time and money.
Digitiliti, Inc.
Profile: Digitiliti, Inc.
Digitiliti is the only company to offer Third Generation Data Protection: centrally controlled, on-demand, disk-to-disk backup with unlimited scalability. What sets Third Generation apart: unlimited scalability combined with massive data reduction at the byte level. Digitiliti offers substantial resources in network infrastructure, storage configuration, systems integration and technical support. The former Federal Reserve Bank Building in Minneapolis, home to the Digitiliti Data Fortress, is a catenary structure built from concrete and steel, and is one of the most architecturally secure buildings in the Midwest. Digitiliti serves customers in legal, financial, healthcare, education, broadcast, pre-press, supercomputing, and other data-intensive fields. Digitiliti is a public company trading under the symbol digi.pk.
Customer profile: Medium to large enterprises.
Typical size: 50-250 seats; 50GB-2TB of data to protect.
Digitiliti, Inc.
266 East 7th Street, Saint Paul, MN 55101 www.digitiliti.com 888.292.3396
Information: [email protected] [email protected]
Brad: Corporate data protection requirements are growing 5% or more per month. At the same time companies try to cope with this growth, they face progressively stringent regulatory, privacy, and security requirements. Surprisingly, many of the same businesses that have made significant investments in NAS/SAN solutions still rely on slow, inherently unreliable tape-based solutions for backup and recovery. In that environment it’s almost impossible to implement a robust strategy for
com-pliance and fast, automated backup/recovery. And businesses that do have defined processes in their data centers more often than not neglect their remote sites.
In this setting, there’s tremendous opportunity for MSPs. We’re expanding our own vault by multiple terabytes every week. We currently support some 20 resellers and through them have put on more than 100 new customers over the last year.
Brad: When we started Digitiliti four years ago, we planned to develop our own backup package. We were quite far into the development when we learned about Asigra. Their solu-tion had all the features we wanted, the company had a long track record, and we liked the management team. We’re now a public company, and we’re still focused 100% on backup/ recovery, still committed to using the best technology
available-One of the key advantages of the Asigra technology is that it gives us unlimited scalability. That’s essential in our ability to attract and service the enterprise-level customers. Most of the solutions that we displace are enterprise-class products-Com-mVault, Legato, NetBackup, TSM. Asigra helps us effectively compete against those alternatives.
What’s the opportunity for managed backup/recovery services?
Thinking of Managed Backup Services? MSP and VAR Alignment. 8 Brad: We do not typically focus on the SOHO market (although
we do have customers storing as little as 10GB), but rather the large financial companies, brokerage houses, accounting and law firms, universities, and other organizations that are more likely to be protecting multiple terabytes. A lot of our custom-ers come from industries that are heavily regulated, so they already understand the need for solutions that address data retention requirements.
We sell exclusively through the channel and guarantee resell-ers a 30% profit margin. Our goal is to support only highly effective, strategic VARs that are committed to customer service and can expertly address the needs of clients in their target markets and industries.
Brad: For one thing, we are storage experts-everyone in the company has been in the storage industry for some time. We bring considerable NAS/SAN expertise to the business, and we understand the entire continuum of storage solutions, par-ticularly from the reseller’s perspective. We want our VARs to sell their equipment in conjunction with our service. We’re not there to compete, but rather to help them build healthy annuity streams.
We also provide end-user training and help transition the orga-nization to shift its focus from trying to maintain generations
of backups to setting and achieving recovery point objectives (RPOs).
In terms of our backup/recovery service, we’ve invested heav-ily in infrastructure technology complementary to the Asigra software. A good example is the global file system that we use in our data centers to give us advantages in performance, scalability, and storage efficiency. And the customer benefits from the storage reduction achieved across a global file system rather than on a single server.
Brad: We tell customers that they can expect their secondary data set-that is, the data set that is protecting their primary data-to be just one third the size of the primary data set. That compares to a secondary of more like 2-500X in a tape-based backup environment without data reduction. For example, if you do weekly backups and have to retain data for five years, that will be 52x5 or 260X the original data set. And then with tape, good luck finding and restoring one of those files after the
tapes have been sitting for years on a shelf in some storage closet.
The Asigra technology helps us conserve capacity in multiple dimensions-it offers de-duplication and common file elimina-tion, and enables us to do incremental-forever backups. So for an average-sized data set of 1.5TB, we generally end up vaulting only 500GB.
Brad: From an end-user perspective, we typically see an ROI of 2:1-that is, for every $2 a customer currently spends on backup/recovery, we can save them $1.
Brad: There are billions of dollars out there and some 77 mil-lion end-user opportunities. If you want to get in the annuity business with no capital and still make 30% almost immedi-ately, work with us. If you hit it out of the ballpark and decide to build your own infrastructure, go for it-there’s room for all of us to play. If you choose to make the investment to do what we’re doing, you can expect a 1-2-year payback. We’re currently seeing anywhere from 6-12% growth, month after month. And the great thing about it is that because your customers’ data
grows overnight, you make money while you sleep! You can’t say that if you’re selling boxes-RAIDs and FC switches don’t sell themselves.
Asigra technology is critical to success. If you don’t use Asigra, you’ll end up having to manage 5-10 point solutions to achieve the same functionality. Taking the duct tape approach will compromise the quality of your backup/recovery service and definitely cut into your profits.
Who are your customers and how do you reach them?
What differentiates your company and your backup/recovery services?
How much does data reduction benefit the customer?
What about your end-user customer’s ROI?
Rick Erickson, president of Agosto, talks about the decision to partner with Digitiliti to maintain flexibility
and conserve investment dollars, the scalability benefits of Asigra technology,and the solution that wins
business in a sophisticated market.
Agosto, Inc.
Profile: Agosto, Inc.
Agosto builds and manages highly available networks and infrastructures tailored to meet a company’s organizational goals and requirements. As a managed service provider, Agosto assists customers in making critical transitions to highly available and secure solutions that increase employee efficiency and decrease the cost of network ownership. Offering complete solutions that bridge the gap between systems, access, and infrastructure, Agosto simplifies the selection of technologies that enhance corporate competitiveness.
Customer profile: Small and mid-size enterprises in any industry.
Agosto, Inc.
800 Washington Ave N., Suite 309, Minneapolis, MN 55401 www.agostoinc.com 612.605.3500
Rick: For several years we’ve been offering services-disaster recovery, high availability, hosting-out of our co-location facili-ties. But even though we had some recurring business, project work drove the bulk of our revenue. The cyclical nature of that revenue stream made it difficult to build a business with
consis-tency. So we worked to expand our managed service offering, adding a staff augmentation service, prepaid billable hours services, and eventually on-demand automation services such as patch management, server management, security, and most recently, backup/recovery services.
Rick: In order for us to fully support the services business, we needed to identify four or five flagship companies that could deliver what we considered foundational products. We first learned about Asigra technology at an MSP Alliance confer-ence and did considerable research around the possibility of offering the backup/recovery service directly. But we ultimately decided that with limited investment dollars, it was not cost-effective for us to build out that competency. Another reason for partnering with Digitiliti is that it maintains our flexibility in product offering. If we had to invest in a specific storage solu-tion, that might limit our ability to offer the full complement of storage and platform technology to our customers.
Digitiliti turned out to be an excellent fit both technically and culturally. On the technical side, they met our requirements for using Asigra software. We had already tested the Asigra product in-house and made the decision to find a partner that used that technology. We liked the Asigra agentless design, as well the fact that it could support more clients than any other software we looked at, plus bring scalability that allows us to support every size client on a single platform-we wouldn’t have to train on many different systems. As for Digitiliti specifically-they were a known, established, and respected player in our market. (And to be honest, we had lost business to them-we’re quick learners!)
What was the genesis of your managed backup/recovery services business?
What led to your partnership with Digitiliti?
Thinking of Managed Backup Services? MSP and VAR Alignment. 10 Rick: Definitely-and one that stands out is the cost of DR. If a
company is building its DR strategy around a storage platform like Hitachi, EMC, or NetApp, the business is forced to deploy duplicate devices. So that’s 2X the hardware costs, 2X the licensing, 2X the maintenance. In contrast, with a managed
backup/recovery service you’ve eliminated all your infrastruc-ture cost. And frankly, for most companies, it’s much easier to find operating budget than it is to find capital. they know first-hand the benefits of being able to quickly drill down and retrieve backup data from the vault.
Rick: We offer both a component service model where the pricing is based on numbers of systems, amount of data, bundled hours, etc., and a full-service model with a per-user monthly fee structure. Approximately 25-30% of our business
is service, some 35% comes from outsourcing, and the rest is product. they know first-hand the benefits of being able to quickly drill down and retrieve backup data from the vault.
Rick: We realize 20% on every sale-and we are achieving that with no capital investment and essentially no business risk. The service already accounts for about 14-15% of our revenue, and we expect it to be a high-growth segment. Delivering backup services was a fairly fast start-in less than 8 months we were vaulting more than a terabyte of client data.
Let me add that customer satisfaction is critical to our success. Part of ensuring that is staying close to the customer-no matter how much value you deliver, if you’re not in frequent contact, the customer will not be happy. The managed backup/recovery service helps us stay close to customers. Agosto serves a very sophisticated market that absolutely expects the availability of backup/recovery services as part of an MSP portfolio.
Rick: We really focus on strategic alignment-do processes align with the business strategy, does the infrastructure enable the desired business outcomes. Then we work with the client to develop a plan and help them execute on it. The majority of our clients generate revenues in the $10M-$75M range, and we find that it’s when they pass the $10M mark that they most
often want and benefit from help developing an operational roadmap. Leveraging the Asigra-powered Digitiliti service lets us deliver an essential service to our customers while it allows us to focus our resources on what we do best-that is, manag-ing enterprise operations.
Rick: Probably that the average length of the sales cycle ranges from 3-6 months. I was expecting a shorter cycle. But I think that is because of the local market. We have a highly educated market with a lot of offerings to consider-if someone yells DR or backup/recovery, 10 suppliers come running. In our business we are usually talking to C-level executives who have backup/recovery on their radar, but who come from a culture that says “if you didn’t hear about it from a friend or colleague,
don’t buy it.” So we make sure that we are experts, that we leverage the best technology and suppliers-in this case Digitiliti and Asigra--and that we can clearly articulate the value we bring in terms of automating backup/recovery processes. We’re confident that once the customer has evaluated available solutions, the decision will be for the Asigra-powered Agosto managed backup/recovery service.
Are there specific cost benefits that you articulate to your customers?
How does your business break out?
What impact does your managed backup/recovery services have on the bottom line?
What differentiates your company?
What have you learned that surprises you?
company, is a good example of a business that utilizes our full range of management services, including the Digitiliti-based backup/recovery service. Midwest Plastics supports a user base of 100 and vaults some 400GB. They were one of our
About Asigra.
Leading organizations reduce costs by applying cloud computing to backup and recovery with efficient, cost-effective and transfor-mational solutions from Asigra. Customers consistently redirect savings derived from our approach to projects of higher strategic and personal value, many of which have been on-hold for a year or more. The positive business outcomes made possible from a
