Intradyn CEO Sees Missed Opportunities In SMB Compliance

Although compliance issues are typically associated with larger enterprises, Intradyn CEO Gary Doan argues that most vendors are missing the mark when it comes to backup and archiving solutions designed for the small to midsize business. In an interview with CRN Editor in Chief Michael Vizard, Doan says there is a massive opportunity for solution providers focusing on compliance and archiving solutions that are designed from the ground up for the SMB market.

CRN: Why do you think there is an untapped opportunity for compliance and archiving solutions in the SMB market?

DOAN: We're seeing exponential growth right now. But it's not just storage. Compliance is a big driver with the e-mail archiving. The SEC says that all brokers, no matter what their size, have to archive e-mail. They have to have it readily available, and also have to write it in a write-once-read-many format. And the NASB says that 94 percent of their membership is firms with 100 brokers or less. These are some pretty strict e-mail retention and availability regulations. I really think that small businesses don't quite understand the differences between backup and archiving. A lot of them will be doing backup and just assume that they're archiving. But really what they're doing is saving multiple copies of a backup. For instance, if they wanted to restore an e-mail message from last year, they'd have to first restore the e-mail server--not a pretty thing to accomplish.

CRN: In terms of that, what's unique about Intradyn?

DOAN: Intradyn was founded in 2001 and we announced the company in 2003. Our strategy is really to provide appliances that do both data protection and archiving. They're really a series of application-specific appliances. Our first product was the RocketVault, and it's basically a backup, data protection appliance. The second product we have out is a specific e-mail archiving appliance.

CRN: Why does an appliance-based approach make a difference in this market segment?

DOAN: The beauty of the appliance is that past methods required a combination of software and hardware, and it had to be integrated. What we're trying to do is make this a lot simpler to help the channel sellers. This is a network device--you plug it in, there's no software to install at all. Once it's plugged in, you can basically manage it with a Web browser. And it can be managed from anywhere in the network. We've had some of our users say that they set it up in 10 minutes. We find under half an hour is probably more like it. But it's something they can start relatively easily and start using it immediately.

CRN: Doesn't this approach reduce the services revenue opportunities?

DOAN: That's true, but they can offer managed services and training really that serves the basic best practices of business. There's also the opportunity to host the data protection off-site piece or to partner with somebody that's doing that. Most of these small businesses don't have an IT staff, and their needs are growing at such a rapid rate that they have a lot more data than they used to have. I think that they're putting in more elaborate systems, and they're going to need help from integrators and value-added resellers. A lot of them are trying to do it themselves, or they're using somebody's brother, or sister, or cousin to do it, and I don't think that's appropriate. I think that, over time, they're going to have these trusted advisers, which are really VARs or resellers, to handle everything from the strategy to tactical implementation. Most small businesses in the past have been very tactical. If it breaks, fix it. If it's too small, get a bigger one. I think that starts to change. Getting an early start with small to midsize businesses can be an excellent strategic move for really any VAR or integrator at this point.

CRN: How hard is it for you to compete in this space with bigger name companies like Symantec-Veritas and EMC?

DOAN: What they offer is not an appliance, it's a bundle. You've got multiple pieces of hardware, and then there are multiple pieces of software you have to deal with. You have to have the licenses for all of those. And then, you have to do the integration. We are going to be substantially less expensive and easier to master. From a channel perspective, you potentially have tens of thousands of new customers, where before you could look at maybe 1,000. It's an entirely different model. You cannot really compete by taking an enterprise solution to that small business because they just can't afford it. This is a brand-new market for most resellers and integrators.

CRN: How big an opportunity is this market segment?

DOAN: There's been a lot of research done as to what the SMBs are willing to pay for solutions. And when you look at the SMB market, some companies are saying any company with less than 1,000 employees is an SMB. We find it's probably more appropriate to just 500 and under with 10 to 100 users actually being the bulk of the market. Most of the new dollars are being spent there. There's several research reports that have stated that over the next couple of years, the SMBs are really going to spend 60 percent of all IT spending. So over a term of the next couple of years, the market's going to change pretty dramatically. I think ease of use and cost are two primary drivers that really are ringing in the ears of the SMB market. I think that when you look at the enterprise vendors today, when they're talking about the small to midsize market, they're really looking at small enterprise. Most of that equipment is really being sold into what we call a very large business, over 500 employees.

CRN: How big is your channel today?

DOAN: We now have over 110 resellers. We sell only to the channel. We also sell through Sony's channel with one of our products, the ComplianceVault.

CRN: What's your relationship with Sony?

DOAN: We sell our ComplianceVault as part of their e-mail archiving solution. We do a bundle with them. We actually supply the unit to Sony, and Sony runs it through their channel.

CRN: What are the price points for your products?

DOAN: Our backup appliance, which is the RocketVault, starts out at under $1,500 and tops out at around $22,000. Our e-mail archiving appliance that we bundle with Sony starts out at around $7,000, tops out at $10,000. We also offer a little stand-alone device that has built-in AIT WORM drive for that solution, but when we offer the bundle with Sony, it uses one of their tape libraries.

CRN: Going forward, how many partners are you looking for?

DOAN: It really depends on the mix in the end. We obviously don't want to oversaturate the market with our VARs, but on the other hand, we do like coverage in all areas, and in the particular verticals we do business with. This year, we'll probably double our number of VARs. And then there will also be different partnerships. We'll have other partnerships like the Sony arrangement, where they have their own set of VARs.