The Other SaaS: Online Storage Takes The Stage
Storage as a Service has come a long way from the heyday of the first dot-com bubble and the original managed storage service providers, who invested millions of dollars in building storage infrastructures in the misplaced hope that enterprise customers were ready to trust the storage of their data to what was then an unproven model.
Today's provider of online storage services is instead likely to be a small-business solution provider that has invested only a couple of thousand dollars, if that much, in integrating the storage service technology from one of a variety of channel-friendly vendors into its own hardware and/or services offerings.
It could very well be someone like IS Support Inc., a Houston-based MSP whose typical customer is a company with 10 to 30 employees.
Steve Combs, president of IS Support, said his clients have been quickly adopting online data protection since his company signed up with eFolder, an Atlanta-based provider of software, to allow small-business VARs to offer online storage to customers.
While online data protection is still a small part of his company's revenue, it is a big part of its ability to develop deep business ties with clients, Combs said. "It's one more service we provide our clients where we can get our name in front of them," he said. "It's one more value in front of us."
Once a small business finds it can do things like protect the data for applications like QuickBooks in a secure off-site location for about $3 per month, they begin asking IS Support about bringing in the service, Combs said.
"Until recently, small businesses didn't understand the value of a backup, let alone disaster recovery," Combs said. "Now a lot of them are coming to us and asking for options for backing up data."
Online data backup and recovery have helped Guardian Angel Computer Services LLC build a data protection business catering to financial and medical companies—many of which are classified as small businesses with maybe 10 employees despite having annual revenue of $100 million or more, said Laura Steward, CEO of the Norwalk, Conn.-based solution provider.
For those clients, online protection of their data is becoming a must-have, as government compliance regulations are forcing them to not only back up their data but also adhere to rules related to how and when data can be deleted, Steward said.
"They need to be compliant," she said. "It's one thing to purge the data, but another thing to know when to purge. We act as our customers' IT person. No IT people have been called in by the government yet because of compliance issues, but it could happen. We are our clients' virtual CIOs."
Helping ensure that customers are compliant with changing government regulations has contributed to the success of Guardian Angel's online storage offerings. That includes knowing when to not take on a client, Steward said.
"We've let go of clients," she said. "We told them, 'This is what you need to do.' If they say no, we say, bye-bye. One was a $3 billion company."
Guardian Angel offers two online storage service options to customers. The first, AngelSafe Offsite, is based on eFolder technology. It lets customers send data off-site to a secure facility, and keep a copy of the backups locally for fast restores. The second, AngelSafe BDR, uses the online storage capabilities and the local storage appliance from Zenith Infotech Ltd., Mumbai, India, and Warrendale, Pa. That appliance has the ability to automatically build and host a virtual server in case a physical server goes down.
Alvarez Technology Group Inc., a Salinas, Calif.-based MSP, leverages its managed services to get small businesses to sign up for online storage, said Luis Alvarez, president and CEO.
Existing customers who add online backup get it at a 25 percent discount, a discount the MSP can offer because of its healthy markup on the backup service, Alvarez said.
Next: Sign Up To iSave Service Alvarez Technology has signed up about 30 clients in the past 12 months to its iSave service, which is its branded version of the eFolder service. Those clients range in size from five or fewer desktop PCs to up to 50 PCs, Alvarez said.
The MSP also passes customers looking for a simple, low-cost backup and restore service to companies like Boston-based Carbonite Inc. Alvarez said he is always evaluating other on-line backup services, such as the Symantec Protection Network from Symantec Corp., Cupertino, Calif. "We're looking at them because of their brand name, and their introductory price is in line with eFolder's," he said.
Truistic Solutions, a nine-employee Houston-based managed IT service provider, got involved with online storage because customers, most of whom have 25 to 75 employees, began to realize the value of it, said Mike Daniel, vice president and COO.
"They all want to get away from tape," Daniel said. "After the big hurricanes almost three years ago, everyone decided they need to be prepared, so our business took off."
Truistic works with another hosted storage provider, Houston-based Terian Solutions LLC, but provides the service to customers under its own TruCare brand. "If we need to change providers, we don't have to worry about the name," Daniel said. "We may sometimes have to offer a different solution based on customer needs."
A growing number of vendors offer online backup, recovery, archiving and protection services. They can generally be divided into several categories.
The first are smaller companies that only offer technology to let others build a Storage as a Service business, or who have that feature as part of their data protection software.
The second category are tier-one storage vendors, most of which have recently acquired the necessary technology and are now looking for new ways to get revenue from customers.
A third category of vendors includes companies that have traditionally focused on the consumer and small-business market with lower-cost technology that is typically offered direct, but which may also go through resellers.
Solution providers looking to offer Storage as a Service can work with one or more of these and other vendors in a couple of different ways.
Those with their own hosted infrastructures that include a large amount of storage capacity can license the technology and software from a vendor and offer their own end-to-end hosted online storage service.
Other solution providers can contract with the technology vendor or a third-party hosted storage provider to handle the back end, while the solution provider deals with customers. In this case, they can either offer a service branded by the vendor, or work with the vendor to rebrand the service to fit the solution provider's other services.
Several vendors allow customers to back up data to both a local storage device and to the remote site simultaneously, a feature that solution providers say is very important.
The move to offer a local storage option stems from the fact that lost or corrupted files can be restored from an on-site storage device faster than they can from online. While some provide the local storage device, others provide the connection to customers' existing storage devices.
Combs said his customers often back up data to a low-cost USB hard drive as part of the eFolder service. "So if they lose a file, they can restore it from their $110 to $120 USB hard drive," he said. "It's not their main backup, but it does fast restores."
Guardian Angel's Steward said that local backup is a must-have, not an option, for her customers. "Our customers do pretty much what we tell them to do," she said.
Going forward, the online Storage as a Service business can only grow because customers' storage requirements can only grow, Daniel at Truistic said.
"Individuals and businesses are creating a lot of digital content," he said. "There has to be a point at which the cost of online storage is so low that customers will want to store all their files online. For instance, one of my law firm customers is now transitioning its paper files to an online warehouse. It's looking at ways to keep all its data online forever."